The first time I bought a car on my own, I got ripped off. I traded in my car for less than it was worth, bought a clunker for more than I should have, and got talked into a $950 warranty to cover rust as I was finalizing the paperwork. The salesman saw me coming and pulled out every trick in the book – from saying my credit wasn’t good enough to tacking on “mandatory charges” during the final sale.
If you’re in the market for a new car, Money Talks News founder Stacy Johnson warns about car dealer tricks of the trade and traps to avoid.
By focusing on payments and not total price, it is easy to trick the consumer into thinking they’re getting a good deal. Steer the conversation to the total price – let the payments take care of themselves.
Step one in buying anything requiring a loan is securing financing. Never head to the lot without first shopping, and getting pre-approved for, a loan. Check out the auto loan rates search tool on the Money Talks News rates page. Or visit a local credit union – they’re usually a good spot for low-interest car loans.
But don’t just shop rates. Actually apply and get approved. This serves two functions – you won’t get ripped off with dealer financing, and you’ll be ready to pull the trigger when you find the perfect ride.
Car dealerships are notorious for should-have-read-the-fine-print promotions. Take the example given in the video; you see a great price on a certain model of car so you go to the dealership. Once there, you find out the advertisement was only for one specific car, which is now sold. And if you want a different car, maybe in a different color or with different features, you’ll have to pay more.
Read the fine print before you go to the dealership. If you’re not sure, call ahead.
Solution? Don’t bite. If you feel uncomfortable or unsure of any decision, ask to speak to someone else or just walk away. Keep looking until you find someone you can work with.
Don’t let the dealer pressure you into a pricey service you don’t need. Know what you want before you sit down in the dealer’s office. And if it’s an extra you need, shop for it elsewhere. There are very few things offered by car dealers you can’t find from other sources, often for less.
Use one of these sites to determine the value of your car:
An even better way to determine your car’s value is to find ones like it selling nearby on eBay. eBay is good because it shows actual prices being paid by retail shoppers in your area. Plus, you can visit cars for sale and compare their condition to yours.
When trading in, don’t expect any dealer to offer your car’s retail value. They make money by buying at wholesale and selling at retail. Want max dollars for your car? Sell it yourself.
What matters isn’t what the manufacturer suggests, it’s what true market value of the car is – how much people in your area are actually paying for similar cars.
You can find true market value at sites like Edmunds or Kelley Blue Book. Find it out and use it to negotiate a better price.
And, of course, if you find your scores are low, improve them before you apply. For more, see 18 Tips to Give Your Credit Score a Boost.
You can get your credit scores (for a fee) from the credit bureaus’ sites or from myfico.com.
Dealers discourage negotiating. Buying a car isn’t one big transaction; it is actually three separate ones: pricing the trade-in, buying the new car, and financing. I made this mistake when I went to the dealership alone for the first time. Rather than look at each piece, I looked at the total cost overall, thought, “OK, I can afford this,” and signed on the dotted line.
Don’t be like me. Negotiate every step of the way, and you’ll get the best deal. Start by making sure the dealer is giving you a fair price for your trade-in. Then make sure you’re getting a close-to-TMV price on the car you want to buy. Finally, look for a good interest rate.
Don’t take the dealer’s word for the condition of a used car. Never buy any car from any source without first taking it to an independent mechanic for an unbiased inspection.
Subscribe to the Money Talks News newsletter