ALT-1 How to Avoid Car Sales Scams
How can you avoid being "scammed" by a car salesman? The answer is easy: Do your homework!
I have bought and sold many, many cars over the years and I can tell you that there is definitely a right way and a wrong way to do it. For the sake of time, I'll identify just 3 things you should never do and 3 things you should always do when buying a new (or used) car. We'll stick to buying rather than leasing here as leasing is a somewhat different animal. Of course this is by no means an exhaustive study on the subject, but take heed of these few, simple pointers and I guarantee it'll enhance your car buying experience.
Things you SHOULD NOT do when buying a car:
1. NEVER negotiate your price based on monthly payment amount.Car salesman absolutely LOVE knowing how much you pay (or are willing to pay) monthly for your car. This is one of the oldest scams in the business. A salesman may ask "So how much can you afford monthly?" Never, ever answer this question. If you do, you give the salesman control to dictate how much he will charge you. For example, let's say you're paying $355/month for your 3 year old clunker. Now, he (or she) has a reference point. He may say "Is this comfortable for you or can you afford a little more?" No matter how you answer this question, he will steer you upwards. What you may not realize is that your new car might cost less than your old car per month to own! Of course a good salesperson would never let on. Instead, you may be setting yourself up to pay more than the dealership is expecting.
Always know beforehand the cost of borrowing money. For example, if your finance amount (not the sale price but the actual amount to be financed) of a car is going to be around $13,000, and you have good credit, you can reasonably assume a monthly payment in the $280-$310 range on a 5 year loan. Now, the salesman may tell you he'll get you a great deal and "give" you the car for just $20 a month more than you're paying now for your old jalopy. Sounds great right? Think again and make sure you do the math based on the price of the car, NEVER on a promised monthly payment.
2. NEVER discuss your trade-in before settling on the price of your new car.If you're trading in your old car for a new one, keep this information to yourself until AFTER you've settled on the price of your new car. The reason is because the dealer will try and confuse you by working a deal on the front end (your new car) and the back end (your trade-in) at the same time. You'll almost alway lose if you tell the salesman upfront that you're trading in your car. So remember: settle on a new car price first, then discuss your trade-in.
3. NEVER be afraid to walk away from a deal.If you're not sure you're getting a good deal, just walk away. I don't care if the salesman tells you "I can't hold the car unless you leave a deposit." Don't do it. If you need some time to think about the deal and someone else buys your car, than maybe it just wasn't meant to be.
Things you SHOULD do when buying a car.
1. ALWAYS bring an ad with you.Dealers HATE when you walk in to the showroom with an advertisement for one of their cars. The reason they hate it is because if you have the ad, they MUST honor it. Usually they'll use a "teaser" ad to get you in, then try and push you into a more expensive vehicle. A smart buyer will have none of this. If you see a car advertised for a certain price, bring the ad with you. That way the salesman can't squirm out the advertised price.
2. ALWAYS know before you go how much you can afford.It seems common sense to assume that you won't pay more for a car than you can afford, but history indicates that this is not always true. Car buying is a highly emotional experience. When you fall in love with a car you may be tempted to pay more than you've budgeted. AVOID DOING THIS! Before you go shopping know exactly how much you can and can not afford. Than stick to your guns. Don't let a sweet talking salesman or a really nice car force you into bankruptcy.
3. ALWAYS research the car BEFORE going to the dealership.How do you know if you're getting a good deal or not? By knowing how much the car you want to buy is selling for elsewhere. Whenever possible try to compare apples with apples. What I mean is that cars of the same make and model but with different options will be priced differently. Look around and find out all you can about the type of car you want. What the options are, what it sells for etc. This way you'll always know around how much you should expect to pay for the car of your dreams.
Hope this helps you. If you want specific advice please feel free to contact me. I'd be happy to help out any way I can!
