Auto Purchasing Resources: Negotiating Price & Avoiding Dealer Tricks
When buying a new car, speed is of the essence. This means that it is recommended that you seal the deal in half an hour and not in any time longer than that. The purpose for this tip is to guard against the salesperson and the dealership stretching out the length of the deal to include more things that they can charge you for. It is not uncommon for dealerships to agree to close the deal for a new car in 30 minutes, which is why you should be firm in your demands.
If you have an offer on the table, you must not give an inch when dealing with a car salesperson. Justify the offer by informing the salesperson of how you arrived at your offer price, and be sure to remind her about the fact that the dealership will be profiting from your purchase anyway. This profit comes in the form of not only the purchase itself, but any future repairs and warranty buys. The salesperson will likely contest you, but you have to stand firm since there are other dealerships that you can try.
The key to successful car negotiations has to do with being prepared. Being prepared means that, above all else, you have to go to the dealership knowing how to check the numbers on your car payment calculations. You may also bring with you a financial calculator that features loan calculation functions. Other preparations include never going to a dealership on an empty stomach, being clean, and having rested appropriately. All these pieces of advice ensure that you can think better and present a more favorable image to the salesperson.
Take a friend or acquaintance with you to the car dealership. Doing so helps psychologically because the car salesperson has to persuade two individuals to accept their offer and their arguments. The purpose of the friend or acquaintance is to basically be the Devil’s Advocate, always second-guessing what the salesperson proposes and even trying to talk you out of any deals. The overall effect of this is to force the salesperson to be defensive and always to react to a barrage of comments from your friend or acquaintance that threatens the sale.
Beware of misconceptions regarding the supposed three-day-law, which pertains to buyer’s remorse. Some people wrongly assume that such a law exists, which allows them to get out of a car deal they entered into because of the alleged three-day grace period. No such law exists for cars, and the misconception may be because said people are thinking of laws that apply to health clubs. Instead, you are advised to do airtight research before buying a car, so that you get the correct deal the first time.
Common Dealer Tricks & How to Avoid Them
The Credit Scare
The Credit Scare car dealer trick pertains to when a car dealer unethically misleads you into believing that your credit score is weaker than it really is. The goal of this scam is to trick shoppers into paying a higher interest rate that they have to. Normally, car buyers will only have to worry about their credit if they are late on paying their bills. An unscrupulous car dealer will not care what the true facts are about a purchaser’s credit.
Avoiding this car dealer trick is easy. It simply boils down to purchasers making certain that they know their actual credit score before they go to a car dealership. All it takes is contacting any one of the three, major credit bureaus—Trans Union, Equifax or Experian—and asking for a copy of a personal credit report. A small fee is usually demanded.
The Too-Good-To-Be-True Payment Plan
This trick that relates to monthly car payments relies on subterfuge. The car dealer will entice shoppers into thinking that they are able to afford monthly payments of their dream car at what would be viewed as relatively low prices. Purchasers should look at such offers with a skeptical eye because the car dealer likely is using questionable tactics to be able to offer such a plan. For example, the car dealer may stretch out the terms of the loan, or she may factor in a big down payment.
Avoiding this car dealer scam requires one thing. Shoppers simply should rely on figuring out the total price of the car rather than centering on the monthly payments. Shoppers ought to concentrate on establishing a definite amount of money that they can afford to pay for the vehicle. They should do this instead of concentrating on how much they are able to afford in monthly car payments.
The Sticker Price Scam
The sticker price scam involves an overreliance on the price of the car that shoppers see on its window. This sticker price is known as the manufacturer’s suggested retail price, or the MSRP. This price is immaterial because the more vital price to determine is actually the invoice price. The invoice price is how much money the car dealership paid for the vehicle.
Avoid this scam by finding out what the invoice price is. It is to a car shopper’s advantage to negotiate up from the invoice price rather than talk down the car dealer from the MSRP. Determine what the real selling price of the vehicle is by consulting some websites that feature information on the actual selling price of cars. Remember that really popular vehicles will actually sell for the sticker price.
The Cash Incentive Cover-up
The Cash Incentive Cover-up is a car dealer trick that applies to something called holdback. Holdback is a term used to denote cash incentives that manufacturers at times present to car dealers. These cash incentives are meant to entice dealers into pushing car models that are not selling that well. The cover-up relates to the fact that car dealers are never anxious to actually advertise these available cash incentives.
Shoppers can avoid this cover-up by being investigative. Shoppers are recommended to look for any such holdbacks that may apply to the car they are curious about. They should inquire about such cash incentives at the car dealership. It is worth noting that such deals do not always apply to all cars on the lot.
The Insurance Mislead
Car dealers will try to sell shoppers insurance as they are buying a new car. One type of insurance is called gap insurance, which is essentially a way of addressing how much shoppers still owe on their car. Another kind of insurance is called credit life insurance. Credit life insurance is meant to pay the balance of the loan if shoppers die before they are able to pay it themselves.
This car dealer trick is based on questionability. These kinds of insurance that car dealers want to sell shoppers are potentially senseless. Avoid any kind of uncertainty by making sure that you know what each form of insurance entails. Shop around, too, so that you know other options.
The Rollover Rip-off
The Rollover Rip-off relates to trading up to more costly cars. This trade-up happens before people have even fully paid off their current vehicle. This trade-up occurs when people roll over the remaining payment obligations into a new car that they are looking at. This move is risky at best.
The Rollover Rip-off is not illegal, but people who do this will subject themselves to a lot of liability. In a rollover, people will owe more on the new car than it is actually worth. For instance, if the new car is wrecked in an accident, or if it is traded in, people will be on the hook. They will be on the hook by being obligated to write a huge check to address the rest of the loan amount.
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