Navigating Landmines at the Car Dealership

Navigating Landmines Navigating Landmines at the Car Dealershipat the Car Dealership

Marissa Hatch

Terry Malone

Rob Ludlow

Wisdom from a car buying sage…

“First they stick you with the undercoating, rust-proofing, dealer prep... Suddenly you're on your back like a turtle."

-George Castanza, “The Dealership”

Auto Dealer’s Strategy: Lure you Into their World…

1.Catchy Ad Campaigns2.Unbelievable “Deals”

--0% APR--Low Monthly Payments (w/ Trade-in)--Below Dealer Invoice--Accept “All Credit”

3.Give-Aways (vacations, Jazz tickets, etc…)

4.Sympathy Ads (“We aren’t making any money…”)

Car Dealership Profits Stem From…

1) Trade-Ins: The negotiating process for the price of the Trade-In.

2) Car Price: The negotiating process for the price of the new car.

3) Financing: Providing the financing for the car.

4) “Scams”: Scams in the business office after negotiations are done.

Playing the Shell Game…

OR… AMAZING Trade-IN

A Dealer Wants to Make Money throughout the Sales Process…

OUR Goal: Smart Shopping…

For Example… 0% APR

Source: CarBuyingTips.com

Understanding Dealer Sales Tactics…1) Stalking the Prey: (Evaluate you as a Buyer… )

Example: Salesman wants to “get to know you.” Purpose: To gauge your need for financing, your willingness

to accept add-ons, etc. Defense: Keep the conversation on the vehicle. Don't answer

personal questions about your plans for the vehicle, your finances or yourself. Dress presentably.

2) Controlling the Negotiation… Example: Salesman centers conversation on MSRP Purpose: Bring rebates, financing, special options, etc into the

equation to make it appear like he’s giving you a great deal Defense: Focus on your bid over the invoice price.

3) Playing the Waiting Game…(talking w/ “Sales Mgr”) Example: Constantly going to the manager for “consultation” Purpose: Wear you down and see how much you want the car Defense: Stay on the move. Do not sit in a waiting area. Let

them know that you are willing to move to the next dealership.Source: Edmunds.com

Aggressive Dealer Tactics…

4) Applying Guilt: Create a sense of obligation Example: Salesman buys you a soda, spends time with you,

tells you he has a family to support Purpose: Either intimidate you or prey on your emotions so

you’ll agree to a higher price Defense: Don’t feel compelled to buy because a salesman

spends time with you. They're not “losing money on this deal.”

5) Creating a sense of Urgency… Example: This low, low price is good for "today only." Purpose: Get you to commit to the purchase today Defense: Keep in mind that the car-buying process is highly

competitive. Chances are, you can get the same deal tomorrow or from a different dealership.

Source: Edmunds.com

Top 10 Car Dealer Scams Of 2002

1) VIN # Window Etching Scam2) Financing Fell Through Scam (Spot Delivery Scam)3) “Lie to the Customer about their Credit Score” Scam 4) The "Forced Warranty" Scam5) The "Dealer Prep" Scam6) "Additional Dealer Markup (ADM)" Scam7) “We’ll Pay off Your Loan No Matter How Much You

Still Owe!!”8) The Previously Wrecked Used Car, Sold “As Is” Scam9) The “Your Bank Bounces Checks” Scam10) The Forced Credit Application Scam

Source: Carbuyingtips.com

The #1 Dealer Scam of 2002

1) VIN # Window Etching Scam… Dealers slip in a $500 fee for window etching, saying that you won't get the loan without it, as "the bank requires it".

How to Overcome… You can order the same do it yourself kit used by car dealers online from CarEtch.com for $29. Some dealers may tell you the VIN etch was free, yet they still padded your monthly payment with the fee. REFUSE TO BUY A CAR THAT ALREADY HAS THIS DONE!


http://www.caretch.com/cgi-bin/affiliates/clickthru.cgi?id=jlo9012


4) The "Forced Warranty" Scam… You're in the business office of dealership, ready to sign the papers when the Finance Manager says you MUST buy a $2000 extended warranty "because the bank requires it, or you won't get the loan".

How to Overcome… Have them to put it in writing that the warranty "is required to be approved for your loan", so you can show it to your State Attorney to get their opinion of its validity. Watch how quick they back off. BE PREPARED TO WALK IF NECESSARY!



5) The "Dealer Prep" Scam …The dealer tries to convince you that a team of “NASA experts” performed a 3-day 15,000-point check of your car. Dealer prep “covers their cost” of removing plastic from the seats, vacuuming, adding fluids, and preparing it for sale. Total time: 2 hours max.

How to Overcome… THIS COST IS COVERED BY THE

FACTORY! Often it's permanently printed on the buyer's order to make you think it's mandatory, but many people make the dealer remove it by adding a credit on the next line. So if you see a $500 dealer prep on the form, have them add a $500 credit. If they won't budge you need to decide how bad you want that car.



5) The Forced Credit Application Scam …They tell you:

1) "State law requires you to fill out a credit application."2) "Everyone that buys a car through this dealer fills out a credit

application."3) "It's company policy."

How to Overcome… Never give out your Social Security

Number or sign any “application.” Every time someone pulls your credit report your score decreases by 5-10 points! Also, arrange financing before coming to dealer and tell them that a credit application will not be necessary because you are a CASH BUYER.


Empowering the Consumer1) Fall in love with a Price, not a particular car2) Never Buy a Car in 1 day3) Be willing to “walk away” at any time4) Purchase a car at the end of the month (or year!)5) Guard your Information: Don’t tell salesman about

trade-in or monthly pmt info until end6) SEARCH for hidden payments7) Know what you want (don’t deviate & add upgrades)8) Never sign anything before finalizing the deal…9) Secure financing before negotiation (don’t rely on

dealer financing)10) Beware of Extra expenses—have dealer remove ALL

optional items (e.g. insurance, extended warranty, paint sealant)

Documents

Navigating Landmines at the Car Dealership