car dealerships can be pretty intimidating. You’re there to spend a lot of money, and everyone in the building knows it. Their job depends on getting as much out of you as possible. But there are some secrets that can help you get through the car-buying process without having a full-blown existential crisis.
I talked to car dealers, negotiators, marketing consultants for dealerships, and personal car shoppers to try and understand the industry better. I found some worrying answers. Not all dealers are bad, but some of the things they do are pretty dark. Some dealers do try to be more human, but not all of them.
20 Things Car Dealerships Don’t Want You To Know
1. The window sticker’s not worth the paper it’s printed on
You should never rely on the window sticker, or Monroney, for the real price of a car. Instead, there are several websites which provide close estimates of the actual invoice price of a car and its options. This is not the price that the dealership is committed to, but it is generally several thousand lower than the MSRP. Knowing this number is essential before making contact with a dealership.
2. The dealer isn’t busy; you’re waiting because it’s an alpha-dominance trick
The dealer’s time is not more valuable than yours. They are just trying to create the illusion that it is.
3. There are a bunch of incentives, but the salesman doesn’t have to tell you
If you want to get a good deal on a car, you need to be aware of all the rebates and special financing offers that are available from the manufacturer. Most sales managers will know about these offers, but they are not obliged to tell you about them. You could end up saving hundreds of dollars by doing your own research.
4. Pay with cash
Doug Nordman, author of “The Military Guide to Financial Independence and Retirement,” said that if you want to get a great deal on a used car, cash is king.
If you’re looking for a good deal on a car that’s selling for less than $6,000, you can try negotiating with the seller for a lower price if you’re willing to pay cash. The author’s daughter saved $500 this way on a car that she later found to be a reliable purchase.
It might be tough to pay for a car with cash, but it will also keep you from wasting money on interest payments and give you more equity in your car.
5. Leverage banking rewards programs
Sometimes your bank’s loyalty rewards program can get you better deals on things like financing, not just things like cash back or air miles, said John Schleck, who is a senior vice president at Bank of America.
While it may not be common knowledge, potential car buyers may be able to get a lower interest rate on their auto loan through their relationship with their bank or current lender.
6. They want you to get overwhelmed and tired
If you walk around the lot for a long time and talk about numbers, trade-ins, options, and percentages, you will start to get tired. This is called decision fatigue, where you become impatient if you have to make a lot of decisions. That’s why there are so many options for add-ons and how to pay, and why there is so much fine print.
7. Always focus on the sale price, and nothing else
Don’t worry about the down payment, monthly payments, or interest rates yet. Your trade-in can wait too. You need to focus on negotiating the price of the car based on its value, not on what you can afford to spend. Starting by saying “I’ve got $3,000 to put down and I can afford $300 per month” is like bringing a knife to a gunfight. Not only will you lose, but you’re also giving the dealer a weapon to use against you.
8. Beware the “let me take this call in another room” trick
At some dealerships, cubicles may be bugged in order to eavesdrop on conversations. This is done by having a colleague call the person you’re working with and putting the phone on speakerphone in another room so that the dealer can hear the discussion. It’s important not to reveal your bottom line to the dealer, but they may resort to dirty tricks to try and get that information.
9. Beware of the add-ons
After you agree on a price for your car, the dealership may give you an invoice with additional charges for things like an extended warranty, security system, paint protection, or rust coating. These extras are very profitable for the dealership, but they don’t necessarily add any value to your car. You can try to negotiate the price of these things if you’re interested, or you can tell the dealer that you don’t want them and just purchase the car.
10. If you don’t shop around online first, you’re already screwed
If you find a car online that is advertised as an “Internet special,” the price you are seeing is generally much lower than the price that is listed on the windshield at the dealership. If you go to the dealership without knowing this, you may end up paying more than you need to.
11. Conduct research ahead of time
According to Autotrader, about 90% of people who buy cars do research on the internet first. This research often takes place on websites such as Kelley Blue Book, Autotrader.com, and Edmunds. These websites provide potential buyers with important information, such as rebates that are available.
12. Don’t Pay More Than $500 Over Invoice
A car dealer will give you a great deal if you offer them $100-$500 more than the new car invoice price, according to InsiderCarSecrets.
The dealer cost of a car is its invoice price, not its manufacturer’s suggested retail price (MSRP), according to automotive resource Edmunds. You can find a car’s invoice price on NADA Guides before you buy.
13. Shop the manufacturer’s website
If you plan to buy a new car, you can save time and money by requesting quotes from dealers directly from the car manufacturer’s website. By choosing your desired car model, color, and features, you can get an accurate estimate from nearby dealers.
Since dealerships are in competition with one another, you will probably get the best price they offer without having to go through a long and difficult negotiation process. Get as many quotes as possible before going to a dealership, and don’t be afraid to let them know what other dealerships have offered. If they can’t beat the sticker price, see if you can get other free things like an extended warranty, free all-weather mats or coupons for detailing.
14. Get your own financing
If you can’t pay for a new or used car in cash, then don’t get financing from the dealership. Look for your own car loan instead. That way, you can take your time to find the best rate and you’ll be more clear about the terms and cost of your financing.
Make sure you understand the interest rates for your car loan so you can budget for the expense.
15. Get an ‘out the door’ price
The website Edmunds advises customers to be aware of dealers who give low initial quotes, only to raise the price later with additional taxes and fees. Customers should make it clear that they want an all-inclusive “out the door” price from the start, in order to avoid wasting time negotiating only to be surprised by a much higher final price.
16. Keep your trade-in a secret
com Once you have a firm price set on your desired car, you can ask the salesperson about trading in your old car. By not initially disclosing that you have a car to trade-in, you may be able to get a better deal on the car you’re interested in.
com. The salesperson is likely to offer you an amount less than the wholesale value of your car. However, this will mean that the salesperson has to take the trade-in value off the top of the price you have set for the new car. In this way, the dealership will not be able use the trade-in value as a negotiation tool or change the numbers to make you feel like you have got a better deal.
17. Have a good attitude
com It is more effective to be honey than vinegar when trying to catch flies, especially when buying a car. Buying a new car can be stressful and unpleasant, but having a good attitude and staying calm can make the experience better. According to InsiderCarSecrets.com, the salesperson will be more willing to help you get a great deal if you treat them well.
18. Shop for less-popular models
During a typical car transaction, the dealership will purchase the vehicle directly from the manufacturer. This process typically involves a “holdback,” which can be a sum of up to 3% of the car’s MSRP or factory invoice price, as reported by AutoCheatSheet. Once the dealership sells the car, the manufacturer will reimburse them for the holdback. If you are in the market for a new car, you may be able to score a better deal on less popular models by offering a price that is lower than the invoice, due to the holdback.
The dealership is more likely to give you a lower price on your car if the model isn’t popular. This is because cars that aren’t popular have a lower demand, so the dealership is more willing to negotiate in order to make a sale.
19. Research the extended warranty
When you buy a new car, the sales manager will present you with different warranty options. These warranties say they will give you extra protection if something goes wrong with your car, but according to Consumer Reports, the small print might stop you from actually being able to use it. They are also very profitable for the dealership – stores usually keep 50% or more of what they charge the customer.
Consumer Reports is suggesting that you read the fine print on the extended warranty to make sure you understand the coverage before purchasing it. They are also suggesting that you might already be covered on certain items through your homeowners and auto insurance and that you don’t want to get caught paying hidden, unnecessary costs.
20. Email a salesperson directly
MoneyUnder30 states that you can get the best deal on a new car by sending a single email. To do this, they recommend collecting email addresses from each of the dealerships you are considering. By including all of the email addresses in the CC line, the salespeople will be aware of the competition and be more likely to give you a good deal.
In the email be sure to list the options you need and that you are aware of the costs associated with them. Include any special deals or rebates offered by other dealerships. Let the salespeople know you are preapproved for financing but are willing to finance through the dealership. Finally, give the salespeople 24 hours to respond with their best offer.