Undercoating, car alarms, dealer markup… is there any wonder that car dealers are generally considered to be among the least trustworthy of all professions – just above Member of Congress? It’s been a while since I bought a car from a dealership, the last one being a couple of years back from a hole-in-the-wall used lot. That experience was actually quite painless, and I never felt like the shop was trying to put anything over on me.
That’s not always the case however, and in fact from Used Cars to Cadillac Man to Fargo, the unscrupulous car dealer has been a robust trope in Hollywood fare. That’s pretty much because there’s a lot of history to substantiate it. It seems like everybody’s trying to grab as much as they can – whether it be meaningless fees, or unnecessary add-ons – and it’s up to us to keep from getting screwed. Caveat Emptor!
When it comes to buying a car – either new or used – there are a bunch of standard ploys that some dealers use to pry more from your wallet, and today I want to hear your stories of those that have tried. I also want to know what you think is the worst of those. What in your opinion, is the biggest car sale scam?
Image: Earl Stewart On Cars
Hooniverse Asks: What's the Biggest Car Sale Scam?
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It’s a small cost, but a useless one – locking lug nuts. My wife’s old Hyundai Accent had them, for the little 14″ alloys – ain’t nobody stealing those.
Compounding it, you need to leave the key in the car at all times, lest you get a flat tire. So, if a thief wants them badly enough, the lock they need is in the car. Barring that, some JB weld and a set of disposable nuts later, they should still be able to get them off.-
I had those my mt Bullitt… lost the key. Kept me from swapping to race rubber and missed the event. Had to take it to the dealer to get them to “spin” them off.
I learned that pounding on a too-small socket would work. Little too late…-
Love the avatar!
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My dealer installed those on every vehicle they got in, because they had a problem with wheel theft. Of course, as you now “benefit” from the wheel locks, they gladly pass the cost along to you. I think it was $10, and if it causes a thief 1/2 second pause, then I suppose I’m OK with that. (they are 20″ factory wheels on an F150)
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The last car I bought new had wheel locks installed, and they tried to charge me $120 for them. I pulled up the identical versions on my phone on Amazon and explained why I didn’t feel it was necessary for me to pay a 600% markup for the convenience and that I would take them off myself if they insisted on that being their price.
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Yup, that’s the big thing – it’s a $10-20 item that dealers will use to extract another hundred in profit from you.
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I took my Taurus in to my usual shop to get new brakes. Got a call about an hour later asking for the key to the wheel locks. I told them it was in the glove compartment. He explained that yes, there was a key in the car, but it did not fit the locks on the car. Oops – key must have gotten switched when the new tires were installed shortly before I bought the car. Which means at least one other car was running around with the wrong key. My car no longer has wheel locks, just simple lug nuts.
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People claiming their $2,000 pile o’ crap cost less than $500.
On the flip side of that, the time I forwarded an ad for a $450 running, driving, cosmetically challenged Miata to a site frequented by people with particular interest in sub-$500 cars, members of that forum called ME the scammer for daring to suggest such a car existed. As it turned out, the car was ultimately purchased by somebody I know, and I have seen it street-driven.-
In my defense, after the Metro was hit I figured it was worth whatever the insurance company decided, which turned out to be only its scrap value.
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Wasn’t that a harsh underestimate? I know a guy in Germany whose pristine Volvo 960 was damaged in a flood. He is rebuilding it with the 11000€ the insurance company paid for the damage. In the market place, it is possible to get that kind of money, but you’ll have to wait for the right buyer.
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It was a bit more complicated than that, in that it’s an incredibly rare car in the US which nonetheless has next to no monetary value as a collectible either here or in the UK. They agreed it had been worth something before the damage, but concluded that the damage although in some sense minor was still enough to consider the car totalled and of only scrap value at that point.
They were entirely sympathetic about paying for repairs up to their estimate of its pre-collision value rather than total it, in recognition of its rarity, but of course they were only on the hook for the repairs arising from the collision. Close inspection turned up other issues (They rust. Who knew?) throughout the car, at which point I decided I didn’t want to put a lot of my own money into what would have been pervasive bodywork and a full paint job. This doesn’t even count the things Spank found when he started working on it, although I had assumed (correctly) there had to be more problems lurking unseen.
When Spank then contacted me about finding an Austin/MG/Rover Metro in the US to race, I figured this was likely to be its best possible fate and certainly an entertaining one. It was better than letting it continue to sit in my driveway while I dithered about what to do.-
I had absolutely no idea this had happened!
I need to start paying attention. -
A guy in an SUV ran a red light and struck the Metro while I was in the middle of completing a “protected” left turn (i.e. on a green arrow). Happily there were plenty of witnesses, as of course he insisted that his light couldn’t possibly have been red. He got a ticket and a claim against his insurance, I got a battle-scarred MG.
http://farm4.staticflickr.com/3690/9630710931_cb656c834d_z.jpg -
Yup, that looks terminal to even the most pro-life members of the Metro fan club.
I remember watching a TV cop show in which the defendant, caught jumping a red light, cited the doppler effect as responsible for his seeing green. Eventually physics determined that he would have had to been doing thousands of times his actual velocity for that to occur.
It transpires that a speeding fine for thousands of miles per hour would have far exceeded the costs he was prosecuted for. -
Like Mr. My-Enemy, I too am only just catching up on the news of the fate of your Metro.
Despite my nostalgia for the MG Metro (red seatbelts! yay) I might side with the insurance company. Having suffered a very low-speed rear ending in a Metro of the same era I can vouch that although the cosmetic repairs were successful the car never felt the same again; it was noticeably looser in feel (don’t laugh — the Metro was not that badly set up in stock form) and most telling that it no longer possessed all of the right-angles it had left Longbridge with was that you could no longer slam any of the doors. My family had to learn the correct sequence of closing each door (hatch-passenger side door – then driver’s door) to make sure that each door fitted into its opening and latched shut. Probably better to give your Metro its moment of Lemons glory than to drive around in a bodged repair.
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$600 tint
$600 pinstripe
$600 Tire pressure monitoring system (the caps that indicate low pressure, then crack and fail)
Asking “How much do you want to spend a month?” then add on a 90 month loan to get it down.
Funny this was posted today.
I bought an extended warranty and tire/wheel insurance for the Focus. I’m about to call can cancel.
I’ve determined I’ll probably trade the car in next year and won’t need the 6yr warranty. My car has been under Ford warranty but the extended warranty is prorated from the day I bought the car. So they get a year’s worth of my cash plus a $50 cancel fee for a service I wouldn’t be using for years.
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Why trade in the Focus so quickly?
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I’m hanging onto it for another year or 2. Just won’t need the extended warranty. I’ve had it a year and just out 6000 miles on it. I’ll get a few $k back on the car that’ll make it easier to trade or sell when the time comes.
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VIN etching. Period. End of discussion. Oh, that’ll only be $299 er, I mean a mere $3 more on your monthly payment. Let me ask you, is 10 cents a day – a mere dime – worth that peace of mind? Am I right? Let me just roll this in and let you sleep peacefully at night, knowing your new investment – your BABY – is protected.
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Yup, I’m pretty sure I can buy an etching pen for slightly less than $299… 😉
It’s actually a tactic. Getting people to talk payment. If a salesman can get you to commit to a payment, they will start with interest rates at 7-8% knowing that if you have good credit, they will steal back dollars when the actual APR is applied. This also sets them up for holding a point on the interest, so there is money in the back end as well. If you have bad credit, they will use that as a way to jack up the rate later, stack a point or two on the deal and make their money there.
For the people with good to great credit, they may throw $4 or $5 back on the payment so you feel good about it going down in cost, but the truth is there is about $1000 – $3000 more in the deal depending on term and price of vehicle then when you were sitting at the salesman’s desk.
Speaking as a guy who did sales (consumer and fleet) and F&I for over 7 years.
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This is one of the reasons I wasn’t a very good business manager/F&I manager back in my dealership days. I honestly had a very hard time pulling these tactics, along with trying to upsell the various back end products (most notably credit life and credit death) that I couldn’t justify purchasing myself – especially hard when our dealership was in a small community and I personally knew a great many of our customers.
Surprisingly (and thankfully) almost all my customers seemed to be truly grateful to have spent the extra money on that “peace of mind” and if they did regret it, they never complained. (although they probably justified that extra in their own mind – people don’t want to admit that they made an unwise financial choice)-
I hate to say it like this because it sets you up as a prejudiced jerk, but I only pulled these tactics when I could. Most people were ‘good’ customers and came in with an idea of what made a deal, how hard to push and then when to sign and be happy. I would make roughly $600 profit on them front end and about $500 back end and they were happy and went on their way in under 90 minutes with their car. I sometimes would throw them a voucher to go up the street to eat while we washed and prepped the car they were taking. To be fair people, $1100 total profit on an average transaction of $32,500 is not a lot. It’s 3%, now you see why service and parts are so important to a dealership (also the used car lot.)
The moment you showed you were a liar, jerk, or just not a nice person (I get it, you’d rather have a root canal than deal with a sales guy) I would use every trick I had to hammer you out and I would, I did my job every day, you did it once every 3-10 years.
It sucks, but being nice and doing a little research, knowing your budget, knowing what the cars sell for and who has the car you are looking for, that all goes a long way.
If you were in the market for a Toyota Camry, go online, find one locally that has the equipment that you want, subtract 6% from the MSRP and go in and buy it. You will be done in 40 minutes, have a decent deal and you will get the car you want at a price you can afford. Shit, they may even throw in a few oil changes.
If you want to spend a day in a dealership, educate yourself about TDA, holdback, financial reserve and financing points/money factors and then convince yourself that the dealer should lose money on the sale and that all of these fees are invalid. You will hate the process, hate the salesman, the manager, and have buyers remorse for every dollar you hand them over “true invoice.” No thanks. My time is worth more than that.
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That’s the one. I wouldn’t hazard a guess on a specific percentage, but the proportion of folks that don’t have a fulsome understanding of basic financing math has to be fairly substantial. Couple that with bad credit and precious little ability to put anything as a down payment other than the ’98 Grand Am that needs a head gasket, and that’s where they will make their money. I do research up front, look around for a few dealers that have the car I want and see what they are selling for on average, and unless you want something unusual, you’ll find someone willing to beat the average and be done with minimal fuss. Yes, they won’t make a huge profit, but they can knock out the sale while they’re locking some poor sap in to an 84 month 17% note on a Fiesta sedan.
$99 down, $99 a month for a new car.
Took me a while to figure this one out.
I’ve seen cars with signs on the windows proclaiming “air bag locks.” I don’t know if these exist or not, or if they have any worthwhile purpose, but it smells to me as if it could be a scam.
Internet surcharge.
I had a salesman who always kept trying to convince me I wanted extra packages I didn’t actually want by constantly casually saying “and you wanted that [package x] right?” through the buying process. It was irritating as can be.
I haven’t yet figured out precisely how the scam works, but I’m suspicious of anyone who has more than one car for sale at a time.
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Ah, so THAT’s how you ended up at the HMV dealership!
Two things come to mind:
1 – Scare tactics. When I traded my Outlook, I did my research and knew a fair trade in was essentially what I owed on it. One dealer offered me $2K less and when I told them I was going to try my luck at Craig’s List he actually tried to scare me with “Be careful, you know someone got shot the other day trying to sell a car on Craig’s List”.
2 – That the salesman actually knows the product he’s selling. – Not really a tactic, but I find that nearly all salesmen know little about the cars they sell. I get it if you’re on a used lot, but they still talk like they know all about them. In some cases, they simply make crap up. The GM Lambda forums were littered with posts by people who bought one to tow and were told by the dealer that they could add a tow package. There’s no such thing as an add on tow package for the Lambdas, it has to be done by the factory or GM won’t rate it to tow more than 2K lbs. I’m not sure of the sales folks are lazy or liars or both.
A ’63 Grand Prix with 8-lugs? Be still, my heart.
The two biggest scams have to be a tie between “Only $99 a month!” or “We’ll give you more for your tradein!” then raise the price of the car.
The super cheap payment scam usually means you’ll get an absolute base-model (we’re talking roll-up windows and no A/C here). Often they only have a couple of these sad examples, then start adding on extras that “won’t cost very much as all!” $200 in add-ons later, you have a fully loaded crappy car. (I’m looking at YOU KIA dealerships!)
The other scam is simple: they’ll give you more for your trade to make you think you’re a great negotiator, then they won’t go down as much as they can on the actual purchase (and hope you don’t notice).
The things I remember from several years ago for any “hot’ new models like first gen Miata and PT Cruiser were the bogus dealer required add-ons like UV paint protection, Scotch Guard fabric protection, special engine oil treatment and other non-essentials. Some dealers were so bold as to just put a “Dealer surcharge” ammount at the bottom of the window sticker. Non negotiable of course.
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During my (very) brief stint as a car salesman back in the late 1970s, we had an item tacked in to the price if every car we sold: “Dealer Cleanup and Special Glaze” @ $149.99 (that’s 1978 dollars). The official explanation was that we essentially detailed every car on the lot. The reality was that the lot boys took the new arrivals to the car wash down the street and got the Carnuba Hot Wax with a standard car wash. Which was closer to $3.00 in actual cost.
$350 “paint protection” – protects your paintwork for a lifetime, never ever needs to be redone!
$350 “leather seat protection” – protects your leather seats for a lifetime, never ever needs to be redone!
I pulled up a dealer who tried this one when I was buying a car not long ago. It was second hand, the previous owner had bought it new from that very dealer with every option in the book – Sunroof, leather seats, a full sized alloy spare (even though it didn’t fit in the tyre well) basically everything down to the little freakin’ rubber strips on the corners of the bumpers – and traded it in on a newer model when it was around two years old.
So when the dealer tried to flog me the paint ‘n’ seat protection I pointed out that they sold the car brand new with every option checked – surely that owner would have also ordered the ‘once in a lifetime’ paint and leather protection as well?
I said thanks but no thanks.
When I bought my first new car, a salesman quoted me a low number on my (rolling junker) trade in. When I asked for more, he rewrote the offer with a higher trade in and a higher selling price. I bought somewhere else, but not because of that.
Buying a new car easily and at a good price is not difficult. Provided you know what you are doing. You have the money. The dealer wants your money. The dealer knows if a buyer walks away the sale will go to a different dealer. Use that to your advantage. You control the process not the dealer. Though the dealer will do everything it can to make you believe they control the process.
How do you control the process? Like this:
Start by pricing the vehicle you want. Take invoice, less holdback, less published incentives. For example a $30,000 vehicle may have an invoice of $27,500, holdback of $600, a customer incentive of $1,000 and a dealer incentive of $900. Your target price starts at $25,000. Note, there are probably additional dealer incentives or bonuses which make the dealer cost even less.
If you have a trade, average the KBB, NADA, and Edmunds values for your trade. Make sure you value at the condition of the vehicle. For example, the average may be $10,000. That is your goal for the trade.
Make sure you check your credit score before you visit the dealership. You can go to a bank or credit union and apply for a car loan. They will run you credit score and offer a loan. You do not need to take the loan. But it is good to know when you visit a dealership. Anything over 740 or so will get the best rate. For example, the bank may offer you 3 percent.
Use your target price, less trade (plus any payoff you may owe on the trade) and the 3 percent to compute a payment.
For example, $25,000 less $10,000 plus a $5,000 pay off on the trade results in a financed amount of $20,000. Note you may want to add sales tax and registration to the $25,000. Use an online loan calculator to compute a monthly payment on that amount. At 3 percent for 60 months, a $20,000 loan will have a payment of $359.
That means every thousand dollars you finance will cost about $17.95. This is useful when negotiating. For example, if you end up negotiating a price of $26,000 instead of $25,000 in this example, you will finance $21,000 and you simply need to add $18 to the $359 to know the new payment, which would be $377 or so.
Having these numbers in mind when you visit a dealership will ensure you do not get scammed.
Other than to allow the dealer an opportunity to beat the interest rate you got from the bank, just say NO to anything the F&I person offers. Everything they offer is overpriced and will most likely not be cost beneficial. Recognize that F&I person is just another sales person, likely the best in the dealership. Everything they say and do is designed for one thing, to get you to buy.
Finally, regardless of what you may read, trying to keep things secret from the sales person is foolish. Dealers negotiate for a living. They will not be fooled by a car buyer. It is better to simply tell the sales person what you want to pay and what you want for your trade. And only negotiate up from your numbers never down from the dealer’s numbers.
Telling the sales person your numbers does a number of things. It gets the sales manager involved. It tells the dealer you have knowledge. It moves the process quickly to the final stages. It also causes the sales person difficulty as they know they cannot sell, they can only facilitate, to a knowledgeable person.
Remember, if you do not get a deal you want there is always another dealer. A couple of years ago, I negotiated a new Civic for my daughter. The first dealer offered a net price (sales price less trade) which I thought was too high. The second dealer offered a net price $1,500 lower than the first. The comical thing was the first dealer later called and offered a price comparable to the net price we got from the second dealer.
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