Ten Lies A Car Dealer Will Tell You

By Tom Van Riper (Forbes Magazine 2/8/07

While car dealers often get a bad rap--the multitude of stories out there on bad customer experiences doesn't mean their all a bunch of hucksters--they can still be prone to white lies (and occasionally bigger ones) when they smell a sale, just like anyone else. Here are 10 to watch out for.
1. Monthly Specials Dealers will try to close a sale by reminding you that buying incentives, like manufacturers' discounts or low financing, change each month. So that $1,500 discount on Jan. 30 could change to $1,000 by Feb. 1. In some cases it actually happens, though most of the time the incentive stays the same. Remember, everything is negotiable. If the salesman has a basic agreement with you, he's probably not going to risk blowing the sale because the calendar flipped
2. Labor Charges For Pre-Delivery Work Buying a minivan but want to upgrade to a larger wheel base? That $300 cost of the replacement wheels is listed right in the printout. An additional labor cost is also legitimate, but some finance managers will subtly up that fee to squeeze another $100 or so out of you. Because that only affects the monthly payment by a couple of dollars, he's betting you'll never notice.
3. Price Packing This is apparently rare, but it's a biggie. You've just agreed to pay $30,000 for a new sedan. You decide to put $10,000 down and finance the remaining $20,000 at 4.9% over 48 months. After crunching the numbers, your salesman tells you the monthly payment comes to $476.33. Sounds about right, doesn't it? Problem is the real monthly payment should be $459.68. The salesman managed to "pack on" an extra $16.65 a month, or nearly $800 to the total price. Unless you're armed with a financial calculator, you'll never notice
4. We Have The Car In Inventory Sometimes a buyer needs to move fast and may even agree to leave a deposit by phone with a credit card if he's told the car he wants is on the lot and will be ready almost immediately. Only after the deposit is secured and the paperwork is in motion is he notified it will be a few days because the expected shipment has been delayed. The buyer is annoyed, but the salesman figures, usually correctly, that he won't bother backing out of the deal to start over again somewhere else.
5. No Bank Fee On All Leases A dealer's local newspaper ad featuring a few specific vehicles will tout "no bank fees on all leases" (typically a $500 to $1,000 component of a lease) near the top of the page. The tactic succeeds in drawing buyers who assume this goodie applies to "all" vehicles in the dealership's lineup. But they're disappointed to learn that the special only applies to "all leases" of the specific vehicles highlighted in the ad, not all the vehicles on the lot.
6. Balloon Note Financing--Limited Supply Ads touting $19,000 cars for $14,000 may include the teaser "five left at this exact price." Only the fine print reveals the low price involves "balloon note" financing--deferring a big part of the cost to the end of a long payment contract. It's an appropriate financing tool for those who expect a higher income in the future. But forget the urgency associated with "five left." If you'll go with a balloon note, you're effectively paying the regular price anyway. They'll sell you any car under those terms for as long as they're in business
7. The Trade-In: 100,000 Miles Is Tough Salesmen will always look for a reason to downplay the value of your trade-in. Some will say that anything with 100,000 miles is tough to sell above blue-book value, even if nothing magical happens when the odometer clicks from 99,999 to 100,000. A car with that much mileage won't fetch a whole lot in a trade anyway, of course, but don't let a salesman tell you that reaching some artificial plateau accelerates the depreciation.
8. The In-Stock Vehicle Special Inventory levels affect profit margins. So dealers try to steer you toward a car in stock, even if it's not what you want. Example: You're looking for a basic minivan with few bells and whistles. The dealer has none in stock, so to meet your desire; he'd have to swap with another dealership. To get you into something on his lot, he'll tell you about "specials" that are expiring on more expensive versions. Going along might save you a little money on the upgraded model, but it will still leave you spending more than you'd planned.
9. Trade-in: Unpaid Balances. If your trade-in still has a loan balance against it, some dealers will offer to pay it off if you buy a new car. Rarely will it work out as promised. The cost will be blended into the loan or, even worse, will fall apart when the deal reaches the financing manager. The salesman will then claim a misunderstanding, hoping that since the customer is now that much closer to driving home his new car, the deal can still be worked out. But the dealership will never pay a loan balance for free. That's just too good to be true.
10. The Extended Warranty "Covers Everything" Why can dealers often sell cars right at the invoice price? Because aftermarket sales like alarms and extended warranties, make up for it. Before forking over big money for an extended warranty, be sure it covers both wear and tear and mechanical failure. Too many customers have taken cars in for warranty work only to discover they weren't covered for the specific work needed. Go over all these details beforehand.