Some Car Dealer Scams Still Remain

Are you thinking of buying a car but hesitant to approach your local car dealer because you are not sure about the processes of buying a car as well as wary of possible dealership scams?

Do you feel that your knowledge about cars and getting great deals is not good enough and you want to learn more about this matter? Then this chapter will enhance your understanding about dealership scams.

The car dealer and his trade

To have a proper understanding of car dealership scams, you must first have an idea of the car dealers themselves and how they go about their trade selling cars.

First of all, the car dealer will try and avoid giving you a price quote. This is because the tendency of the buyer would be to go to another dealer and the other one will probably offer a lower price thus, the first dealer loses the buyer to the second dealer.

To increase their chances of getting you to buy their car, they will try to make you commit to them before they give you the final selling price.

On your part, you can do two things: maneuver the dealer into telling you the price quotation or negotiate the terms of the deal with them. If you decided to negotiate with the dealer then be always on the lookout for the following tricks:

Low Balling

This is one of the tricks most commonly done by dealers. They will try to convince the buyer that they can provide the lowest possible price for the car thereby prompting the buyer to start negotiations with the dealer. The salesman will probably tell you that you can get the car that you want for a lesser amount but when you are about to enter negotiations, it turns out that you were not promised a lower price after all. It is just an empty promise.

Best Price Matching

When you tell the dealer that you will try to look around and check other car dealerships, the salesman will ask you to return when you get the best possible price and he will offer to match it. By this time, you will probably be too tired and sick of looking around. Chances are that you will take their offer.

Trade In Scam

When you have already bought the car, the car salesman will try to contact you before your new car is delivered and tell you that the initial pricing of the car was $500 lower and would like to collect the balance from you. If you fall for this, he will get an extra $500 at your expense.

Spraying

What the dealer will do is to pursue you relentlessly until you give up and buy the car. On the other hand, if you decided to buy from another dealer, he will call you and tell you that he could have given you a lower price thus making you upset. To avoid this, you should not hand out your contact number. Some people even give wrong contact numbers just to evade very irritating car dealers.

Puppy Dog Trick

The dealer will allow you to take the car for an overnight or for a whole day, his aim is for you to fall for the car and buy it. This falls in line with the “Yoyo scam in the next chapter.

Immediate Sale

The dealer will give you a very attractive price but he will also make you believe that this deal can only be made until the end of the day. This will cause you to think too much and in the end, make the mistake of buying the car without checking what other car dealers have to offer.

Extra Accessories

The dealer will offer to give you extras like: car mats, window tinting, and other accessories. This aims to stop you from asking for a lower price because of the perceived “extras” that you will be receiving from the dealer. It will slow down the price negotiations and divert your attention away from the price.

All of us want the best deal available and we abhor the notion that someone will take advantage of us through modis operandi like car dealership scams.

So before going to the local car dealer, you better have a good idea of what he will be talking about.

As they say, only a fool will go to battle unprepared and with no weapons. Your weapon will be knowledge, always remember that.

A Spot Delivery When Car Buying Can Leave A Mark

In the car business a ’spot delivery’ is a common practice. But just like about anything else that involves revenue, sales, and commission, there are those that are unscrupulous around us.

What happens in a ’spot delivery’ is that the buyer agrees to the terms and conditions of the loan and to take delivery ‘on the spot’… even though the financing contract isn’t yet been picked up and actually approved by the bank.

All dealerships have working relationships with various financial institutions that approve (and disapprove)the loan papers.

Sales managers work with and evaluate potential buyers credit reports and credit scores all day long in conjunction with the working relationships that they have with their various lenders. Needless to say there are many business hours that a car dealership is open and doing business that the banks and lenders are not. As such, dealers will make the decision to ’spot deliver’ a car based on the probability that they will be able to get the loan as stated in the contract from one of the lenders.

For those customers with good to excellent credit, this is rarely if ever a problem. The problems occur when someone’s credit is in the gray area. Also, more often than not this usually (but not always) involves a used car purchase.

As you might imagine, under the aforementioned business practice there would be advantages and disadvantages (as well as the opportunity for exploiting). The most prominent advantage is for both sides. For the dealer… obviously the sale. For the consumer who may need transportation, the ability to take delivery ‘on the spot’ and not have to wait for the next available approval such as when a sales takes place after hours or on the weekend.

Again, this all depends on your credit rating and if you are deemed a good risk.

The problems can occur when those who don’t have the best of credit and don’t have the income to overcome the lackluster credit, ultimately don’t get approved for the financing terms that the dealer put them in the car at.

So what happens… first of all all the contracts that I ever dealt with state that the agreement that you are signing up for is contingent upon approval from the lender. In other words, the agreement isn’t binding until the vehicle financing is approved.

If the car financing isn’t approved… the ’spot delivered’ car must be returned or you’ll have to re-sign papers for a less favorable deal.

When a dealer mis-calculates and doesn’t get a car buyer approved for the terms that they put the customer in the car with, it’s not a pleasant situation.

I know that there are unscrupulous dealers out there and this is where the window of opportunity opens for them… but that’s a whole other article and for the purposes of this one, I’m going to just stay with the idea that the dealer got a bit too aggressive thinking they could get the customer approved.

So, when the bad news comes back that none of the lenders will approve the loan ‘as is’, outside of returning the car, the customer will generally have to come up with a larger down payment (this puts the lender at less risk), accept a higher interest rate (which will mean higher payments) or in some cases have to come up with a co-signer of good credit standing.

None of these options are pleasant, and for me as a sales manager weren’t pleasant to have to be the bearer of the news either.

8 Car Buying Tips To Avoid This Situation:

1. First and foremost know what a ’spot delivery’ is (which you should by now) and know what can happen if the dealer can’t get you approved.
2. Check with the Better Business Bureau and/or only visit reputable car dealers.
3. It’s in your best interest to find your own loan rate and terms. If you can, apply for and arrange a loan so you’ll already know what you’re approved for. At the very least, talk with your bank or credit union and see what term and rate you could qualify for… you’ll then be able to compare with the dealer’s offer and get the best car deal possible for your scenario.
4. This is a biggie… especially if your credit is risky… if you finance through the dealer, after signing the papers, simply decline to take a ’spot delivery’ of the car… just tell them you’ll be back to pick up the car once the financing has been dutifully approved.
5. Give yourself a cooling off period. This is a good idea because buying a car can be a long and tiring day… give yourself a chance to get yourself back together after the rush of the car deal.
6. Read everything… ask questions!
7. Keep a record of everything and don’t pay cash.
8. Get it in writing… if you’re going to accept the car buying ’spot delivery’ it is not too much to ask to get in writing that your trade-in WILL be returned to you if the financing should fail… and… if the financing does go through but with different credit terms than you were ’spot delivered’ at… you are free to cancel the deal.

Car Buying Tips - Back End Profit Center

The ‘back end’ of the car deal is essentially all the variables and salesmanship that you are confronted with once you enter the dealer’s F&I (Finance and Insurance) department to sign all the necessary paperwork (and then some).

On the back end of the car deal is where a buyer can really get lost in the numbers and the dealership can score very well on the profit… particularly if the buyer has opted in for letting the dealership arrange for the financing .

And by the way… it’s probably O.K. for you to let the dealer ‘compete’ for your financing. I say compete because I know at this point you’ve done your financing and have a good idea of what you qualify for in a loan, what your credit is, and what your interest rate will be. If you don’t know this or haven’t researched your financing situation… you DO NOT want to have the dealer do this for you! Remember the ‘back end’ is where a dealer can make a lot of money on your car deal.

Bottom line… get yourself pre-approved before you even set foot on a car dealership’s lot.

One aspect of car deals and car buying tips that we’ve not touched on is the element of cash… and more precisely… if you are going to pay cash for the bottom line amount.

We all should be so lucky to even have this as an option. But, if you do, it is probably not in the best interest of you getting the best car deal possible if you tell this to the sales person right up front.

Why you ask…

Remember… we just talked about the back end of the deal and how dealers rely on the back end to make additional money on the whole deal itself. If the dealer / sales manager knows that there is not going to be a back end because you are going to pay cash; then (s)he knows that they are going to have to make their number on the front end of the deal… this means getting them to come off the selling price of the new car or squeeze some additional money out of your trade-in is going to get much tougher.

The same will probably hold true if you’ve been pre-approved for your financing… in essence you’re taking away the ‘back end’ profit for the dealer, so it’s best from a negotiating perspective that you hold those cards close your vest.

Having said this though, there is certainly nothing wrong telling the dealer up front that you would welcome offering the dealership a chance to beat the financing numbers that you’ve already got in your pocket.

Selling cars for dealerships and sales people is a very competitive business and something that you as a consumer can certainly leverage. Many times you may decide on which deal to go for between multiple dealers based simply upon how you were treated at each of the dealerships… whatever the ultimate reason… the numbers you arrive at are greatly determined by your diligence in your research and homework and your patience at the car dealer.

Car Buying Tips - Loose Lips Sink Ships

When it comes to buying a car what you don’t say can be your biggest and best car buying tip.

Feeling a bit lazy and don’t want to read the whole article?

OK… no problem… here’s the most important car buying tip once you’ve got yourself on the dealership car lot… DO NOT talk about or otherwise negotiate based on hitting a monthly payment.

There you go… that’s it. That’s numero uno.

But please read on… there’s more amazing money saving car buying tips.

You know what you want your monthly payment to be… you’ve done your budgeting homework (if you haven’t then get the hell off the car lot).

No body that you come in contact with at a car dealer should have any idea what you want your monthl payment to be… nobody… so don’t even answer that question!

The probabilities are high that the sales people will try to get you to commit to some sort of monthly payment figure. When this happens just politely remind them that the focus is on the price of the car not your monthly payment.

Walking into a car dealership and begining the car buying process is an aniexty filled event for most people. Generally we don’t like confrontation it’s just human nature; and most people regard any type of negotiating process a form of such confrontation… a battle… a struggle over that damn price.

Hello internet… hello www.informationsuperhiway.

Today… the average potential car buyer has the aforementioned at their disposal and as such has a tremendous tool that we of a few years back did not so readily have… information.

So use it.

Don’t go anywhere car shopping until you’ve done your homework. Shop and compare car prices, get a quote, check on your insurance coverage, check your credit, and qualify for a loan… and do it all from the comfort of your favorite chair at your house. Folks… this is powerful stuff you have at your disposal when it comes to getting your best car deal possible!

But even after you’ve taken the time to educate yourself, there are still some things you’ve got know once your on the car lot… things you just shouldn’t say… so let’s take a look.

Stay focused and keep the conversation focused with whoever you talk with on the selling price of the car… do not slide into the murkey waters of monthly payment discussions… do not do it.

Monthly payment’s are a function of several mathematical variables that can be introduced beyond the selling price of the car such as down payment in form of cash - trade - or both, your interest rate, and the length of the loan… so just don’t give the sales person the opportunity to work and swirl these variable around at you trying to hit a monthly payment…. you’ll probably lose track and lose money.

Why is the monthly payment approach from a car dealership such a common tactic?

Ok… shhhhshhhhhh… I’m going to tell you…

(Whispering)… because they can make more money.

So, you may very well hear the approach… “If I can get you in this car for $300 a month….”

If you listen real close to the sales person (or if you missed it have them repeat it)… you’ll note that they don’t say for how many months that $300 per month is going to last. A key element to be sure.

So, if the sales person can get you to commit to that nebulous monthly payment, both the sales person and the dealership now have you on the road to profit city….

If you’ve looked around my website you’ll know about the three basics business areas of a car deal: the price of the car - the financing - the trade in (the trade in may or may not be there but the vast majority of us do trade).

If you’ve just allowed the sales person to pull you into the monthly payment vortex… you’ve just about lost sight of the price of the car (cha-ching) and now you’re about to go work with their finance manager on accomplishing those monthly payments (cha-ching again)… so you’re just about to contribute to the profit margin of the dealer in two of the three areas… ouch!

Is it all just smoke and mirrors from the car dealer?

Let’s talk about that next time… in the mean time take a cruise around my car buying site… it’ll save you some money.