Car Quote Secrets Your Dealer Won't Tell You

January 27, 2012

There are many points a salesperson will not mention when offering you a car quote. This is a way they make their profits while they make you think you have received the best deal.

Dealer Invoice:

The invoice is the price the dealership pays the manufacturer for the vehicle. One of the secrets the dealers do not tell you, is in many cases, the dealers are receiving bonuses or factory incentives to sell certain models. The dealership might also get a bonus or “kickback” for high volume sales.

Documentation and Prep fees:

Some of the fees listed, such as documentation fees for processing the sale, and preparation fees, for cleaning the vehicle before delivering it to you, are usually excessive. This is one way they make additional profit.

Credit Score:

Many times you will be told your credit score is not high enough to get a better interest rate on financing. Many car dealerships do not use the regular FICO credit scores. There is an Auto Industry option that adjusts your ratings based on past car loan history. Depending which score is lower, that is the score they use to get your financing. The more you pay in interest, the more of a commission the dealership receives. Many times the dealership makes more from their financing commission than they make from the profits of the actual sale.

Installed Optional Equipment:

Many times the dealer will point out options included in the car such as upgraded sound systems. In many cases this equipment is by unknown manufacturers and listed at prices that are more expensive than purchasing on your own. Since they do not want to remove these items, they will lower the price.

Optional Equipment:

If there is optional equipment you want added, you can probably get a better price outside of the dealership. Check prices before you go. Many times they will lower the price to match their competition. If you buy it from them, it will increase your financing total and increase their bonus.

Extended Warranty:

If you are planning to keep the car for many years, an extended warranty can be a good idea. One of the things the dealership does not tell you is their fee is inflated, and then when it is included in your financing, it increases their bonus.

Credit Life & Disability Insurance:

This is another item they try to sneak into your agreement. These insurance plans make your payments if you are disabled or die during the terms of the loan. You need to realize the disability coverage does not go into effect until you have been disabled for fifteen to thirty days. If you are employed, you might already have this coverage.  

Leave to Compare Pricing:

One of the rules of car salesperson is making the deal that day. They feel, once you leave their dealership, you will not be back. Once they make you an offer, tell them you plan to visit another dealership or need to leave for an appointment. At that point they will find other ways to lower the price.