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The Car Coach: Top 10 Car Dealer Tricks To Avoid

Written By | May 7, 2022
Top 10 Car Dealer tricks

Screen Grab, Car Coach video on Top 10 Car Dealer tricks.

Car dealers are in business to make money. And most of them are honest. Sadly, however, some play the game and know the clever tricks that can become a consumer trap. But having “Car Smarts” assures that you, as the consumer, come to the dealership prepared for potential situations that could work against you. These include the typical situation where you encounter a slick, aggressive salesperson looking to close a quick sale, the better to maximize the salesperson’s and the dealership’s profits. To help you out in situations like this one, here’s our list of the top 10 car dealer tricks and and the ways you can avoid them. Knowing these tricks can save you real money the next time you purchase a car.

Buying a car is an exciting time. But in the excitement, customers who really want the car can miss the car dealer tricks and games that can cost you real money. Let’s solve that problem.

Top 10 Car Dealer Tricks and how to avoid them

1. The Credit Trick

A car dealer may tell you the your credit score won’t qualify for competitive financing rates. This may be true. The dealer is implying your credit is worse than it is and you’ll have to pay a higher interest rate.

Car Smarts: Find your credit score before you buy, use Credit Karma or other apps.

2. The 3 Part Trick

Many people view buying a car as one single transaction. It’s not. It’s typically three transactions rolled into one: the new-car price, the trade-in value of your old car and the financing of the final deal. A car dealer sees all three as ways to make more money.

Car Smarts: Look at each transaction the same way as the car dealer. That means you should negotiate each part of the car transaction separately.

3. The payment Trick

Your car dealer will discuss monthly payments that seem affordable. Dealers typically factor in a large down payment or stretch the term of the auto loan to 60 or 72 months. They do this with leases as well.

Car Smarts: Negotiate the price of the car rather than the monthly payment. Never give the car dealer a figure you can afford to pay on a monthly basis. Stick to price.

4. The Sticker Price Trick

The vehicle price listed on the car window is what’s known as the manufacturer’s suggested retail price, or MSRP. But currently, given today’s chronic computer chip shortage, you need to look for something described defined as “market adjustment prices” or similar wording. Some dealers are over-charging buyers. You need to figure out if your dealer is one of them.

Car Smarts: Finding the car car is half the battle. A good car dealer will not add in those available extra fees. Of course, dealers can price some really hot cars go far above the sticker price anyway. But don’t be afraid to walk away if you determine the car or the deal may not prove the right one for you.

5. The Holdback Trick

Manufacturers often offer loyalty or conquest discounts to car dealerships. These incentives are part of something in the industry called “holdbacks.” These dealership discounts or holdbacks provide extra incentive money back to the dealers. That is, unless the customer doesn’t know anything about them. Obviously, dealers and salespersons typically don’t discuss such internal deals with customers. So ask about them, and try to use them to negotiate further price reductions.

Car Smarts: Loyalty or “conquest” discounts are larger for more expensive vehicles. Don’t leave money behind by failing to check these out. Find a dealer that wants your business. It doesn’t hurt to ask about holdbacks for any vehicle.

6. The Financing Trick

This financing trick involves your getting a call after the purchase that your financing wasn’t accepted. Dealers today can know almost instantly if you qualify for financing. But by pulling this trick, they can try to get you to sign you up for a loan with a higher interest rate. That’s because, according to them, they just found out you didn’t qualify for the lower rate. This is a scam.

Car Smarts: Never leave the showroom without signed contracts that spell out every detail and with every blank filled in.

7. The Rollover Trick

It’s tempting to trade up to a more expensive car even before you’ve finished paying off the car you’re currently driving. Some car buyers roll over the remaining payments on customer’s current vehicle into a new car loan or lease. The trick? You’ll end up owing more on the second car than it’s worth. The term for this is often called being “upside down” on the new vehicle. If your new car gets totaled in an accident or if you decide down the road to trade it in, you’ll end up covering the remaining amount of the loan anyway.

Car Smarts: Don’t roll over an old car loan into a new one.

8. The Balloon Trick

Some dealers will encourage you to purchase a car for unrealistically low monthly payments. This sounds good on the surface. But it leaves you with a large “balloon payment,” or lump sum larger than your monthly payment, at the end of the loan period.

Car Smarts: Look out for deals involving a balloon payment. Understand that your financial situation may change by the time the balloon payment comes due. You still have to make that large payment at the end even if your financial situation has changed.

9. Bait and Switch Trick

The bait and switch trick is when you are looking for one car and the dealer manages to get you behind the wheel of a different one. They use this strategy to convince you drive a car available on the lot rather than something they may need to order. Typically, they also try to get you in to a more expensive ride.

Car Smarts: Do your homework and know what you can afford. Go to another dealer that does have the car you want in inventory.

10. Contract Tricks

Contract tricks are clauses tucked into the “fine print” you might easily miss and likely won’t even read. Tricks like these might also come in the form of changes to the loan term, add-ons that you never agreed to or other services that can lead to significant costs.

Car Smarts: Read over the contract carefully. Ask about all charges and make sure the terms are clear to both you and the dealer. Always keep a copy of the contract.

The bottom line: Avoid those Top 10 Car Dealer tricks

Buying a car really should be a positive experience. If you find a car dealer attempting to trick you, just walk away.

Don’t overpay for your vehicle. Knowledge is power. So make sure to save today’s video to view around the time of your next purchase to ensure you do not get tricked. Remember: What the big prints gives, the small print takes away.

There is so much more to discuss on this. Share your comments below and let’s start the conversation.


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Lauren Fix

Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news and safety issues.