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NEVER BUY THE FIRST TIME YOU GO IN.
Once you sign the contract for your new car, it's nearly impossible to get out of the deal. Find your lowest deal before you sign, not after. Don't take the
word of a salesman that other places can't match their price. Every time I've heard that, I have proven them wrong. Make sure they see "The Folder" with research and
quotes. Show them you did your homework and you know how to get the best deal possible. Once they know they can't trick you, business will be conducted on your
terms.
Mercedes may charge $1300 for "full leather" in the E-class as opposed to "seating surface only". In the C-Class, they charged $1300 for only "partial leather".
Your $45,000 car is really $46,300 if you want real leather. Most manufacturer's offer "partial leather" or some BS called "Leatherette", and
salesman don't tell you that you just paid $1300 for a few strips of it. You could buy a Natuzzi leather couch for the same price. TV ads can list a lower "base"
price. But go to the dealer, you'll find $3000-$5000 worth of "forced options".
"Power Seats" does not mean both seats, the passenger seat is manual. You pay $700 for "power seats", but only on the driver's side. By skimping on the 2nd motor,
car makers keep the price stable, but improve their profit margins by giving you less. Would you buy a car from me if I my TV ad said "Come on down to Crazy Jeff's
and get your Supermobile with a power driver's seat while the loser passenger suffers with an old style manual seat."
Another disturbing trend is they charge you A LOT EXTRA for the paint colors you and I actually want. Black or white paint is free, but if you go metallic, better
reopen your wallet. Mazda charges $380 for their Pearl White, which is the worst Pearl White I've seen on any car in it's class. It's no Lexus. Mercedes charged $600
extra for metallic paint. I'm no arbitrageur of fine paint, but I'd like to know what makes 2 gallons of paint with some metallic glitter in it worth $600? Isn't price
gouging supposed to be illegal?
Shopping Around For Cars and Test Driving:
As you enter the dealership, remember your goal. Get pricing and option info from the MSRP sticker, find out what options your car is supplied with.
Their goal is to keep you from leaving without buying. They don't want you to go elsewhere to comparison shop. While shopping around, inform the
salesperson you are definitely not buying today, no matter what. The better salesman know not to pressure you, if you want the car, you'll be back. Just say No,
unless you are ready. "What if I told you can drive off today with no money down? Let me get this straight, you don't want to save over $1500? What will it
take to put you in this car today?" Tell Them "Even if it was free, I would not buy today, I'm weighing all my options."
Write down all the option packages, you'll need this info later to form your offer.
Take the test drive, remain silent
During the test drive they want as much info out of you as possible. Anything you say will be used against you. They want to know what monthly payment can you afford,
and they want your trade-in. Tell them nothing. They are conditioning you as a payment buyer. They determine what payment you are happy with, shielding you from the
selling price. Tell them you don't deal that way, you negotiate based on its price, not monthly payments. Test the AC. Is it cold? Does cool air reach back seat? Test
drive on a hot sunny day to test the AC. Always inspect the car in daylight, not in the dark, for any nicks, or dents. Inspect the paint and make sure it's in good
condition. Don't let them deny rebates that you know are valid. Print the pricing and package/option info from the manufacturer's sticker so you can look up dealer
cost. The internet pricing sites also list the invoice price of options. Ignore the dealer's sticker. Get the sales person's card, thank them, and tell them you'll be
back. This is only a fact finding mission. Don't let them try to sell you at this time, as you are unprepared, and they know it. If they try to create a sense of
urgency for you to buy today, ignore it. The "urgency" is for them to sell and not let you walk out of there. Some no haggle places may sit down with you to give you
some numbers and not pressure you to buy today. That's OK too.
Here A Fee, There A Fee, Everywhere A Fee Fee
Ask if the dealer charges advertising fees, dealer prep, or other fees, and find out what the destination charge is. Make sure it agrees with what you found on the car
pricing sites. Knowing the fees is important when you end up comparing similar deals. Fees can add up to over $1000, throwing off all your budget calculations. You
must know all the fees your dealer plans to charge so you can factor them into your budget and formulate your offer accurately.
 "Gee, I don't know what that fee is for, we've always charged it."
If they claim they don't know what a specific fee is for, they are lying and you should leave immediately. They just don't have the guts to look you in the eye and
tell you it's a B.S. fee. If the sales manager gives some obscure story that it's to help offset the cost of giving you discounts, do yourself a favor and leave to
offset your cost of lining their wallet. |
Glossary Of Fees you may see at a new car dealership:
"ADM" or "ADP" Charges (Additional Dealer Markup)
Bogus charges added by greedy dealers. It means "Additional Dealer Markup" or "Additional Dealer Profit", and appears on a sticker next to manufacturer's MSRP sticker.
I call it Arrogant Dealer Markup. ADM is an artificial buffer to bargain down the price. If ADM is $1000 and you talk them down $800, you still paid MSRP plus $200 for
the car! If you see this toxic waste, have them nix it. One buyer of a Honda Civic got the dealer to drop a $1995 ADM! But what if she had no idea what was going on?
Advertising Fees
Car makers charge dealers for regional and national
advertising campaigns. These charges are reflected on the invoice and are a legitimate cost of doing business. This is where opinions differ, as I feel it's
their cost of doing business, not ours. Tell them to pay your fees like gas, wear and tear, and your time for driving all over town to shop for
the car. Many dealers are sticklers about this fee, and it's difficult to get them to drop it, but some do waive the fee. If a dealer adds on their own advertising
fee above and beyond this, they are out of bounds. Dealers try to charge $250-$1000, but it should not be more than $250. You're not paying for their inability to find
cost effective ads. $1000 ad fees allow the dealer to charge you a lower price on the car. You think you're saving money, but ad fees take it right back. This fee may
also show up as "Sales Promotion Fund", or DAA, or ADA, or anything referring to ads.
Edmund's says it's non-negotiable, but they are wrong. Anything in life is
negotiable, and I don't give up that easily. What angers me the most is the cryptic way that dealers hide this fee from you by using huge acronyms, then playing stupid
when you question it. "Duh, I don't know, we always charge this fee". A Nissan Dealer in Chicago told one of our visitors that they have to charge the
Nissan advertisement fee and can't drop it or they can face a class action law suit. Nice scam. Where's my bull icon?
Documentation Fees
Expenses like registration, tags, title, and other state fees. Determine the fees your state charges before you go shopping. Call the Department of Motor Vehicles to
determine the cost of registering a new car, and getting the tags if necessary. It may be cheaper to transfer the tag from your old car to the new one. Once you know
all documentation fees, determine if the dealer is padding the charge. Have the salesman give a breakdown of every fee in writing.
Drive off Deposit
A bogus fee that greediest of dealerships pile on those with bad credit. The purpose of this fee is to steal your rebate from you. One reader had a $900 rebate on his
car, but the dealer stole it right back with a $900 drive off deposit. What does "Drive Off Deposit" mean? Nothing, it's a meaningless term. If you see a drive off
deposit on your worksheet, just drive off, no deposit.
Window VIN# Etching Fee
A stupid fee for etching the VIN# or other anti theft information into your side windows. It costs next to nothing for the dealer to do it, and the average fee is
about $300. You can buy same kit in auto parts stores for $20, and do it yourself.
LieNance Managers
That's my funny name for some Finance Managers who lie and cheat, for example, telling you that your credit score is too low to get a good APR, or
telling you that the bank requires you to buy a warranty, gap insurance, VIN etch, or credit life in order for you to get the loan.
Port Prep Fee or Port Installed Options (PIO)
These are fees for prep or options installed at the port of entry by the manufacturer. For example, Toyota has a Port Installed Option added to the cars once they
land in Florida called ToyoGuard, an extremely overpriced rubberized coating sprayed inside your wheel wells to prevent rust. Sometimes this adds up to $600 your
Toyota. Some port prep fees might only be $25. VW in Washington D.C. seems to have some PIOs that are unavoidable too..
Registration Fees
That's a tough one to determine, each state is different. There may also be small tire and battery fees around $10 levied by the state. In Florida, it's cheaper
to transfer your plates from the trade-in to the new car, about $50 instead of $180 for new plates. Some states charge hundreds, so check with your DMV before going
shopping. Print out the DMV fees online and bring them to the dealer. Quite often dealer charge up to $400 "document fees" supposedly to handle paperwork
transfer of the plate, done by their lowest paid secretary. Give me a break.
Washington Association Fee
Buyers in Washington D.C. buying a Volkswagen said the dealer tried to charge a $175 Washington Association Fee claiming it was "the cost that the manufacturer
charged them for doing business in this area". We don't know if this is a valid fee or not. It sure sounds like a bogus charge to me.
Incentives:
Incentives are used by the factory to stimulate car sales to unload inventory. There's 2 kinds of incentives: Factory To Dealer and Factory To Consumer.
Factory To Dealer Incentives
You and I don't know about these. Sometimes Edmunds lists them, but they don't always show all the ones available. Incentives can be huge, and reduce the
dealer's effective cost to buy the car. If there is one available on your car, many dealers are willing to give up some of it.
Factory To Consumer Incentives (Rebates)
Rebates are paid by the factory to you, or the dealer subtracts it from the price. Some states charge sales tax on it. A common scam at "No Haggle" dealers is to
charge lower than MSRP, (MSRP - Rebate), so you really aren't getting a deal, so ask if the price includes a rebate. Rebates can be $500-$2000 or more, and put you
ahead when you resell it years later. The rebate is from the factory, NOT the dealer. Don't let them jack up the price "because we are giving you a rebate", the
dealer has nothing to do with the rebate. The factory subsidizes lower APR leases and 2% loans in lieu of rebates, but you need stellar credit.
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