8 tricks up your auto dealer’s sleeve

Dollar bill shaped like a car with quarters for wheels

Auto dealers have lots of ways to make the most off of every sale.

If you're not careful, you can wind up paying more to buy and finance a new car or truck than you really need to.

That's a total waste of money for anyone trying to build financial security for themselves and their families.

Look out for these 8 common tricks when you visit the showroom.

Dealer trick 1. Preying on your lack of information.

There's nothing a salesperson loves more than a clueless car shopper.

You can't negotiate a fair price when you don't really know what it is.

Forget the sticker price. Edmunds.com and Kelley Blue Book are among the best places to find the important information you need.

You'll want to focus on the average transaction price in your city and be the smart buyer who aims to pay a little bit less than that.

Car salespeople do this every day. You do it what, once a decade? The only possible way to offer a more level playing field is for you to do your homework before you hit the lot.

Once you know what vehicle you want, you should walk in knowing around what price you should be paying.

Dealer trick 2. Imposing finance charge markups.

You've picked the car you want to buy, and now the finance manager is searching his computer for the best deal on a loan.

But the dealership is not required to tell you the cheapest loan you've qualified for and can legally pad the interest rate with a couple percentage points for themselves.

Let's say the bank or finance company says you're eligible for a 5% loan, but the finance manager tells you 7%.

On a $22,000, five-year loan, that extra 2% will add an extra $1,277 to your payments.

The lender is in cahoots with the dealer. It collects the extra money, keeps half for itself and sends the other half back to the dealer.

While this is quite legal, the U.S. Justice Department and the Consumer Financial Protection Bureau have been investigating whether dealers and lenders are prone to discriminate against women and minorities by adding markups to their loans more often.

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Dealer trick 3. Making the deal all about the monthly payment.

Salespeople often ask potential buyers what's the biggest monthly payment they can afford.

With that number in hand, they'll calculate the most you can possibly spend and still hit that monthly payment by dragging out the loan for as long as possible.

He or she will then show you cars and trucks in that price range, which is often higher than what you wanted to spend, while reassuring you that a better ride is well within your budget.

Let's say you came in to buy a compact sedan that cost about $20,000 but let slip that you could afford a payment of $450 a month.

The salesperson immediately recognizes that a 60- or 72-month loan would allow you to buy a $25,000 midsize sedan while keeping your payment at about $450 a month — and that is what he or she will try to sell you.

The bigger sticker price, and longer loan, both mean more money for the dealership.

Dealer trick 4. Making deceptive payoff promises.

Let’s say you’re looking to buy a new car but still have a balance on your current car loan.

To close the deal, a salesperson will often promise: “We’ll pay off your loan no matter how much you owe.”

Many dealers count on making up that loss by offering you less than your trade in is really worth.

But some unscrupulous showrooms pay off your old loan, just as they promised, then secretly add that amount to your new loan.

To get away with that, they're counting on you to focus on the monthly payment and ignore the total amount that you’re financing.

Say you're told you need to borrow $20,000 over 48 months at 6% to buy the new car you've picked out. It's a monthly payment of $470.

The dealer then acts like they're offering a special deal and says they'll pay off your old car note.

What they really did was add the $4,000 payoff to the balance, then hand you papers for a $24,000 loan over 60 months.

The finance manager directs your attention to the monthly payment, which turns out to be only $464.

"The process itself is only vaguely disclosed to the consumer," says Chris Kukla, Senior Council for Government Affairs at the Center for Responsible Lending, a nonprofit group based in Durham, N.C., that fights predatory lending. "You really need to read the [fine print] carefully to see what you're getting,"

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Dealer trick 5. Saying the deal is only good today.

Sales people often say the "deal is only good today" to prevent you from checking other dealerships or having second thoughts.

They know if you leave the lot, you may not come back.

In most cases, you're likely to get the same deal if you return. You don't want to be pressured into a quick sale anyway.

The only exception is around the end of each month when automaker's set their incentive programs — rebates and discount loans — to expire.

If you're being quoted a price or financing deal that includes those discounts, dealers can't know if they'll be renewed for the following month.

Dealer trick 6. Yo-yoing the financing.

You make a deal, sign the papers, take your new car home and think it's done.

A week later, the dealer calls and says you have to bring the car back because the financing has fallen through.

This most commonly happens when dealers allow a buyer with shaky credit to take what the industry calls "spot delivery" on a car before the loan application is approved.

Why would they do that?

Disappointed buyers will do almost anything to keep their new car, whether it's agreeing to a higher interest rate, ponying up more cash for a down payment or even finding a cosigner for the note.

"We hear about it in all states across the country," Kukla says. "Dealers have the legal right to be able to back out of the deal even after they send you home with the car."

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Dealer trick 7. Rolling out the old bait-and-switch.

You see an ad for a great price on a car you've been considering. But then you get to the showroom and find that's only for a stripped-down model, or trim level in auto lingo, that no one ever buys.

The salesperson is sympathetic. When was the last time you saw a car with crank windows and no air conditioning?

Over the next hour he or she shows you better-equipped versions. By the time you finally see the car you thought the ad was touting, you're paying $4,000 more.

Dealer trick 8. Selling worthless or overpriced dealer add-ons.

Dealers boost their profits by selling all sorts of accessories, from roof racks to premium sound systems.

But take a careful look at the cost. You can usually get the same thing for half price or less at electronics or auto parts stores.

Be especially alert for "surprise" add-ons — extras you absolutely don't need but that salespeople try to slip in as you're wrapping up the deal.

VIN etching is the latest cost to avoid, according to Gregg Fidan, founder of RealCarTips.com. But he says to turn down paint protection, fabric protection, rust-proofing and upgraded car alarms, too.

"A worthless $500 add-on increases the monthly payment by less than $9 on a 60-month loan," Fidan says, "so it's easy to overlook these things."

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  • Denise

    Call around and tell the dealer that you got the price that you are willing to pay from another car dealer. They normally will beat the price. I do that with all my cars. I got a Maxima that retails for 32K for 25k. It can be done but you don't ever go into the showroom except to test drive the car. And then call around to the different dealers. Also last day of the month is the best time to get a car.

  • Mattb

    This article is insulting to me. A true Sales Consultant for a very reputable dealer.
    Want to know how I'm paid? Volume. And customer satisfaction scores. AND a Salary! Not a Draw against Commission. I have never in 14 years been paid a commission. If I sell ten of our least expensive car the Spark. I get paid the same as selling 10 Corvettes.
    Maybe you should tell people to look for Google Reviews of a dealership. Or on cars.com. Maybe they will find a dealership with lots of happy customers.Of course you probably think they're idiots for being happy and actually buying a car. Why don't you tell people to search for a non-commissioned dealer? There are more and more of us these days.

  • Jack

    What many people don't know is that when the salesperson leaves you in the office while they check paperwork or some other excuse to leave you alone, that office you and your significant other are waiting in has a microphone in it and everything you say is overheard. That's why the sale seems to go your way or not depending on what you said. Maybe not all dealerships do this. But a lot do.

  • Paul

    Comment 1 is complete BS...Its illegal to wiretap people without a Court order. Dealerships stopped doing that 20 years ago. People commonly demonize car dealerships, well they deserved, not for what they are doing now, but what they did to themselves in the 80s and 90s. There are rate limits to what the dealers can mark up the base buy rate. This article completely fabricates that amount that they can mark it up. Baseless and complete fear mongoring.

  • http://Xfinity James sachtjen

    Paul you have no idea what wiretapping is obviously because a dealer having an office wired isn't it. I happen to know first hand as a former sales person this happens amd it's quite legal.

  • http://www.interest.com Dick

    Let's all demonize car people. How would you like to be working in the NE right now spending 8hrs a day moving snow in sub-freezing weather with no customers ... making little or no money in commission. THEN have a customer finally walk in only to tell you what a thief you are.

  • http://title= Roger

    The integerity reputation the car industry suffers, overall is well earned.

  • Pedro

    I understand not all car dealerships are equal and not all salespeople fit the stereotype, however, I went to a dealership where some of what is described in this article occurred. I wanted to trade in my truck for a fuel-efficient car. They asked me how much a month I could afford and promised to get me the car I wanted within that price. After two hours, I went to the finance manager. He quoted me a monthly price $150 more than I wanted to spend. When I decline, he called the sales manager in. They attempted to "make me feel bad" about the hard work they did to get me this financing. The sales manager said they were "giving me" $2500 for the truck. I had to point out they were not "giving me" anything because the balance of my truck loan was wrapped in the new loan. I guess they figured I would not look too closely. Needless to say, I went to a different dealership.

    Unfortunately, not everyone understands the art of the deal. This makes it easier for some salespeople and dealerships to take advantage. The easier targets tends to be those with low credit scores and young families.

    There are good auto dealerships and good car salespeople. Let this not diminish the fact that some are unscrupulous and consumer should be made aware.

  • http://interest jerry

    So sad to have a guy write an article that has no truth at all. Was this a reprint from the 1970's? The article is a bunch of BS.

  • Jimbo

    Please relize that salespeople are working to support their families. You should not criticize them for making an honest living. They are not like you crooked politichans

  • Daniel

    these articles actually make it harder for the buyer. When they say dont tell them what payment you want to be at. If the customer picks out a car who does not want all the toys ? It is hard to say no until you have spent the time to test drive and get a feature presentation and not find out itl 45 minutes later that the car they love is $200 a month more than what they want to spend. We ask these questions so we do not waist the customers time . We want to pick the most car or truck for there money. That is how we get repeat business.you want to give them a good deal and take care of them after the sale. After 2% the banks only pay us half % and most will not let us ad 3% to the buy rate. guess what everyone makes a profit from underwear to haircuts and the markup is far more than the markup in a vehicle. how about you do and article on negotiating a deal on a $500 Yeti cooler

  • http://internetezplorer David

    i was a car salesmsn for 30years there a lot more that go's on in dealership then this art icle is getting into william burns is right alot of salemen are hard working people but you have the bad salesman too look out for the financing don't biy anything after you made a deal as it will make monthyly go up more and bill you need not let article get to you

  • Mark

    I have been leasing cars every 3 years for the last 15. I have seen the car busines evolve. 15 yrs ago salesman would actually sell. The customer would negotiate with them, and only a couple of times during the transaction would the rep consult the sales manager. Fast forward 15 yrs. The internet has changed things entirely. I have found the in almost all instances whether you get a qouote online or in person the price is almost exactly what Edmunds etc. has determined to be "invoice". I've even gone into dealers acting like a rube and have gotten offers pretty close to invoice on the first shot. Consultant is actually a good term for "salesman". They really don't sell. The best "salesman" simply keep the potential customer in the building as long as possible before .

  • Lenny

    Once again another uneducated "expert" telling people how to purchase a car. I have been in the car business for a long time and I find it strange how this is the only industry that is not aloud to make any money. The auto industries directly or indirectly employee more people in this county than any other industry. Walk into a furniture store or jewelry store and ask to see the "invoice" and see what they say to you. A furniture store makes more money on a $800 couch than when we would sell a $72000 corvette. With the internet and many other resources it is not possible for dealers to "cheat" customers. These types of articles are a waste of space.

  • jim

    The invice the dealer claims is what they paid for the vehicle is all b/s. the deal actually pays 10 to 20 percentt below the invoice for the car. Does anyone actually think A dealer grows into a 2 block mega complex by selling cars at 100.00 above invoice. I Have a great friend who runs a dealership. he will sell up to 10% below the invoice. When it comes to intrest and financing through the dealer to get cash back,,,, oh yeh do it, Then go to your local bank to get the lower finance charge. Yes, salesman have to make a living but, they are no different then a lawyer.... all taught to be sleazy. Know what your willing to pay for the vehicle, compare intrest rates before going in to the dealership and get the KBB and NADA value of your trade if doing so. If that dealer does'nt come to your price, there is a dealer within 200 miles of you that gets incentives ect,,, that will meet or beat your price. Trust me!!!!

  • Larry Moore

    We have several local dealers that advertise that they will payoff your current car even if you owe more than it is worth or are upside down (actual wording used in the ads). This is the add the balance to your new loan deal. I have had some of these tricks pulled on me so as in all things; there are some great dealers and sales people and some shall we say "not so great".

  • KAE


  • Casey CarGuy

    Thanks alot Craig. Nice article. You just turned my $100 commision on new car sales into $50 minis. How many cars do I have to sell now to support my family. It's hard enough as it is. Car sales people today have it way tougher than back in the day, and you just want to make it worse. Look for the kid from Best Buy to be your next car salesman, because you are putting the real professionals out of bussiness.

  • http://Comcast David d.

    I am a salesman at Freehold Buick GMC.
    Did you know that all buyers are lairs?
    You want to call me sleazy,well your just an AH.All customers want us to loose money,since when is making a profit a bad thing.If we don't make a profit we are just going to go bankrupted.

  • http://comcast Richard

    Comments from car dealers keep emphasizing "your article keeps us from making an HONEST living." BUT the whole point of the article is that some of what is done at car dealers is DISHONEST. And the salespeople who have written comments do not dispute that. It is the dishonesty that disturbs people and has earned car salespeople the reputation they now have.

  • Ed L

    Dealers make much more money on the vehicle you trade in than they do on a new car they sell you. Today most people are smart enough to get a fair price on the new vehicle but don't research the value of their trade in.

  • JT

    This article is what you get when you have a "freelance" writer for finance and business write about auto sales. Instead of an article done with any sort of research for his article submission pay, we get this drivel. Make no mistake ... there are some bad dealers out there. Trouble is they pale in comparison to how poorly educated this writer is on the subject matter. No excuse for it either if you look at his other work. The guy is a very smart man. Just took the easy way out on this one.

  • Rich D

    I've been in the car business now for 30 years.I can honestly say if it was up to idiots like the person who wrote this article everyone associated with selling cars would starve.The auto business is the only business that no one is allowed to make a living or that bad word PROFIT!.I guess working sometimes 80 hrs and not bringing home a paycheck is ok.Stop the BS.

  • Scatman

    I laughed at most of these "tricks". After reading, most of these wouldn't be tried by any modern dealerships. None that want to keep doing business.
    I have never tried to break a salesperson down to a few dollars over invoice. For some reason, "way back when", it became tradition to negotiate the price on a car. Why? You don't negotiate TV's, washers, etc. In today's age consumers can get all the info they need with a bit of web research. Pay what you can afford to buy, that's all. A dealer offers a rebate or low financing, take it. They want to charge you $150 extra for floor mats, ask them to throw them in for free or walk away. Simple, don't pay for what you don't want. The article acts like all car dealerships are "out to get you"; dealers want to turn a profit somehow. It's what businesses are for, it isn't a "charity". People now think they are entitled to nice cars and "stuff". NO, you earn the money to pay for them.

  • James

    It's funny reading dealer's comments here criticizing this article. I've see ALL these tricks played, plus more. And OF COURSE you can haggle to get the price down! This isn't like buying a TV! The idiot who wrote that comment deserves to pay too much!

  • tc

    bottom line, make a small profit, don't rake someone over the coals and we don't have an issue. The reason articles like this are writtenor exist is becuase too many dealers (not all) waffle the ever loving snot out of an average consumer.....Becuase of this people are on the defensive....can you really blame them?

  • DavidD

    The person who wtote the article. Would you work for free? It sounds like you don't care about salespeople having to feed their family. Because we all know the dealer is not going broke after all most have 5 business under one roof and you can't lose on all of them. The other thing is that most salespeople are told by management what to do. The mentality of management. Management doesn't deal with the public they leave it up to the salespeople to do it. 26 years and out of the business. In 1988 i did not have to deal with sticker prices on cars and trucks try that on today.

  • dave Suton

    This guy that wrote this MUST of been visiting Japanese Brand dealerships. They are by FAR, the Worst criminals I have ever dealt with.

  • Dave

    I have been buying cars for over 35 years, and have yet to purchase a vehicle without the low life dealership and salespeople trying to pick pocket my money. Could you imagine going to the grocery store and the cashier telling you that she knows the price on the bannanas are marked a dollar a pound but since they were washed you now have to pay two dollars a pound? It's the same nonsense and tricks they play at the dealership that makes me feel like I am going to see convicts and have them sell me a car. Put a price on every car, bad credit this price good credit this price, and thats what you pay period. Then you take the scuzy feeling of dealing with these low lifes out of the equation.

  • Tio4

    Great article and excellent tips - David the issue here is not about feeding families, but rather being honest with the customers. When trust is erased from any transaction, the dealer is taking money away from the buyer's family.

  • Tom

    @ Daniel, I've never bought 2 vehicles from the same salesman. Since 1970, every deal has had a sugar coated lie in it... I won't even start about Dealer Service!!!

  • JP

    Can car salesman/ auto dealers be allowed to make a little money without being portrayed as crooks or animals? I mean seriously come on. Do we negotiate on what a dentist or doctor charges? NO ...Do you go into wal-mart an negotiate the price on toilet paper? ..NO. Yes some dealers do bait and switch and yes some are crooks however those couple dealers give the rest a bad name, and with manufactuers surveys you have to be full disclosure now anyways. Now make a real article about timeshare presentations and ill understand.

  • http://interest.com josh

    an another thing. edmunds an kbb they are just guides! majority of the time they are off by hundreds of dollars. get real. do you negotiate toilet paper at walmart to? sales people need to make a living and yes we dealers pay what the invoice says not 10 or 20 percent less thats rediculous. the manufacturer pays the dealer money by selling a certain amount and based on customer surveys based on there buying experience.

  • Dave

    I've been a sales person before. More than half of this is false. Here's a good thing to think about: would you allow me to take $100 off of your weekly paycheck? How about $200? The biggest misconception is that a sales person makes all kinds of $ off of a potential consumer. The overall cost of a vehicle makes no difference. If a dealership owns a vehicle for $20,000 and sells it for $19,000, guess what the sales person makes on that sale? $0-100. Think that's fair? So, can I knock a little money off of your weekly paycheck so I can get a tax break? You do the math. A person would have to sell 5-7 cars a week to "make money to live the dream" how many could you sell?

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  • Ronin

    I am a bank loan officer. Read the fine print on those warranty. I am vry familiar with them. There are two classifications: "named inclusion" ONLY pays for what they name in the coverage. If it's not named, it's not covered. It allows the warranty provider to surgically omit anything they don't want to pay for by simply not naming it as covered. These coverages are sold on vehicles that are out of manufacture's warranty. The "named exclusion" plan is the opposite. It will cover ALL parts, unless it specifically excludes it. For example, it might say ALL PARTS AND COMPONENTS, EXCEPT TIRES, BRAKE PADS, WIPER BLADES (etc.).
    If you want to understand your financing terms, go to the Federal Trade Commission's site ftc.gov and look up the Truth In Lending Act (TILA for short). Every automobile loan financing contract (but not leases) must make TILA disclosures to state the APR, Amount Financed, Term In Months, Finance Charges (means the interest that will be accrued if you make only your minimum payments) and the Total Financed (the original Amount Financed, plus the potential accrued interest).

  • Chad Christian

    LOL..."honest salespeople"...in the auto industry. LMFAO.

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