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Old 10-30-2008, 10:06 AM   #1
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"7 ways dealers make you pay extra"

A good article with some information on what to watch out for at dealers. A few of these really sounded familiar from my own car buying experiences. Especially the dealer adding a bunch of sh*t you don't need to make the price higher. Like the BMW i looked at that was priced at about 37k. After all the BS the dealer added it was 43k.

http://autos.yahoo.com/consumerrepor...NwYXktZXh0cmE-


Your goal is to get the best car at the best price. The dealers goal should be to help you do this, but too often its simply to make as much profit as they can. As a smart shopper, you need to know the common strategies that dealerships use to pad their bottom line--from tricky negotiating tactics to trying to sell you unnecessary extras--and how to avoid playing their game. Consumer Reports auto-test staff, which buys more than 50 vehicles a year, has had hundreds of dealership experiences. Following are some of the most common things you could encounter and CRs advice on how to avoid falling prey to them.


1 Mixing Negotiations

Mixing negotiations. Salespeople like to combine the vehicle price, trade-in, and/or financing negotiation, often asking you what you can afford to pay per month. This gives them more latitude to provide a favorable figure in one area while inflating figures in other areas. In the end, this could cost you more overall.

Avoid this trap by negotiating one thing at a time, starting with the price of the car. Approach this as if you were paying cash, with no trade-in. To get the best deal, you should go in with a starting price thats based not on the vehicles sticker price but on how much the dealer paid for it. The dealer invoice price is commonly available on Web sites and in pricing guides, but that isnt necessarily what the dealer paid. Behind-the-scenes bonuses, such as dealer incentives and holdbacks, give the dealer more profit margin--sometimes thousands of dollars--which gives you more room to haggle. To help, Consumer Reports New Car Price Reports (available via ConsumerReports.org) includes the CR Bottom Line Price, which is the dealer invoice minus any incentives, holdbacks, or rebates. A reasonable starting price is 4 to 8 percent over the CR Bottom Line Price, depending on how much demand there is for the model.

Make it clear to the salesperson that you want the lowest possible markup over your starting price, and that youll visit other dealerships selling the same vehicle and will buy from the one with the best price.

Once youve settled on a price, discuss financing and any trade-in separately. This makes it easier to get the best deal at every step of the transaction.


2 0 down, 0 interest, 0 payments for 1 year

0 down, 0 interest, 0 payments for one year. This may sound good, but there are downsides that can cost you money. After the first year, you still owe all the monthly payments youve delayed, often at a higher-than-necessary interest rate. In short, you end up owing much more than the sticker price on a vehicle that is now a used car.

Consider this kind of deal carefully. No down payment, for instance, means youll have to finance more, which makes the monthly payments higher and increases the amount you pay in interest over the life of the loan. Be sure you know what the interest rate will be after the first year, and compare with rates that are currently available. Keep in mind that many buyers dont qualify for zero-percent loans and other low rates. Knowing the current rates can also help you avoid being talked into a rate thats higher than what you could get elsewhere.


3 The leasing game

The leasing game. Many leasing customers assume that the monthly payment the salesperson quotes is a nonnegotiable figure. Thats not true. The figure is often based on a vehicles sticker price with no discount, and can be negotiated just as if you were buying the car. In fact, to keep the transaction simple, you can negotiate the vehicle price before mentioning that you want to lease.

Other negotiable lease items include the down payment, annual mileage limit, and purchase-option price. Just as when buying, you can have dealers compete against each other, giving your business to the one that offers you the best deal.


4 Financing and your credit score

Financing and your credit score. Dealers like to arrange the financing for your vehicle because it gives them another source of profit. But the interest rate they offer may be higher than you could get elsewhere. Dont make financing a purchase-time decision. Before visiting the dealership, make sure you know how youll pay for the vehicle. Call ahead to find out what the dealers rate is, and compare it with what you could get from banks, credit unions, or other lending institutions. If you are preapproved for a loan, you can keep the financial arrangements out of the negotiations.

Remember that your credit score will affect what interest rate youre offered, so its good to know it in advance. Ideally, check your credit score a couple months before buying the car so that you have time to correct any errors in your report.

Knowing your credit score can also protect you if a disreputable dealer tries to give you a higher interest rate than you deserve. Any score over 700 should ensure you the lowest rates. A report with a credit score costs $15 or less at each of the major credit bureaus: Equifax, www.equifax.com, 800-685-1111; Experian, www.experian.com, 888-397-3742; and TransUnion, www.transunion.com, 800-888-4213.


5 Loading on the options

Loading on the options. Salespeople will sometimes try to make up for a low price on a vehicle by talking you into a lot of optional equipment. Do your homework, so you know what options you want and which you can live without. Many options are available separately, but others can only be bought as part of a package. Consider these carefully. Option packages can make you pay for features you dont need to get a few you want. Its best to choose a vehicle trim level that gives you most of the options you want, then add other options separately. If a model doesnt have the features at the price you want, consider another.

Remember that you can negotiate the price of options. Various Web sites and Consumer Reports New Car Price Reports give you dealer invoice price for all available options.


6 Extras you don't need

Extras you dont need. Another profit source for dealers is extras such as rustproofing, fabric protection, paint sealant, and etching your Vehicle Identification Number (VIN) on windows to deter thieves. Sometimes, these types of charges will simply appear on your bill of sale without anyone having mentioned them to you. Dont waste your money. What could cost the dealer about $90 can cost you $1,000 or more.

Vehicle bodies are already treated to protect against rust. Upholstery is typically treated at the factory, or you can do it yourself with a can of spray-on fabric protectant. Paint sealants and waxes are available for under $15 at any auto-parts store or supermarket. Some states do require dealers to offer VIN etching, but none require that you buy it from them. If you want VIN etching, you can do it yourself with a $25 kit.

Dealer prep fees--such as checking tire pressure--should be included in the purchase price, not listed as extras. If these items are on your bill of sale, refuse to pay for them.


7 The question of extended warranties

The question of extended warranties. At some point in the buying process, the dealerships financing manager will try to sell you an extended warranty, which can cost hundreds of dollars. Consumer Reports does not recommend buying an extended warranty unless you plan on keeping a trouble-prone vehicle for an extended time after the original warranty runs out. Most manufacturer warranties are sufficient, with bumper-to-bumper coverage of at least three years or 36,000 miles and powertrain coverage thats often longer. If you want an extended warranty, ones offered by the auto manufacturer are typically better than those offered by third-party companies.

Some disreputable dealers may tell you that you must buy an extended warranty because the bank requires it. In fact, lenders typically dont require it, and making you pay for one under these pretenses is illegal in some states.
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Old 10-30-2008, 11:45 AM   #2
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excellent post.
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Old 10-30-2008, 01:27 PM   #3
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Good info, THX.
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Old 10-30-2008, 02:05 PM   #4
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Thats helps alot, Thanks!
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Old 10-30-2008, 02:33 PM   #5
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Old 01-15-2009, 01:03 PM   #6
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Hopefully this article should be written about ALL businesses and not just the auto industry. How would it work when other industries worked and made little or no money because of articles like this? It would be nice to go into a restaurant and get the filet mignon for the price of a burger, or lobster for the price of a fish stick. God forbid the dealer makes a little money. No wonder the auto industry is in trouble. Profit is NOT a dirty word.

In fact, the article is saying that shoppers are stupid and can't make decisions on their own. If you can't understand clearly how to buy a car, stay out of the showroom or have a lawyer read all of the fine print before you sign it.
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Old 01-15-2009, 01:16 PM   #7
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Originally Posted by RPO_Z28 View Post
Hopefully this article should be written about ALL businesses and not just the auto industry. How would it work when other industries worked and made little or no money because of articles like this? It would be nice to go into a restaurant and get the filet mignon for the price of a burger, or lobster for the price of a fish stick. God forbid the dealer makes a little money. No wonder the auto industry is in trouble. Profit is NOT a dirty word.

In fact, the article is saying that shoppers are stupid and can't make decisions on their own. If you can't understand clearly how to buy a car, stay out of the showroom or have a lawyer read all of the fine print before you sign it.
Sorry, but I really like you buddy...






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Old 01-15-2009, 01:18 PM   #8
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I am married so don't even think it!
Keep on selling and making money.
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Old 01-15-2009, 04:33 PM   #9
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Thanks for that!! Awesome info!!!
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Old 01-15-2009, 04:40 PM   #10
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Thanks for that!! Awesome info!!!
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Old 01-15-2009, 06:00 PM   #11
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This is ground control to MajorTom, Commencing countdown, engines on. Sorry I couldn't resist. Still rockin' there in STL with KSHE-95 and Sweetmeat?

Very good info. that all informed buyers should know. Thanks!
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Old 01-15-2009, 06:36 PM   #12
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Originally Posted by RPO_Z28 View Post
Hopefully this article should be written about ALL businesses and not just the auto industry. How would it work when other industries worked and made little or no money because of articles like this? It would be nice to go into a restaurant and get the filet mignon for the price of a burger, or lobster for the price of a fish stick. God forbid the dealer makes a little money. No wonder the auto industry is in trouble. Profit is NOT a dirty word.

In fact, the article is saying that shoppers are stupid and can't make decisions on their own. If you can't understand clearly how to buy a car, stay out of the showroom or have a lawyer read all of the fine print before you sign it.
I agree with you 100%. I don't believe the article is necessarily saying people are stupid and incapable of making decisions. Most people are simply lazy, particularly when it comes to any activity that requires thinking. This article and others like it are not even close to the source of any problems with auto manufacturers or dealerships though, it's simply one of the symptoms of a poorly educated population.
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Old 01-15-2009, 06:55 PM   #13
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I agree with you 100%. I don't believe the article is necessarily saying people are stupid and incapable of making decisions. Most people are simply lazy, particularly when it comes to any activity that requires thinking. This article and others like it are not even close to the source of any problems with auto manufacturers or dealerships though, it's simply one of the symptoms of a poorly educated population.
This article has good advice, and the theme is that people need to take the initiative and make things happen for themselves. Without this article, a lot of would-be ignoramuses can go into dealerships with some knowledge of the process that costs them more than the need to spend. This is a great find.
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Old 01-15-2009, 07:48 PM   #14
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It's good advice but it's all stuff that anyone paying attention should easily be able to see if it's a good or bad deal, with the possible exception of number six. Personally I doubt many people that actually read and remember the stuff from that article when they buy a car (or anything else) were likely to fall for any of those tricks to begin with.

1 - Common sales trick for cars and other purchases with negotiable prices. It's also one of those sneaky tricks that gives car sales the bad rep it has IMO, but anyone spending tens of thousands of dollars should be aware of what they are doing and calculate that the sellers idea of a bargain isn't necessarily the same as the buyers idea of a bargain.

2 - Typical credit trick, falling for it is pure shortsighted greed on the part of the buyer. This one is even easier to spot, just run the numbers and see if this is a good or bad deal.

3 - Again this shouldn't happen to anyone (except maybe at Saturn ), it doesn't take much logic or research to realize that leases are just as negotiable as purchases. This isn't even the dealer doing something at all bad, they are normally asking for what amounts to list price and the customer is happily accepting.

4 - Again common sense that anyone making a large purchase does if they aren't being lazy.

5 - This is just standard advice for any purchase, pay attention to what you are buying. Salesmen like to sell you stuff you don't need so pay a little attention.

6 - The exact nature of this one varies dealer to dealer, some places simply offer straight forward dealer options (normally very overpriced but not always). Some other dealers try to pressure or sneak this crap in after the negotations are completed. I think this can be the slimiest trick on the list, the way some dealers do it they should be tossed in jail for fraud IMO. They are the minority but there's enough of them that almost everyone knows someone that's been tricked by some variation of this.

7 - Another one that's not car specific, always be careful of extended warranties as they are always designed to make the seller money and can have large seller markups. The only time I see a problem on this is when the dealer represents an aftermarket warranty as an extended factory warranty. This is something that somone paying attention should notice but it's still a nasty trick that should never be pulled by a business worth buying from.
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