7 Ways Dealers Can Rip You Off With Car Financing

image of a dashboard sold by a dealership

Dealers have a bad reputation to consumers. They do a lot of shenanigans to fool you around whenever you step onto the lot, clueless and unprepared. Of course, they know every type of customer, all their objections and tactics to pressure and profit from them.

Keeping a Keen Eye on Dealers’ Tricks

It is indeed true that 8 out of 10 consumers don’t know how to buy a car without getting ripped-off. The only way to avoid falling into the dealers’ trick is to know how they are trying to stimulate you into their monkey business. Since a typical consumer only buys a car once every 5 to 6 years, isn’t it more worth it to spend a little more time learning the techniques before heading to the dealer rather than spending thousands of dollars on the spot? Here are some of the ways dealers can rip you off with car financing.

Dealers Tell You Lies, Lies, and More Lies

“That color is not available”; “there is only one left statewide”; “someone else is interested in that car, better decide quickly.”– these are some of the small things dealers lie about, and it could go a long way more than you can ever imagine. Dealers will try to pressure you to decide on the spot without being able to think through it completely. The key to getting out of this trick? Don’t rush into anything. Make sure to take your time and be patient whenever shopping for a car. There is a ton of selection of cars waiting for you, so don’t close your doors yet for something a dealer is trying to sell you.

Dealers Play Shell Games

Dealers will ask you what certain price you want your trade-in for. They will offer you what you want, but then raise the price of the new car you want to get. They’ll make sure you get the monthly payment you’re willing to pay but will extend the loan term, so you end
up paying more in the long run. To get out of this dilemma, negotiate each portion of your car purchase separately based on the actual price of the vehicle. Shop in your trade-in not just to one, but to multiple dealers and then compare. Never bundle everything into one big deal.

Dealers Hide the Bigger Picture

Dealers also change figures in the leasing agreement to steal money from you and include useless add-ons such as extended warranties into the lease agreement. You won’t need it because the manufacturer warranty usually covers everything during the short duration of the lease. That only means additional fees hidden in the capitalized cost portion of the lease. If you aren’t very keen, you can be fooled and won’t notice the increased monthly payments. Be sure to be at least familiar with the leasing language and read the agreement carefully.

Dealers Use the Four-Square Method

The Four Square Method is the most common sales tactic you will find in dealerships. It is a technique to confuse consumers by mixing the price of the car, down payment, trade-in value, and monthly payment into a single transaction. But worry not, because only car shoppers who negotiate at a dealership are the usual victims. The simple solution to this is to use the phone or email to negotiate and handle each part of your transaction separately.

Dealers Use Spot Delivery Scam

Also known as the Yo-Yo Financing, the Spot Delivery Scam is a very common scam used against car buyers with bad credit. The dealer leads the car buyer into thinking that their financing was approved and let them take the car home. But after a few days or even weeks, they call you and tell you otherwise. You are then pressured to finance through a different rate, and you have no choice but to keep the new car because they’d tell you that your old car has already been sold. To avoid this, always have a car loan arranged before visiting the dealership and never take possession of the car unless everything has already been finalized.

Dealers Play With Window Stickers

A “dealer sticker” displayed next to the official MSRP might trick you. It may look legit, but the only thing they’re trying to do is to fool consumers into paying more for a car. Usually, the sticker will include options that were installed after the car arrived from the manufacturer. They are useless, made-up charges. Be wary and spot a fake window sticker.

Dealers Title Wash

Dealers hide the history of a vehicle that’s been into a dilemma and make you believe that it is still more than flawless. Title washing is common after major flood and hurricanes. Use CarFax and Autocheck to see the vehicle history. Computer records are not modified and cannot be fabricated by title washing.

The Bottom Line

Dealers know your hot buttons. But you can always counter this by knowing their tricks first hand. With a little eagerness to invest time with all the information you need, you can inform yourself how to haggle the right way and save your wallet from crying for years. Never negotiate price at a dealership. It’s best to do it over the phone or online. Don’t settle for something you know that is too much. Always take your time to think through your decisions because at the end of the day, it’s about your car and money– not the dealers’.