Car Dealership Scams
Don’t fall for these major ripoffs at the car dealership. I’m gonna share five major ripoffs that many dealerships use to take advantage of consumers that can cost you thousands of dollars.
Not every dealership uses these tactics, but enough of them do that. You really need to watch out.
1. Paying Cash? You Might Face a Higher Price
Now let’s get right into it, starting with the first major dealer ripoff, and that’s when a dealership surprises you by charging a much higher price If you want to pay cash for a vehicle instead of financing.
Cash is definitely not king when it comes to buying a car.
Dealers make a lot more money when they get you to finance and some will do whatever it takes to make that happen.
This is why it’s become common for some dealerships to charge a much higher price.
Sometimes thousands more if you want to pay cash for a vehicle.
And some dealerships won’t even allow you to pay for a vehicle in cash, which is truly wild.
I often see dealers advertise vehicles with a certain price that might look attractive, but it is only when you contact the dealer or read the fine print when you learn that the cash price is actually far higher.
In many cases, the cash price for a vehicle can be anywhere from a thousand dollars to as much as $5,000 higher than the financing price.
And some dealerships don’t even properly disclose this in the advertising.
So it comes as a complete surprise until you contact the dealer.
In many regions, it’s actually illegal for a dealership to advertise a vehicle this way.
If they advertise the price they need to honor that price, which is known as all in price advertising.
So if you encounter a dealership that tries to charge you a higher price, then the price that was advertised online, make sure to report that dealership to your local regulatory authority.
2. Beware of Unnecessary Junk Fees
Moving on to the next major dealer ripoff that you need to watch out for, and that’s when a dealership tries to charge unnecessary junk fees.
When you purchase a new vehicle, there are only a few mandatory charges that you need to pay on top of the vehicle’s MSRP.
These include a freight or delivery and destination charge, which you can see right on the manufacturer’s website.
There are also a few small levees including your licensing and registration fee, which should total no more than 200 to $300.
And then on top of that, you have your sales tax. Anything else is questionable. Of course, though, many dealerships
Will load up that price breakdown with all kinds of additional charges that you do not need to pay for.
Some of the most common additional charges include some kind of an admin fee, an etching or anti-theft fee, nitrogen tire inflation, all kinds of insurance products, and any form of protection products.
These charges can add hundreds, even thousands of dollars to the total vehicle price, but they often don’t offer much if any value to you.
They’re simply a way for the dealership to make extra profit on the deal, Simple as that.
Now again, it’s important to understand your consumer protection rights and in areas that have all in price advertising rules, dealerships are not allowed to add any additional charges or fees on top of their advertised price.
So if you see a dealership that attempts to add any of these charges that are not already included in the advertised price, make sure you report that dealership to your local regulatory authority.
3. Forced Add-Ons: The Tied Selling Trap
Moving on to the next major dealer ripoff that you need to watch out for.
And this is one that I absolutely despise, and that’s when dealerships use the sales tactic known as Tides Selling.
Tide selling is when the dealership won’t let you buy the vehicle unless you pay for products and add-ons, which can sometimes add thousands of dollars to the price of the vehicle.
These products come in all kinds of shapes and forms, and oftentimes the dealership won’t even disclose them to you.
Many dealerships, which use Tide selling just automatically put the products onto the price quote or the contract for the vehicle hoping that you won’t even notice it, which to me is as good as stealing and is totally unprofessional.
It’s an absolutely despicable practice, which should not be tolerated by anyone.
So if you encounter a dealership that’s using Tide selling and won’t allow you to remove products from the quote of the vehicle, just go somewhere else.
And again, don’t be afraid to report that dealership to your local regulatory authority.
4. Marked-Up Interest Rates on Financing
The next major ripoff that you need to watch out for has to do with financing, specifically when you finance a loan through the dealership using one of their own lenders, in which case the dealership can sometimes mark up the interest rate on the loan without you even being aware of it.
A practice that’s especially common across the us of course, dealerships that mark up the interest rate sometimes by 2 to 3% are doing so to make more money on the deal.
So not only is the dealership making money on the vehicle itself, but they’re also making a lot of money off the financing.
Some dealers will even tell you that you must finance for a minimum period of time, like say six months, which is total nonsense.
The reality is, is that dealerships want you to finance the vehicle through them
And for a minimum period of time because they make more money that way. It’s as simple as that.
So make sure to shop around and understand what all your financing options are from your local bank, your credit union, and you can find the lowest interest rate that you qualify for.
Never rely on the dealership to do the financing for you.
Remember, dealerships are not your financial advisors.
They’re not looking out for your best interests or your financial needs.
They’re simply looking to sell a car as quickly as possible and for as much money as possible.
So make sure you do your homework, find the lowest rate and the best loan option that you qualify for, and also go with a shorter loan term so that you pay off the car faster.
And remember, you always have the option to pay off the loan in full at any time you wish with no penalties whatsoever.
5. Selling Overpriced Product
And that brings me to the next major dealer Ripoff, And that’s when the dealership takes you to the business office or the f and i office with the finance manager and tries to sell you all kinds of overpriced, expensive products.
This is one of the most profitable parts of the deal for the dealership.
Most of the products in the business office are incredibly overpriced, and some of them are just totally unnecessary, offering very little value to you.
It’s not uncommon for a lot of these products to add thousands of dollars to the price of the vehicle, and the dealership will sometimes use all kinds of pressure tactics and stories in order to sell them to you, which of course is totally wrong.
Now, yes, some of these products might have value to you.
For example, if you’re leasing a vehicle, yes, it might be a good idea to get lease protection to protect you at the end of the lease.
if you’re buying a vehicle that’s known for having very high repair bills, like say for example a lot of European brand vehicles,
it might be a good idea to consider that extended warranty, at least if it’s a manufacturer warranty that you can get for a really good price.
But all of these products should be carefully evaluated and negotiated, and some of these products don’t necessarily need to be purchased at the dealership.
For example, if you want to get paint protection, you could easily go to a reputable detailer and get a much higher quality product for a much better price.
The same is also true of rust protection.
You don’t necessarily need to buy the really expensive dealer rust protection when you can just go to a reputable Rust protection company like say for example, crown Rust control and get a really good oil spray product for only around $150.
Oftentimes, you’re better off shopping elsewhere or just not purchasing any of these dealer products whatsoever. Most of them are overpriced, unnecessary, or
Just not worth the money. Now again, I just want to emphasize that not every single dealership out there is going to attempt to use these tactics on you.
There are many of professional, honest dealerships that are just trying to do the right thing, but There are Enough bad apples out there that ruin it for everyone, making the market extremely tough and giving dealerships a bad name.