Some Sales Scams
As I’ve said before, there are many ongoing scams that dealerships will throw at you in order to bank some extra money from you. I’ve shown you the most popular, but let’s look at some more.
1. Written contract scam: This is basically when the finance manager sits you down and begins to write himself into frenzy, while quickly throwing numbers at you until you are so confused, you end up paying more than you agreed upon.
This may seem impossible for a person to get away with but believe me; it happens all of the time. The finance manager is counting on you being confused and desperate to get out of there, so assumes you will simply go along with whatever he says. Most of the time, it works.
Avoid it by forcing the guy to slow down, and calculate right along with him to make sure that you are getting a fair deal and that you both come up with the same numbers.
2. Price beating scam: This is when the dealer tells you that they will beat anyone else’s prices or give you $500.
They simply ask you to get the price from another dealer and they’ll beat it. The hard part is that other dealers will not just hand over their information for you to take to someone else.
This deal is almost impossible to get because most dealers sell different makes and models anyway.
Avoid it by not buying into it in the first place.
3. I won’t get paid scam: This is when the dealer tells you that he won’t get paid if you don’t purchase the options package. This is a tug at your heart strings.
To avoid this simply tell them that you refuse to buy something you don’t want just so that they get paid. If it’s that much of a problem they should get another job.
4. No payments until scam: This is when a dealership advertises that you don’t have to pay for 6 months.
Next thing you know, you buy the car and they tell you that it is due for payment in 2 months. Some will not even be applicable at all.
They can claim a typographical error or that the deal was a week ago. It’s an outright lie, and you should get your deposit back.
Avoid this by asking the dealer to put that in writing before you purchase the car and make your deposit by credit card so that you can refute it.
5. The “We’ve Got it” scam: This happens when you call a dealership asking for a specific car make, model and color and are told that they have it.
However, when you get there, you are told that they miraculously sold the only one they had before you arrived. Next they will tell you that they have another car similar to it for only $500 more.
Avoid this by leaving.
6. No Cheaper rate scam: This is when a dealership tells you that you can’t find a cheaper price anywhere else on the market.
Get real!
Of course, if you’ve done your research as I told you before, you already know that the prices don’t change on the value of a car.
Avoid this by simply stating that they must be right, and then leave.
7. The Phone call scam: This is when you have successfully negotiated a car, and the salesman suddenly gets a phone call with an offer for the car that is higher than the price you agreed on.
Then he casually lets you hear him state that he will call the man on the phone right back if you opt out of the deal. Next, he tries to talk you down from your set upon price to compete with the guy on the phone’s offer.
Avoid this by telling the salesman that you will understand if he chooses to take the better offer.
8. Paperwork scam: This generally happens after you have already paid your bank draft for the financing of your car, and the deal has already been set in contract.
Conveniently, the salesman will write down the wrong date on the sales contract.
You are then told that you will have to finance the car through their company for extra fees within 2 days or you will be stuck with a higher financing and interest rates monthly.
To avoid this watch the salesman write your contract and check the dates before you sign them, just to be sure.
9. Factory Holdback scam: Dealerships depend on a buyer’s ignorance so that they can mark up your prices. Holdback is money paid to the dealer for about 2-3% of MSRP.
It is money that is given to the dealer from the factory when the car is sold. This is profit for the dealer for buying the car.
Most dealers will tell you that it costs them money so that they can charge you for it later. Basically, they can get the money twice.
Avoid this by letting the dealer know that you know better and will not pay it.
10. Insurance scam: This is when the dealership tells you that you must get your insurance from them or a company that they work with if you want to avoid paying higher interest rates.
This scam also applies to the dealership forcing you to pay life insurance or extended warranties due to “bad credit.”
Avoid this by leaving. What they are doing is wrong.
11. Turnover scam: This is when the dealership sends over many different salespeople hoping to wear you down and get you to hurry up and buy. This is also called harassment.
Avoid this by threatening to leave if they don’t stop it.
12. Hidden rebates: This is when the dealership advertises that the price of the car is lower than the MSRP.
What you don’t realize is that the fine print says that the prices include rebates. All this means is that the rebate that you were offered doesn’t exist because it was already calculated in the ad.
Avoid this by ignoring it or requesting it in writing that states the rebate is in addition to the price of the car.
13. Deposit scam: This is when the finance manager insists on a deposit before you have signed the purchase contract.
You will be told that the finance manager has to bring in a copy of the contract offer to his boss and he needs a deposit from you just to ensure that the boss will sign off on it.
It’s just to make sure that you are “serious” about getting the car.
Avoid this by refusing to give a deposit before the contract is finished a signed by both parties. Dealers run this scam so that they can keep you there. Tell them that the fact that you made an offer on the car shows that you are serious.
What Kind of Car Buyer Am I?
If you want to save money while you are negotiating you should negotiate from the dealer cost up and not from the MSRP down.
You just need to remember that dealer cost is not the same as the factory invoice.
Some dealerships refuse to haggle over the cost of a car. Once you make your opening offer you should never accept anything higher than that, as far as costs go.
If the dealership that you go to doesn’t haggle, don’t sweat it, some other dealership will.
The reason some dealerships refuse to haggle is because they want to add extra fees to the MSRP. You will need to decide what kind of buyer you are in order to get a negotiating stance.
You do not want to set yourself up as a monthly payment buyer either because that is a guaranteed way for you to get a higher payment fee.
They will offer to take a little bit off of the MSRP. They will then ask you what you are looking to pay each month; this is where the extra money comes in.
Cash buyers are generally asked, “Are willing to pay each month?”
Tell them it doesn’t matter because you are looking for an even division on the cost of the car, not to haggle over the monthly cost.
Tell them that you are looking to haggle over the cost of the car, not the monthly payments. This is often used for cash buyers.
If a finance manager tries to get you to report your payment method before you have decided upon purchasing the car, don’t get sucked into it.
The method of payment doesn’t matter unless you are deciding upon purchasing the car. Finance managers ask so that that they can best decide how to screw you over.
Some dealers will offer you to give you a better deal if you finance your car through them. I can guarantee that this will not be the case.
Of course the worst thing that you could be an impulse buyer.
An impulse buyer is just another word for “victim.” Impulse buyers can often get sucked into the “hot” car of the moment and usually get taken for as much as $10,000. A dealer can see this buyer coming from a mile away.
If a dealer approaches you about the “hot” car tell him that you are not interested because it will not be worth the money next year as the new “hot” car will be out by then.
You don’t want to buy a car that is in demand because it is the easiest way for a dealership to mark up the prices. The MSRP always looks low, but it is the extras and monthly payments that will lose you money.
Remember the resale value of the car doesn’t change no matter how much money you bought the car for. It still depreciates in value from the factory invoice.
Negotiating Tips When Buying a Car
Being a good negotiator doesn’t have to be difficult. Sooner or later everyone has to negotiate with someone if they want to get a good deal on a purchase.
When you are trying to negotiate with a car dealer, you should know that they are very practiced in the art already. You will need to know how to get through their “car speak” in order to be successful.
Since you now know how to calculate your offer and already know what the dealer paid for it, you should get a copy of the paperwork from a friend that recently bought a car, so that you can become familiar with what you will see on your paperwork. They are all generally the same.
If you’ve followed the above mentioned tips, you will also be pre-approved for a loan. The key is for you to get in and out of the dealership as quickly as possible because the salesman will definitely find more loopholes to up your charges if you stay.
Here are a few tips to successful negotiating.
• Remain positive and confident
• Don’t talk down to your opponent
• Show up prepared and ready to counter anything that may come up
• Bring ads from other dealerships with you as an extra weapon
• Finance your loan before you arrive at the dealership so as to avoid paying unnecessary extra fees
• Bring a friend with you for extra support
Something that you should look out for from salesmen is the extra little tricks that you will likely encounter that will try to force or rush into a buying decision.
You have to remember that they are trying to negotiate you into paying more money just as you are trying to negotiate paying less. Here are some of the things that you can expect to hear from them.
1. “These cars are flying off of the lot. It may not be available for the same deal tomorrow”. (Threaten to leave and they will ease up and try to change their strategy)
2. “This deal is only good for today. If you come back tomorrow I can’t guarantee that the deal will be the same”.
3. “I’m an honest man. Look at how many cars I’ve sold this weekend” (This is where he will show you his list of sold cars. If he does this, then tell him that he doesn’t need your money).
4. “I hate to tell you this but I have another offer on the table from a man that is willing to pay more money than this.
I am just waiting for his paperwork to be returned”.
(Tell him that if he promised the car to someone else, you don’t want to step on someone else’s toes and that you should leave then).
5. “To cover the overhead costs, we have paid $13,000 for this car (Just check your paperwork in your folder and prove them wrong).
