Car salespeople often come with a reputation for being untrustworthy and doing whatever it takes to make a sale. While the industry has made improvements, it’s still crucial for you as a consumer to be prepared and understand the car buying process. Sometimes, you might encounter a salesperson who prioritizes their interests over yours. To help you navigate these scenarios, here are 10 common tricks used by car salespeople and how to avoid them.
1. The Credit Qualification Trick
One way dealers might try to make extra money is by telling you that your credit score doesn’t qualify you for good rates, even if it does. This can push you into a higher interest loan unnecessarily. To protect yourself, come to the dealership with a pre-approval for a loan. You can easily get pre-approved by filling out our quick car loan application, ensuring you know your real credit standing.
2. The “Single” Transaction Trick
Many buyers think of purchasing a car as one transaction, but it’s actually three: the car price, the trade-in value, and the financing terms. Dealers might try to manipulate these to their advantage. To get the best deal, treat each transaction separately. Shop your trade-in at multiple dealerships to get the best offer and compare vehicle prices at different locations. Using these numbers as leverage can help you negotiate the best overall deal.
3. The Monthly Payment Trick
Some salespeople lure buyers with low monthly payments by extending the loan term to seven years or more, resulting in higher overall costs. Instead of focusing on the monthly payment, consider the total price of the vehicle and the loan’s total cost. Avoid telling the salesperson your target monthly payment to prevent them from stretching the loan term to fit it, which could lead to a bad deal.
4. The Sticker Price Trick
The sticker price, or Manufacturer’s Suggested Retail Price (MSRP), isn’t the most crucial number. Focus on the invoice price—the amount the dealer paid for the vehicle. Negotiating up from the invoice price rather than down from the MSRP can lead to a better deal. Knowing the invoice price gives you a better starting point for negotiations.
5. The Spot Delivery Financing Trick
In this sneaky move, some dealers might call you days or weeks after you’ve signed a purchase agreement to claim the financing fell through, attempting to get you to sign a new loan agreement at a higher interest rate. Reputable dealers can determine your financing almost instantly, so any such claim is likely a scam. Be wary of any last-minute changes to your financing terms.
6. The Long-Term Loan Trick
Long-term loans, though not illegal, can be detrimental. They make an expensive car seem more affordable by spreading payments over a longer period, but due to vehicle depreciation, you might end up owing more than the car’s worth. This is known as being “upside-down” on your loan. Be cautious of long-term loans and consider the total interest you’ll pay over the loan term.
7. The 0% Financing Trick
0% financing sounds great but often comes with strict terms. Usually, it’s available only to those with excellent credit and requires a shorter loan term, resulting in higher monthly payments. While it can be beneficial for some, always read the fine print and use a car loan calculator to see if the payments fit your budget. Sometimes, a slightly higher interest rate with more manageable payments is a better option.
8. The Payment Rollover Trick
If you still owe money on your current vehicle, rolling over the remaining balance into your new loan can be tempting. However, this immediately puts you at risk of being upside-down on your new loan. Combining both payments increases your debt and makes it harder to get out of financial trouble if needed. It’s generally better to pay off your existing loan before taking on a new one.
9. The Bait and Switch Trick
The bait and switch involves advertising a specific vehicle to lure you into the dealership, only to claim it’s no longer available once you arrive. The salesperson then tries to sell you a different, often more expensive, vehicle. To avoid this, call ahead to confirm the availability of the car and be prepared to walk away if the dealer attempts this tactic.
10. The Contract Trick
Finally, be aware of sneaky contract clauses or last-minute changes. Some salespeople might add extra features or change loan terms without your agreement. An honest dealer will carefully review everything with you and explain each fee. Before signing, thoroughly check the contract to ensure it reflects your discussions without any unwelcome surprises.
