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xchrom

(108,903 posts)
Sat Dec 27, 2014, 07:26 AM Dec 2014

It's Car Buying Season: 8 Ways Used Car Dealers Can Swindle You

http://www.alternet.org/economy/8-ways-used-car-dealers-can-swindle-you



1. Heavy pressure. Salespeople's favorite customers are those who seem to be in a big hurry, since they tend to be the ones who do not inspect the car thoroughly or don't negotiate the price. Never go to a dealership acting rushed, even if you need a car immediately, as they'll surely take advantage of it. In fact, while they always say they don’t want to pressure or rush you, used car salespeople typically do because it works to their advantage.

2. Pushing certified pre-owned cars. Used-car dealers say certified pre-owned cars are the next best thing to buying new and they’ve been very popular with budget-conscious drivers who want new-car dependability without paying the new-car price.


3. Mixing negotiations. Most used car shoppers are fixated on the amount they can afford each month in car payments, and salespeople know this. It’s their hope that you will tip your hand what you think an affordable monthly payment will be. Oftentimes, they’ll even ask you what that figure is. Don’t fall into that trap, as a slick salesperson will use that number to pad in as much profit as he can for himself.

4. Obscuring a car’s history. While many new car dealerships that sell used cars offer services such as CarFax or Experian upfront, some independent used car lots are hoping you won’t ask for a vehicle-history report. Often, they’ll try to assure you they know plenty about the history and tell you not to worry. If they continue to try to stall or change the subject, this should send up a red flag, as they may be hiding something such as odometer fraud; flood, fire or accident damage; or evidence the car was once a salvage vehicle. While a clean car-history report doesn’t guarantee that the car you’re interested in won’t have any of these problems, it does a good job of sniffing them out.
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It's Car Buying Season: 8 Ways Used Car Dealers Can Swindle You (Original Post) xchrom Dec 2014 OP
Interesting they didn't list the most common profit making technique pipoman Dec 2014 #1
Well may be... sendero Dec 2014 #2
I actually enjoy buying used cars. SheilaT Dec 2014 #3
Spam deleted by MIR Team zooken Mar 2019 #4
 

pipoman

(16,038 posts)
1. Interesting they didn't list the most common profit making technique
Sat Dec 27, 2014, 09:34 AM
Dec 2014

Trade-in math.

Most used car buyers haven't a clue the actual retail value of the car they are looking at, nor the value of their trade. Bottom line is that one always takes wholesale for their trade in and sometimes well less than wholesale. Some cars are a pita to sell and it's worth it to sell it for wholesale and let the dealer worry about selling it. Other vehicles are incredibly easy to sell outright and could mean a couple thousand dollars difference in the trade. If there isn't a trade one should realize most used cars have between $1k and 5k built into the retail price of the car to make a deal including a trade more appealing.

Example, the dealer pays $5k for a car with a retail NADA value of $7k. The dealer will price the car at $7995, knowing the car will be down the road if someone offers $6200. The customer drives in with a vehicle with a $4k retail value, the dealer decides gas a $2500 wholesale value. The dealer would accept a trade difference of $3700...6200-2500... The salesman comes in telling you the used car is going to be hard to sell, require cleanup, this repair or that. They will then offer $2000 for the used car stating, 'we need to make a little money on your car'. So the initial offer is $7995-2000=5995, or 2200 more than they are actually willing to take. The buyer responds with 'that isn't enough' and the negotiations are on' usually ending up well above the dealer's actual bottom dollar.

This can be handled by knowing the actual value of the car you are buying and trading. Making your deal for a cash purchase without a trade, then throwing in the trade works sometimes. This would be a wholesale/wholesale trade. If the dealer is negotiated to their lowest price, expect wholesale for the trade in. This gives one a better idea what one is actually selling their trade for....might know someone who would pay 1000 more than wholesale....

sendero

(28,552 posts)
2. Well may be...
Sat Dec 27, 2014, 09:35 AM
Dec 2014

... but it is my considered and somewhat informed opinion that new car dealers make used car dealers look like amateurs.

"Actual value" is at the heart of a lot of these issues. How do you determine that? Well, it is a lot easier to do with a used car.

I get amused at these commercials that have popped up for an outfit called "True Car". They claim to be able to tell you what a new car should retail for. But guess where they get their data? You got it, new car dealers. In other words, a totally useless service using probably unverified data from an interested party.

Buyer beware.

 

SheilaT

(23,156 posts)
3. I actually enjoy buying used cars.
Sat Dec 27, 2014, 11:51 AM
Dec 2014

A while back I participated in the purchase of something like 8 or 9 of them in a two and a half year period. Thanks to a combination of cars getting totalled, or someone wanting a replacement car, I got quite good at it. I've even typed up Rules For Buying a Used Car.

Here are some of the basics:

The internet is your friend. Use it.

Use an on-line pricing service (I'm fond of Kelly Blue Book, www.kbb.com) to find out prices. With a used car, I assume that the dealer never has any more than the trade-in value invested in the car. Use that number as your starting point for negotiations. If a particular dealership is charging noticeably more or less than the other places for the same kind of vehicle, something is not quite right.

Price negotiation should be the absolutely last step in the purchase. Know what you can afford and do not go over that amount. That may mean buying a less fancy or less new car than you'd like. Too bad.

Never be desperate and needing to buy the car right now. If your car has died or been totalled, borrow or rent a car to drive to the dealerships. Always behave as if you're not terribly anxious to buy just now.

Be friendly and polite, but maintain a neutral expression. If you're a woman, try not to smile too much. Really squelch that inclination to be smiley and friendly. No matter how much you'd like a particular color car, don't talk about that until very late in the process.

Go to the car lots and dealerships alone. Especially don't go with a spouse. If you're at the point where you're going to let them look at your trade-in, make sure you've brought along a spare key in case they decide to pull the "We've misplaced your key" trick. And then leave because they're unethical.

Trust your instincts. If for any reason you feel uncomfortable, leave. Because I bought so many cars in such a short time I got to be pretty knowledgeable about dealerships and used car lots in the Kansas City area. There was one in particular, a dealership for my own favorite brand of cars, that always made me feel icky, and after a while I stopped going there.

Absolutely do your research. Start out on-line by seeing what's out there in your area. I do this on the Kelly Blue Book site, and since I last bought a car, I see they allow for the kind of search that is most useful, such as body type, fuel type, transmission, and so on. Since I only drive a stick shift, that would have saved me a lot of trouble back when I was doing all that purchasing.

Also, once you've found a vehicle or two you might like at a specific car lot (which is the term I'm going to use to cover dealerships and free-standing used car lots) go to their website and see what else they have, as not everything will show up on the KBB site. A really good lot will make the Carfax report a part of the listing on each vehicle. Look at it. If there's anything you don't quite understand about it, make sure it gets explained to you at some point. If any car lot won't give you the Carfax reports, leave. Do not do business with them.

If you'd rather purchase from an owner, buy a membership in Carfax. Right now you can get a 60 day membership, unlimited reports, for $54.99.

If you're buying from an individual or a free-standing used car lot, you must get the vehicle inspected by a mechanic. It's well worth it. If you're buying from any major manufacturer's dealership, that's probably not necessary. If you think they're that unreliable, shop elsewhere.

If it's at all possible, pay cash. If it's not, buy less car than you can afford, never have a loan that has you owing more than the car is worth, because if you have the misfortune to be in a wreck and it's totalled, you not only don't have a car, but you owe additional money, since your insurance only covers the current value of the car. Anyway, once you've paid off the loan, put that loan amount into a separate, dedicated savings account. The next time you need to buy a car, you are ahead of the game.

Test drive. Leave the car lot. Don't let them bamboozle you with the "Lots of people are interested in this specific vehicle" nonsense. There are always more out there, and usually more of the specific make and model you want. Even your color choice. Also, when buying used, more cars show up every single day. I have more than once visited a lot, not found what I want, then a couple days later double check their website and now they have exactly what I want.

Hang out if at all possible and watch what happens. See how they treat customers, see how they behave when not dealing directly with customers. I once wound up spending about three hours at one used car lot while my son test-drove a lot of cars. The sales floor was tiny and crowded, and I got to see a lot of sales being finalized -- this place was quite busy and later moved to a larger location. There was nothing there my son wanted, so we went elsewhere to buy. Five days later when his brother's car was totalled, I went straight back to that place and we did find one that had just come in. After we took delivery on it, the a/c wasn't working, so I took it straight back to them and they fixed it. It's a place I recommend.

I have found that the internet has drastically altered the car-buying process, and it's in favor of the buyer who makes use of it. You can show up armed with a ton of information about cars in general, and the specific car you're interested in. In short, do your homework, know what you can afford, and don't let yourself be rushed into the purchase.

Response to SheilaT (Reply #3)

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