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Buying a Car? Don’t Get Taken For a Ride

March 14, 2014

woman holding keys to her new carCar salespeople have an unfortunate stereotype of being slick con artists who steal from the good hardworking population. This is generally not true. But like every profession, a few bad apples can really spoil the bunch. If you are looking to purchase a car through a dealership, here are some tips on how you can ensure you are getting the best deal.

1) The Internet and Smart Phone are Your Best Friends

Show up to the dealership as prepared as possible. Why? Because a knowledgeable consumer is a less gullible consumer. Prior to even visiting any lots, contact several dealers asking for a quote. You can even mention that you’re shopping around with the competition. Chances are that dealers will try to give you a better deal just to beat the competition’s quotes. Essentially, you’re creating a bidding war for your business before you even step foot on a lot. Bring the cheapest quotes with you to the lot for extra leverage in negotiations. Find the original invoice price of the car and how it compares to the sticker price. Search online to see reviews of the car and what others have paid for it in the past.

Once you are in negotiations, do not hesitate to pull out your smart phone right in front of the salesperson to double check the figures.

2) Take Your Time and Carefully Read Over Your Contract

It is incredibly important to read every word of your contract before signing. Double check the math to ensure it checks out. Sometimes, your monthly rate doesn’t add up to the total price that you had agreed upon. Make sure that you understand and agree to every word in your contract before signing anything. There may be expensive and unnecessary add-ons that were not mentioned or glossed over (see #3). Become familiar with what dealerships call the Four Square System. For more information on how the “bad apple” dealers can use this deceiving Four Square System to charge more, here is an explanation by a sixteen year veteran of the automobile industry.

Many salespeople, regardless of the industry, will want to close the deal as quickly as possible. Take your time and ask questions. Ask a lot of questions. Do not let them rush you into making any decisions. You are in charge of this negotiation. If you have a trade-in, keep your keys until the deal is done. You have nothing to lose by walking away and it’s much easier to leave when you have your keys on you.

3) Insurance, Add-ons, and Extended Warranties When Buying a Car

While these are convenient options for the customer, they are also generally overpriced. Many dealerships will try to sell you insurance that will cover your remaining car payments should you die before paying it off. However, most life insurance policies will have this already covered. Don’t pay for something you already have.  Before buying a vehicle, consult your insurance provider to see what is covered under your plan. Most of the time, any add-ons such as rims, pin striping, spoilers, tinted windows, alarms, and stereo systems are marked up by the dealership.  With a little research, you can find far more affordable options elsewhere.

4) Ask More Questions Than You Answer

Negotiating with any salesperson is like a high stakes poker game. Never reveal your hand or your bluff until all of the chips are in. Car dealers will try to ask you as many questions as possible to gauge exactly what you can afford. Good dealers will use this information to help you find an appropriate car and plan. However, this information can also be used to gauge what unnecessary extras and add-ons you can afford. Car Dealerships have a lot of wiggle room in their negotiations – they can get exclusive factory-to-dealer incentives, customer rebates, and other discounts. They have a lot more wiggle room then they let on so make them wiggle those savings onto you.

One common sales tactic is to focus on monthly payments rather than the overall price of the vehicle. This is an effective way to make your payments seem lower but in reality, you could be paying more than you think. Before signing on the dotted line, you should know both the total price of your car and your monthly payments.

5) Getting The Best Deal On Used Cars

When purchasing a used car, it is even more important to do your research and ask as many questions as possible. When you are trading in a car, the dealer will ask you a lot of questions to determine the worth of your car. If buying a used car from a dealer, you should be asking the same questions right back to the dealer. Some questions you should ask  include:

- How many people have owned the car?
- Has the vehicle been in any accidents?
- Has there been any minor or major repairs to the car and were they done by a licensed mechanic?
- What is the overall condition of the car?
- How fuel efficient is the car?
- How many kilometres are on the odometer?
- Are there service records available?

These are all questions that will ensure you are getting a good price on a durable vehicle. If you are looking into trading in your car or buying a used car, we recommend finding out the value of the car on Canadian Black Book.  This site (along with additional research) will give you a good idea of the car’s worth so you can negotiate the best deal possible from the dealer.

Anyone looking to purchase a car should do their homework beforehand and not sign anything without taking the time to consider every aspect of the deal. Keep your hard-earned money in your wallet where it belongs.