Dealers are very good at what they do - getting you to buy whatever they have in stock, right now. Some resort to tricks to maximize profit along the way, and that’s what I want to teach you about. Here are the top 10 dealer tricks to watch out for while you’re car shopping :

  1. High Demand - Some cars are in higher demand than others - that’s a fact. But, some dealers will act as though every one of their cars is the hottest vehicle on the market, and if you don’t pay what they want, someone else will. They’ll also pull the “if you don’t buy it now, it’ll be gone when you come back” trick. Yes, this could happen - but you shouldn’t let that force your hand.
  2. Come back and sign, your signature didn’t match. - If you financed with the dealer and you get this phone call, watch out! The dealer could be changing things on the contract so that you end up paying more money than you agreed to. Whether it’s the price of the car, value of your trade, interest rate, or # of payments, you need to match every number to your copy of the contract.
  3. Straw purchase. - If you have shaky credit and need a cosigner, you need to watch out for a straw purchase.  Generally, if you have a cosigner on your loan, both you and your cosigner will get “credit” for your on-time payments.  However, some dealers will end up taking you off the note altogether - which means the car is only in your cosigner’s name.  The worst part is that in most states it’s illegal to purchase car insurance for a car that isn’t in your name!
  4. Required Warranty - Some dealers will say that you must buy a warranty to get financed - the lender requires it. I’ve worked in the car business for many years, and I’ve worked with a ton of different lenders. No lender will ever require that you purchase an extended warranty to be approved for financing. Not a single one. Whether you get a warranty or not should be up to you - it is not required.
  5. We’ll pay off your loan no matter how much you owe - This message is all over the radio, TV, and even that funny black and white paper that my parents used to read. Yes, any dealer will pay off your loan, even if you’re upside down. But the amount that you were upside down doesn’t go away - it gets added to the price of the car you’re buying. The dealer isn’t doing you any favors by paying off your negative equity.
  6. Lie about your credit - This one is particularly devious. Some dealers will lie to less-informed consumers, and indicate that their credit is worse than it really is. Since the customer thinks their credit isn’t as good, they’re more willing to pay a higher interest rate. This just adds up to more dealer profit.
  7. Switch to a lease - This isn’t as common today as it once was, but it still happens. At the last minute, the dealer will switch from a purchase to a lease. Since you agreed to the higher purchase payments, you’ll end up paying those same payments on a lease. And, of course, the vehicle goes back after the lease is up. You end up with high payments and no vehicle at the end - ouch.
  8. Extend the term - You may think you agreed to a 60 month purchase, but the dealer got sneaky at the end and changed it to 72 months. Or even worse - 84 or 96 months. Imagine paying on a car for 8 years - that’s insane! And it’s insanely profitable for the dealer.
  9. Mistake on Contract - Happens all the time. The $21,000 that you thought you were paying for your car magically turns into $22,000 on the final contract. If you’re not careful, then you’ll sign up at an additional thousand dollars - pure profit for the dealer, and painful for you.