Battling with the salesperson isn’t the best way to get a great price on your new car. It’s the dealership’s finance manager that can offer you a good deal or mess it up. Here’s how you can navigate the traps they set for you.
Marking up Interest Rate Trap
The finance manager will review your credit history in excruciating detail and find the smallest of reasons to mark your report in red ink. They’re trying to break your confidence and add percentage points to the interest rate. Don’t fall for it. Get a preapproved loan from a bank, online lender, or credit union and use that offer as a bargaining chip to lower the dealer’s rate. Always arrange your financing before walking into a dealership.
Monthly Payment Trap
Dealers do something called “packing payments” and get you to agree to an inflated monthly payment. They then add products like extended-warranties, anti-theft devices, and paint protection packages that they say are discounted or free. It’s illegal, but they do it. When dealers ask what monthly payment you’re looking for, tell them you’re a cash buyer and only negotiate on the price of the car. Remember to research the vehicle’s current market value first.
Overpriced Extras Trap
The finance manager will offer you a confusing array of products and services just before setting up the sales contract. Most of these are ripoffs. The prepaid maintenance plan is a way to make you overpay for maintenance. Then there’s the hugely overpriced extended warranty, as the chances of something going seriously wrong with your car are slim. Don’t let your guard down. Just tell them you won’t be keeping the car long enough to bother about the extended warranty.
Loan Extension Trap
Any loans that are over 60 months long are traps. You’re going to be paying too much interest and will likely end up owing more than the car is worth. It only works if the interest rate is very low, and you’re sure you’ll keep the car for about seven years.
Bogus Fees Trap
Find out about all fees before you agree to anything. Get a fee breakdown and an “out-the-door” price. Question every bit of the contract.
