THE INS AND OUTS OF CAR DEALERS
By Carl O’Reilly
The following will give you some insight into the ins-and-outs of new
car dealerships. Remember, the more you know, the more you’ll save and
the better your chances of finding a dealer that will treat you right
beyond the initial sale.
A GOOD NEW CAR DEALER
The most important factor is to buy from a dealer that has a reputation
for doing good warranty work. Yes, that’s right – warranty work. Of
course you’ll also want to find a dealer who’ll give you the best deal.
However, it’s the dealer that will take care of you if things go wrong
with the vehicle. Ask friends who have purchased from a dealer you are
considering or better, check the dealer’s CSI rating by calling the
manufacturer (check your phone book or the web for the number of the
local manufacturer’s office).
WILL YOU ENCOUNTER AT A NEW CAR DEALERSHIP?
The Salesman – this person is trained to psychologically understand
the potential buyer, get into their mindset, find out what they really
want, and make a sale today. They are extremely motivated and will do
almost anything to sell you a vehicle and maximize their profit. When
dealing with a salesman, always make sure you are the one commanding
the conversation. Don’t let yourself be manipulated. Don’t ever let
the salesman know that you’re “in love” with the vehicle.
Stay relaxed and if something does not seem right, it probably isn’t
– leave and think about the situation.
Manager – this person will step in if the salesman is not able to get
enough for the vehicle or can’t close the sale. Watch out! Please know
that this person used to be a salesman but was so good, he was promoted
to sales manager. Stick to your guns and don’t back down.
Manager – once a deal is made, the next step is to fill out the paperwork.
The business manager is the one who does this. OK, suppose you just
negotiated a great price… you’re happy and thinking all you have to
do now is go through the paperwork. The business manager invites you
into his air conditioned office, offers you a cup of coffee, and congratulates
you on your new purchase. You think you’re home free but you’re not;
don’t get too comfortable because this person’s job is to add on extras
to increase the dealer’s profit. Things like paint sealant, fabric guard,
rustproofing, an alarm system, a service contract, and other overpriced
items. He’ll probably say something like, “we can install this
gizmo for you right now and it will only increase your monthly payment
by a few dollars… you won’t even notice that”. Don’t cave in!
You can always find that gizmo for a much lower price at a specialty
shop that deals in that type of equipment (for example – car stereos,
alarm systems, etc.).
TO AVOID NEW CAR DEALER FINANCING
Seven out of ten people who buy a new vehicle will finance it through
the dealer. Does this mean that dealer financing is a good deal? Not
at all. What it really means is that dealers are experts at persuasion
– especially when it comes to financing. If you’re a low risk (ie. have
a good credit rating), dealers can make a bundle. In general, if you
have a good credit history and a steady job, you’ll want to look towards
banks and credit unions for financing since their rates will be less
than what a dealer will offer. On the other hand, if your credit rating
is less than favorable, you may have no choice but to finance through
USED BY NEW CAR SALESMEN
Car salesmen play on the emotional appeal of owning a new vehicle. If
you feel you’re being “swept away”, start to think logically
about the deal the salesman is offering you. Some salesmen try to be
your friend. Never forget that the salesman is only there to make money.
New car dealers make a good profit from trade-ins. Always make sure
you know the value of your used vehicle before you accept an offer on
it. Consult Edmund’s Used Car Prices or VMR Used Car Prices (both available
at most bookstores & online). A car salesman may offer you a very
generous amount for your trade-in in order to gain your trust. Watch
out because they will make up for that loss in a higher selling price
of the new vehicle, a higher interest rate, or will try to sell you
numerous options. A car salesman may say his offer is good only today
because it’s a “special” offer; walk away when you hear this.
If a car salesman keeps emphasizing the monthly payment and how “you
can afford it”, be careful, you’re having the wool pulled over
There is no question you will pay more for a used car if you buy from
a used car dealer as opposed to a private party. Some used car dealers
are pros at deception and will do everything possible to jack up the
price of a used vehicle. Further, some used car dealers have even been
known to turn back the odometer so they can ask more for the car. Of
course, not all used car dealers practice illegal tactics. Many are
very honest and run a reputable business. However, you as a consumer
should be aware of what often goes on “behind the scenes”.
If you’re in the market for a used car, look to a private party before
approaching a used car dealer. A used car dealer should be your last