6 Things You Should Never Say To A Car Salesman

There are few things in life that will test your mettle more than a savvy car salesman. He is a master manipulator and has a PhD in messing with your head. Even if you have checked out some confessions of a car salesman and carefully studied the evil “four-square” technique, there are still some things you could say that tell a salesman you are a soft target. CNN Money and Edmunds.com have put together a list of 6 things you should never say to a car salesman. The list, inside…

1. I love, love, love this car
Even if you fall in love with a car, maintain your composure and don’t let the salesman realize it. It is easy for salesmen to manipulate you when they know that you will do almost anything to own the car.

2. I need to get a car by tomorrow
Even if you need the car quickly, act like there’s no desperate need for the car. If he senses your desperation he will realize that you won’t be thinking carefully about your choice and will accept most anything.

3. I need a monthly payment of…
The monthly payment is only one part of the equation. A salesman can give you that monthly payment and still rip you off in another area such as in the number of payments or trade-in value. Ideally, you should calculate what you can afford based on your monthly budget and expected trade-in value and negotiate that big number. Now, agree on a monthly payment and then negotiate any trade-in value.

4. My trade-in is outside
If you let him know it is outside he will want the keys. If the deal starts to go south, your keys may be somehow misplaced in which case you will be forced to listen to his sales pitch longer than you want to.

5. I don’t know anything about leasing
Even if you don’t plan on leasing a car, you should learn about leasing to help make you impervious to the salesman who may try to sell you the idea. Usually, leasing only makes sense if you know that you won’t be keeping the car for several years. If you do plan to lease, you should be familiar with the costs of leasing beyond monthly payments. You should also be aware of how many miles are included in the lease and any money that needs to be paid up front or at the end of the lease.

6. My credit is a little spotty
Often, consumers underestimate their own credit score. Ideally, you should try to secure a loan you can use for “plan B” in case you don’t like what the dealership has to offer. This gives you bargaining power and lets you know more clearly where you stand with your credit rating.

6 things never to tell a car salesman [CNN]

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  1. Antediluvian says:

    I’m curious if it’s possible to use these phrases to manipulate the sales-critter to your benefit somehow.

    Like exclaiming how you “love, love, LOVE” this car but then walking away from the deal if it’s not good enough, but now the sales-critter is all worked-up thinking you’re a sucker but really you’re playing hardball.

    I’m not sure that’s the right approach, I’m just wondering.

  2. 4ster says:

    One of the best techniques I learned is to do as much over the phone as possible. I once had to shop for a car when I lived about 45 minutes from a dealership, and out of necessity, I did all the negotiations over the phone.

    We had test-driven the car, so the guy knew we were interested, but man, it was so nice to have lunch and get the gutters cleaned while he “talked to the finance guy,” instead of having to play the waiting game in his office.

  3. MisterE says:

    Whenever you buy a car, ALWAYS research with a particular make/model in mind. ALWAYS have a prepaid check from your credit union or bank.
    I don’t have a problem telling the salesman my terms to buy a car. My financing, taxes and payments are handled through my credit union so I already know what my monthly payment is going to be ahead of time. Because of this, the dealers don’t need a credit check on me, and it eliminates another “haggling” factor.

    Also, if you do plan to trade in – the dealers will never give you the full value of your car. Knowing this up front helps with the “shock” of such a lowball offer.

    In other words, I’m in control, not the salesman.

  4. TangDrinker says:

    @MisterE: Yeah, the trade in value is surprising. You might have better luck selling your car (if you have any equity in it at all) to CarMax – and then take that cash. We ended up getting quite a bit more selling the car, even at CarMax, than doing the whole trade in bit at the dealership.

  5. TotallyStumped says:

    @Antediluvian: I did the “OMG I love this car!” at a VW dealer in 2005 and walked away. It was a 2004 New Beetle that sat on the lot from August 2004 to May 2005. However, the sales manager was unwilling to come down on the sticker price. The price included a $995 “Dealer Prep” and the deceptive “Free Gas for a YEAR!” which, in reality, tacked an additional $600 on the total.

    I mentioned the fact that the car had been on the lot for 8-9 months and why in the world would I pay them to wash the car for me? I struck several bogus figures off the managers list and said, “You’ll have to pluck that chicken yourself.” I also waffled on the fact that I’d put over $1K of stereo equipment into my (then) current car.

    That evening the salesman (not manager) called. He said the manager was so desperate for a sale they would’ve knocked all the fees AND installed my stereo into the new car. By that point I was done and still said no.

    So if someone can play the Love This Car! game and walk away, it really can work in their favor. Just got to have balls of steels to do it.

  6. homerjay says:

    @4ster: I did this with my last car and it worked beautifully. I called everywhere. Did the whole thing by phone initially and then email. I had a paper trail.
    I ended up getting the car I wanted for several thousand less than anyone else I’ve met with the same car.

    Phone and email- its the only way to do it without all the hassle.

  7. Rachacha says:

    I have had great success at doing research on Edmunds.com and KBB.com. Both sites allow you to “build” your car, and give you a print out of the MSRP, and invoice price for each option. They will also tell you the dealer holdback price, and any special promotions that the manufacturer is running for the dealer.

    I almost always have to special order the car with the options that I want, as my tastes do not match that of the typical American, and I almost always have pre-arranged financing from my bank. Prior to visiting the dealership, I also go to Carmax and have my car appraised, as well as KBB so I know the true value for my tradein.

    I then walk into the dealership, select the car that I want, and I let the salesman come back with his “first” offer. I then hmm & haw for a while, and casually open up my research folder, tell him exactly what the car costs him, what is holdback is, and then give him a fair price that I am willing to pay so they are earning a fair amount of proffit. I tell them that is the highest that I will pay, and I want to cut out all of this BS. If after your next talk with your manager, you can not meet that price, I am leaving. The next offer may come back a bit higher than your counter-offer (few hundred dollars), if it does, stand up and begin to walk out, they will usually make up some lie and give you the price that you stipulated. As I usually custom order, no dealer has an advantage as they ALL need to custom order, so there is no pain of “they have the perfect car” that I have to deal with, and I can alsways walk away from the dealer and go to the one up the road.

    As I come in with my own financing, have alternate plans for a trade in, and have done all of my homework and know exactly what the car costs, they have nothing to bargain on but the price (and I let them know early on what I am willing to pay) so all of the BS goes away, and I can be in and out in an hour.

    Once we get a price on the car, I will then ask them to give me an offer on the trade, If I don’t like it, I sell my trade to CarMax.

  8. mytdawg says:

    I got caught on my first new car purchase by the textbook car salesman and I learned a couple of things from that experience. Fortunately I checked the paperwork because they actually tried to charge me more than sticker. I still got robbed but they did “fix” that.

    Number one is always be willing to walk away from a car deal. You can’t win them all but nothing makes them start backpedaling like someone saying “That wasn’t what I had in mind, maybe I’d have better luck somewhere else”. But you have to mean it. They are masters of the insincere and can see right through amateurs.

  9. mytdawg says:

    I’ve also had good luck buying the strange and unusual off the lot. Stuff nobody else seems to want. Usually it’s been advertised for a while or it’s behind the building with a big red tag on it. I don’t go looking for a specific car, I go looking for a specific deal. Demos, plain janes and stuff like that.

  10. alumicor says:

    Another good thing to do is definately goto http://www.carfax.com

    This site will give you the low down on any reported accidents plus tell you the number of owners where it was registered. This was an invaluable tool when we were looking. It definately ruled out a couple of vehicles when we were shopping.

    We did not have a pre-paid cheque from our credit union but we did sit down and get pre-approved for 15,0000.

    We ended up getting a 2004 Grand AM GT with about 37,0000 KM or 23,000 Miles. We spent just over our 15,000 after all was said and done but we were able to talk the dealership down to 13,000 (I think) purchace price. Then add in all the taxes as well as a few other things we requested they do to the car before we took posession.

    Car was advertised for just over 16,500 when the sales man asked if we were willing to budge on the price we told him we’d be open to going lower than our offer, at which point he said congrats.

    Blue book on the car according to the credit union was about 14,500 based on having about 50,000 KM

    All in all we made out good on this car, it’s fun to drive and great on the highway…..Gas prices are a bit high at the moment so there is a bit of regret that we ended up getting a “Semi-High performance” car but this car gets great milage on the highways. All in all we are happy with the purchace.

    The biggest suggestion I have especially if your looking for used cars is to talk to other dealerships in the area and ask if they can find something that is similar. Most used cars are purchaced by dealerships at auctions. Some dealerships will try to find what your looking for if they don’t have anyting in stock that intrests you.

  11. Old_Car_Guy says:

    Always take someone with you. No matter what the saleman tells you, look at the other person and say something like, “I’m not really comfortable with that, are you?” And be ready to walk if they don’t ask, “Well, what would you be comfortable with?” It gets the ball rolling. It is their first backpedal. But like the experts say, do your homework first and don’t get married to a car.

  12. weave says:

    I don’t like the idea of ordering off the lot. Lots of unknowns happen to a car while sitting on the lot, like lot damage, very short hard drives around the lot, test drives, etc.

    My last car I ordered from a list of inbound vehicles to the dealer, since dealer didn’t have the color and options I wanted. The salesman tried to convince me to take one off the lot, and I refused. The car I picked was at the time on a truck in Montana being shipped to Delaware. When it arrived I picked it up the next day. Only had 4 miles on it.

    I also stipulate that if they try to put any dealer badges or stickers on the car, the deal is off, and make them write that on the paperwork. I hate those things. That’s easier to do with a car not on the lot because many of them badge it up as part of their prep.

  13. weave says:

    Great pic by the way. Great movie.

    Used Cars

  14. I always heard that you should bring a spare set of keys with you so that if they try the lost key bit, you can just up and drive off and tell them to mail you the keys, or else.

    I also heard you should bring a “bad” check from an old or closed account so if they ask for a check, you can hand it over, and if they try the “The check got locked in the safe and the Mgr. went home”, you can tell them to mail it back or bin it b/c the check isn’t good anyway.

  15. Snarkysnake says:

    @homerjay:

    Not trying to be ornery,but be careful with the “negotiate over the phone” thing,especially if the car is in another city or an inconvenient drive away. Salesmen that are up against their quota will give you a price and tell you that it includes all fees. Then when you arrive,they will tack those fees back on because ” my manager won’t let me waive the dealer prep,doc fee etc…” They know that you have just driven a ways and already have some investment in the car.I had written the name,price,date and all salient details down and double checked.They said tough. I listened to their BS for the discrepancy then told them to stuff it and found a better car for less money.

  16. Eysmahn says:

    Before I was fortunate enough to get my current job, I did a stint as a car saleman. So far this post and everybody else has been right on the mark. I wasn’t your typical car salesman, I was more about helping the customer, not myself or the dealership. There was several occasions where I even waved my commision, just to get the customer the price they wanted.
    Of the things you can do to better your situation, top of the list is research. Find out all you can about how much the car you are interested in is roughly supposed to cost. Consumer reports offers a service for this, costs a bit, but generally saves you alot. Even when you are finally at the dealership, ask for a printout of the car’s invoice. Most dealers will do that for you. On it it says exactly what the dealer paid for the vehicle. But there are generally additional, incentives and whatnot that will lower the price of the vehicle as well.
    If your used car is worth less than $10,000… try and sell it yourself. I can largely gaurantee you’ll get more money for it that way. Told many of my customers this. Sales manager wanted to give em $500, they could easily have gotten $1500- $2000 if they sold it themselves.
    Communication by email is very good, not so much by phone. Phone work is spotty. If I wasn’t busy, I would help the customer as much as possible. But if I was busy I wouldn’t really spend the time on a phone call, I would actually just try to get off the phone quickly. A customer that is right there in front of you is always better than one who is on the phone. Which is why emails are good, the salesman can work on them in his free time. And therefore dedicate more effort.
    Never be afraid to walk out. Nothing allowed me to bring down the sales manager better, than somebody who was willing to walk out.
    If the salesman does use the four square, focus on your trade in value and the car’s value. Then you are negotiating with the dealer’s money. If you fall into the normal trap and focus on the monthly payment and the down payment then you are negotiating with your money.
    Also if it is possible, shop during the week and towards the end of the month. And if at all possible, the end of the model year. Nothing gets you a lower price than a salesmanager who needs to meet a quota and is far from his goal :)

  17. forgottenpassword says:

    I swore off dealing with ANY & ALL car salesmen when i first started looking for a vehicle long ago. I ran into so many scumbag car salesmen that I decided to ONLY buy from individuals only after my mechanic checking it out first & a carfax check. I have never bought from a dealer & never plan on doing so. ANd after my jeep wears out I plan on buying the next one in cash.

  18. Jeff asks: "WTF could you possibly have been thinking? says:

    When I purchased my used 99 malibu several years ago (2000), we drew up a deal and the salesman said “Let me get this approved by my manager”. Well, the manager came back with some BS that the bank would only take the financing if I took the $700 extended warranty. By the way, I was approved for $0 down financing before we started to haggle.
    Apparently the #1 reason people default is because the car breaks down and they dont want to pay for a dead horse. I quickly reminded them they had just broken Michigan law, which specifically states a car sale cannot hinge on the purchase of an extended warranty, and I got up to leave. I took out my PDA (hey, it was 2000) and started jotting down names. Amazingly, almost as if by magic, the car was suddenly available without the extended warranty.
    The salesman almost called off the deal when I told him at delivery to take it back in the shop and remove all the dealer badges (3 of them! WTF?) and their logo license plate frame unless they were going to pay me a monthly fee to advertise for them.

  19. sleze69 says:

    @Snarkysnake: You still need to be prepared to walk away.

    I had to drive 4 hours to get my TDI Passat and trade in my Explorer (the next closest dealer was in Texas). I told the salesman before I made the trip that I love to drive and that if he pulled any shenanigans, I would gladly drive home in my old car.

    Everything went as planned :)

  20. asaturn says:

    “I want to pay X per month” is possibly the worst thing you can do. I’ve seen people do this very thing while waiting at dealerships for parts. they love hearing that… because they can write something up that’s X per month for 10 years… worst idea ever. another thing you never want to do is let them find financing for you. NEVER get financing through the dealership! always go through your own bank, whether it’s a credit union or sometimes even your insurance company offers car loans, and they’ll be at much much better rates and often even carry free gap insurance.

  21. I’ve done many of the above, but I also like to:

    When they treat me like I’m stupid (especially based on my pair of X chromosomes), I like to ACT like I’m stupid. It drives them absolutely batshit. I’ll listen intently through their whole pitch and then totally miss their point. I’ll insist I can’t make any decisions on options/upgrades without calling my husband for permission and, oh darn, he’s in a meeting. They get more and more desperate as they realize I’m apparently too stupid to haggle if they can foist a bad deal on me, but they can’t figure a way to make the sale.

    It also works with appliance and electronic salesmen, and anywhere else they like a hardsell based on you being too female to make good decisions.

    Walking out is faster, but much less fun :D

  22. asaturn says:

    @Psychodad1961: I ALWAYS make them remove the stupid dealer stickers. I’m paying THEM for a car… if they want I can take it for free and leave their ads on it. It’s not as if they built the car! Heck, sometimes I even remove the manufacturer badges if they’re stupid looking.

  23. asaturn says:

    One thing to try: if you’re a guy this works great… bring your girlfriend/wife along with you. just as the deal is about to be struck, have her “pull you aside” and seemingly give you shit for buying another car… have her go “wait in the car” to “cool off” — the dealer will instantly try to knock off $1,000+

  24. JustThatGuy3 says:

    @Snarkysnake:

    I’ve done it over the Internet, but in reverse:

    Sent an email to a bunch (6 or 7) of dealerships saying:

    1. I want to buy XYZ.
    2. I’ll pay $X for it, including all fees (taxes would vary by location, whether I paid them there or at registration)
    3. I’m prepared to pick up this car this weekend (sent these out on a Monday)
    4. If you’re interested, fax me a contract, and I’ll fax it back to you with credit card authorization for $500 (proves I’m serious and not just jerking them around, also locks them into a written agreement, so no “oh, didn’t we mention the schmergenbergen fee of $300? sorry about that!”).

    Sent the emails late AM, got a fax about 4PM. Picked up the car that Saturday.

  25. JanetCarol says:

    The best technique we recently used – We went to the dealership together, he seemed interested but I walked out like 6 times saying that I didn’t like what they were offering. Our salesman was super skeevy and we mentioned so to the finance guy, who called his manager and that got the price lowered again.
    After walking out, what felt like a million times, we ended up with the car we wanted, with brand new tires, and approx. and additional $7,000 off.
    Men, take your ladies.
    Ladies, use your pms for good.

  26. RandomHookup says:

    @weave: For a great movie about car dealers (and it’s a documentary), see “Slasher”. You’ll have even less respect for car sales reps after seeing it.

  27. bravo369 says:

    @weave: my gf did the same thing with the dealer stickers. she found a mustang mach1 that just got onto a lot and didn’t get ‘tagged’ yet. well she bought it, or at least had the deal setup. she stipulated that absolutely no dealer decals can be put on the car or else she’s walking away. well she comes back the next day to sign the paperwork and pick up the car and lo and behold, there’s stickers on it. They tried to give her the runaround how they can’t take them off once they are on…so she said fine and started to leave. those stickers came off faster than they were put on.

  28. I bought my used Altima at a Nissan dealership. During an early part of the converstion, the salesman told me that every car is state inspected when it is received before it is put on the lot for sale. He intended that as a selling point, but I used it to my advantage. When I found the car I wanted, the inspection stickers were several months old. This told me that the car had been there for a couple months, and I used that knowledge to get a little better deal.

  29. TouchMyMonkey says:

    Well, I don’t like this Turkish bazaar thing when I go car shopping. I usually find the car I like and pay MSRP. It used to be that if it has a dealer sticker on it, I tell the guy I will pay MSRP and not one penny more. Then they’d go in the manager’s office for approval, then come back saying something like “we can knock 50% off the dealer add-ons…”

    Now, if there is a dealer sticker on the car, I just walk because I know the stress and bullshit merely BEGINS with the bullshit dealer add-ons. There are plenty of places out there where I can buy a car as if I were buying a microwave oven at Target, and for me, paying retail is worth it.

    I also figured out rather quickly that the most important word in the English language is ‘no.’ Last time around, I had pre-approved financing, I knew exactly what car I wanted, and the whole car buying thing should have taken half an hour from start to finish, right? Well, I still had to sit through all the spiels about special paint coatings, undercoatings, service contracts, extended warranties, the works. Best to just not listen to them; go to your special happy place inside your mind as if you were getting your teeth drilled, or chewed out by your boss, or whatever unpleasant thing you want to blot out. Then say no. I wanted to ask they guy if he thought a Honda Accord was such an unreliable and poorly manufactured car that it needed all that extra ‘protection’, but I just said no.

    The guy was lucky I threw the customer survey in the trash when it appeared in my mailbox. I should have given Honda corporate a piece of my mind about these bozos, but I was too tired. Maybe next time I need a new car, I’ll just drive out to the next city and try my luck there.

  30. A.W.E.S.O.M.-O says:

    @HurtsSoGood: Uh, if you’re demanding the car at MSRP, you are not getting a bargain. You are getting hosed. I’ve seen people get their cars at and sometimes even below invoice!

  31. arsbadmojo says:

    The best advice I ever got regarding buying a car.

    1. Know beforehand what you want and what you’re willing to pay for it.
    2. Find a salesperson you like, tell them you’re going to buy a car, probably today. This establishes you as a buyer.
    3. Use as much of that salesperson’s time as you possibly can. 4 hours minimum, asking questions about the car. Just keep them busy. If they’ve spent all day with you, they haven’t had time to make other sales. They won’t want you to walk.

  32. spikespeigel says:

    I think the best way to circumvent the dealership altogether is to walk in with a check from your loan provider/credit union. That’s what I did and it eliminated most of the hassle that comes with buying a car. The sales rep just about deflated when I showed him the check and pointed to the car that I wanted. Lovely memory, that.

  33. Jeb_Hoge says:

    I sold cars for a few months at a CarMax, and it was an enlightening experience. At least in our case, we literally didn’t have a mechanism for dickering or sliding-scale stuff, although we still got taught about how it worked and I met one or two guys who’d worked in that kind of environment before. What I heard from them and from customers who’d been shopping at other dealerships was enough to turn me off car shopping forever. I still believe in the CarMax model, though. It’s simple and it makes sense.

    Also, there are a LOT of jerks out there shopping (or pretending to shop) for cars. We had one salesman demoing a GTO and the customer started doing doughnuts in a parking lot within sight of our store, and I got yanked around by more than a few people.

  34. thevillageman says:

    I’m a car salesman. My family has been selling cars for over 50 years. We’re not crooked or deceptive. We do our best to make a profit though. Here’s how to really avoid hassles and haggling. Go into a car store having done your homework. Know what you want. Know what you want to pay. Know what you want for your car. These three things will help you save the most time. If you have alternative plans for financing and getting rid of your trade. You can get in and out quickly and hassle free.

  35. pandroid says:

    I was helping a friend go car shopping this past weekend and I did the negotiating for her. Sadly, we weren’t able to get any of the dealers to come down in price to meet her budget. Around here, all the small fuel efficient cars are flying off the lots, and the dealers don’t want to negotiate on those. My friend, of course, is only looking at those cars. I have a feeling she’s going to keep looking for awhile… I just hope she finds a good deal eventually.

  36. Kevin Cotter says:

    I bought my last Honda through Costco, who sent me to the fleet guy at the dealership. He showed me the prices and said go pick out a color.

    The sales drone who finished up worked on me for financing – I used my credit union again, and all the protetorant crap I denied.

  37. apotheosis says:

    @Psychodad1961:

    The salesman almost called off the deal when I told him at delivery to take it back in the shop and remove all the dealer badges (3 of them! WTF?) and their logo license plate frame unless they were going to pay me a monthly fee to advertise for them.

    Awesome, my dad used to do the same thing. At the time I remember thinking it wasn’t such a big deal, but the years have changed my perspective.

  38. Concerned_Citizen says:

    @A.W.E.S.O.M.-O: I doubt you are going to get that with in-demand foreign cars these days. But if you want to brave a ford or a dodge, it definitely shouldn’t be that hard to work out a deal.

  39. Anyone looking for a GREAT read? Here’s “Confessions of a Car Salesman” LONG READ, but informative!
    [www.edmunds.com]

    Here’s another about car buying/leasing tips that I use:
    [www.carbuyingtips.com]

    Take the time to read if you’re in the market, I’m telling you… it’s saved me many a times from making a mistake!

  40. Manok says:

    my father sells cars. He told me he could get me a military discount (since I’m in the service). I said “rather than the friends and family discount which is better?”

    Car salesmen even try to rip off their own family. What a greasy way to earn a living.

  41. SOhp101 says:

    @Git Em SteveDave has a new Lego set: It’s against the law to intentionally write a check that you know is not good.

    @A.W.E.S.O.M.-O: Well it depends on what kind of car you’re getting–if it’s a new generation that has just come out or a very popular car with limited production (say, the GT-R for example) then MSRP is usually the best that you can do.

    If a dealer gives you an awesome deal for your trade-in, be wary. They’re probably ripping you off in every other aspect of the deal.

  42. 67alecto says:

    I absolutely use #2, as I go to the lot ready to buy, having done all my research in advance. You will get the salesperson motivated to sell when you can say “I’m buying today” as it’s a guaranteed commision for them.

    I once bought my car where they even backdated the sale to a week earlier so I’d qualify for an additional rebate.

  43. citroën67 says:

    That is absolutely right! The MSRP is not the number you want to pay when it comes to buying a car. And it IS possible to buy below invoice due to a little thing called “dealer holdbacks”, which is one way a dealer makes money off a car that just rolled into the lot from the factory. The only time the MSRP comes into play is when you are purchacing a vehicle that may be in high demand or short supply. If at all possible, when negotiating the price of a vehicle, always negociate AT or UP from the invoice price, not DOWN from the MSRP, you will most likely end up with a better deal. Other things to remember are: Factory rebates are like a gift to you from the factory, and can be added to your down payment and should be taken off the final total along with your down payment(most dealers will tell you that a factory rebate is subtracted off the MSRP and that is a LIE). The equation should go as follows, NEGOTIATED PRICE+TAXES+LICENCE AND OR TITLE FEES+DOCUMENT FEES=GRAND TOTAL, then, GRAND TOTAL-REBATE-CASH DOWN=FINANCE AMOUNT. Also, make sure your negotiated price shows up on the Sales Contract, because a shady salesman will try to slip in the MSRP price in its place, and once you sign the contract its game over. Always take your time and double check the salesmans math, because it is their job to make them and the dealership money, even if the salesman is a “family friend”. And lastly, never take any extras from the dealer, this is just a way for them to add more to your finance total. This means that their “paint protection” that costs another $300 is usually nothing more than some cheap spray on wax that won’t last more than a day. A good dealer will prep the car for you at no extra cost to the buyer. Remember also, you never want to walk into a dealer with any sort of arrogance that you know how to work these guys over, salesmen are trained to pick up on things like that and will screw you twice as hard an laugh about it with their salesman buddies after you leave. I know this because I used to sell cars, and I did not like what I had become, it got to the point that I probebly would have thrown my own Mother under a bus to make a sale.

  44. thatguy01 says:

    @TangDrinker: Depending on the state, you need to consider the value of sales tax in the trade-in scenario. In my state, you only pay sales tax on the cash part of the transaction; if you sell your old car elsewhere for cash, you pay more sales tax on your new purchase.

  45. skippywasserman says:

    No, no, no.

    Bring with you a small notepad. Walk around the lot, looking at every car they show you. For each car that you don’t like, write down a price that’s significantly less than the asking price. For cars you do like, write down a price a few grand lower than what you are actually willing to pay. When the salesperson asks what you’re doing, say, ‘making notes about what I’m willing to pay for a given car’. Ask what’s the best they can do on one of the cars you don’t like. Whatever they tell you, simply move on. When they try and go back, simply be firm and say ‘that’s more than I am willing to pay for that car, so it’s off the table’. Continue until on a car you like they give you a price you like. Go from there.

    No one ever lasts more than the first few cars without insisting that they can do better on one of the cars. Simply say ‘that’s not how this works. I ask your best price and you give me your best price and then I make a decision.’

    It’s pretty effective.

    It also makes for something fun to do when you just feel like making a used car salesman squirm.

  46. cmdrsass says:

    @Rachacha: “my tastes do not match that of the typical American”

    I found this phrase a bit strange. I’m genuinely curious to know which options and colours you specify that separate you from a typical American. Is your car lime green with beaded seats and a factory-installed 8-track tape player?

  47. jamesdenver says:

    @verucalise:

    I love that article.

    @TotallyStumped:

    I like your story – but I would’ve never given my phone number out. Maybe my spam email account I use for online shopping.

  48. Antediluvian says:

    @TotallyStumped: That’s a great story and some awesome advice. Thanks!

  49. southerndandy says:

    Know what you want, know how much you want to spend. Do as much research as you can on the internet before you ever step on a car lot. Secure a loan beforehand. If you have a trade don’t mention it until you have made the deal on your new vehicle. Do not buy any add on’s, rustproofing, fabric protector,etc, those are the biggest screw jobs on the lot & make the salesman lots of $$. You can do everything right & still get taken cause these guy’s do this for a living but at least it gives you a fighting chance.

  50. citroën67 says:

    Good luck “making a salesman squirm”, it is their sole purpose in life to get the dealership as much of your money as possible without you knowing it, and all while doing it with a smile and a handshake. The best way to make a dealer squirm is to tell him that you will pay full retail, deny any rebates, take all the $50 air fresheners you can fit on the mirror and you will give him your trade-in for free, and then when it comes time to sign papers tell him you are unemployed and your credit score is 12, that’ll make him squirm.

  51. moparlepore says:

    If a car dealer pulls that lost the keys crap, and tries to pressure me.
    I reach across the desk grab his polyester tie and pull him toward me.
    Then I explain to him he had better find my keys quick and that I have 357 magnum under my coat and I’m about to splatter what few brains he
    has in his head all over his little
    office.
    This really happened to me and he
    found the keys real quick and maybe
    it took a few years off his life too.

  52. @SOhp101: I was wrong. It was an old license or a copy of your license. Sometimes they hold your license hostage.

  53. SOhp101 says:

    @cmdrsass: I’m guessing manual transmission and no air conditioning.

    By the way, there should be some summary of all of the tips–although some are better than others.

  54. apotheosis says:

    @moparlepore:
    Have you considered the health benefits of decaf?

  55. GearheadGeek says:

    @cmdrsass: Manual transmission and wagon form-factor in my case. Hard to find that in a sea of automatic-transmission SUVs and sedans.

    @SOhp101: No. Air. Conditioning. Hmmm…. I read your words but can’t quite put them together in a phrase that makes any sense to me. ;) Perhaps it has something to do with the fact that it’s already 85 outside, at 10 in the morning.

  56. Phexerian says:

    I Recently bought a used car. I went to a few dealerships and played my game with them which is, I make a lowball offer, and they call me back over a period of 2-3 days so I can see how desperate they are for a sale. Went to 3-4 dealerships and told them upfront, I know your game, I know what you payed for the car, and I know how much profit you are gonna make off the car at any given price. Dumb dealerships still try to throw bullshit at you even if you say that.

    I went into this dealership, drove the car and it was fine, and told the salesman we could talk business. They tried to high ball me and then give me reasons for keeping the price high such as…”we are only gonna make 100 dollars off of this sale” and “it has a brand new transmission in it”. Right there, I told the sales manager and salesman that what they were telling me was utter bullshit, and that it insulted my intelligence. Well, they didn’t like that, and told me that if I was gonna use that language that I could leave. As I started to turn to leave, they said “ok ok ok, whats your offer?” And I told them my offer, which of course was a low ball offer, and he went and talked on the phone and such to his supervisor and came back with an offer right where I wanted him and we made the deal.

    Point is, these people are out to screw you to the wall. Get rowdy with them, mess with them a little, be a little rude to them, and don’t give them ammo to use against you. Next time I go to buy a car, I think I am going to even be more rude to them.

    -Phex
    -3rd Year PharmD / MBA Candidate

    P.S. I could type a book on this subject I think about the various games and tactics that I use when shopping for a car, but it would take forever to write. But for short, one of the fun things you can do, is that when you look at the trunk, make the comment of…”WOW! You could put 5 dead hookers in there!” just to see if the salesman has a sense of humor. Also, if you want to use the phone negotiations which are a good tactic, tell them that you have other cars you are going to look at today. When they ask you what else you are looking at, tell them it is none of their business, which is true, it isn’t. You are doing the research and looking for the car, not setting up the pins so they can tr to lure you into giving them extra money.
    If you are gonna do a long drawn out negotiation on a car over 3-4 days, have a friend go buy the car dealership, or two friends, and bid on the car a good bit below your offer. This can somewhat create an illusionary market for that specific car and the dealership may come down on the price a little more.

  57. homerjay says:

    @Snarkysnake: Well, actually that DID happen to me the first time I went to the dealer. Luckily this one was 5 minutes from home. I have the whole ordeal posted on the Consumerist Forums and for a while there when you googled the dealership one of the first 5 things that would come up would be my horror story.

    Then I started doing it fully through email and I brought all the paperwork to the dealer I ultimately bought the car from. Turns out I didn’t need the paper trail. He was up front and honest about the transaction and was all ready for me to walk away with my car (well, not walk).

    I may use JUSTTHATGUY3′s suggestion and go all the way via fax next time. Seems to force them to fully commit before ever seeing my face.

  58. ibored says:

    Theres a far simpelr one then trying to game dealers or make threaten them…but it only works in the snow belt.

    go shopping in winter. go on some gray cold wednesday morning when you took the time to do a driveby and notice that there is NO one in the dealership.

    We were desperate for a car after an encounter with a deer (but never mentioned that). Took a look around the lot and when the gentleman came out said we were just looking. Wandered for about 15 minutes with teh salesman watchign us the whole time. Went inside mentioend the one car we liked ($9600) and asked what they could do for us. Came back with $7200 (pretty desperate already). But we decided to think about it and call them back. Went for a cofffee and about 30 minutes later salesman called us back with an offer of $5500 on 6% financing. Went back in told them we wanted to pay cash and walked out with the car for $5500 cash after some hemmin and hawing from the manager.

    Total time: about 4 hours
    Outside temperature: about 23 degrees F

  59. vdragonmpc says:

    I just fought with the Toyota Dealer in Colonial Heights (Priority) and got my mother a pretty good deal on her car.

    What people say about the ‘popular cars’ is BUNK! Dealers will claim any car you look at is the best seller in the world. Just simply quote the news. We are in a recession and Toyota just posted major declines in sales. The dealer will try anything to keep the price high.

    I know I probably shouldnt have paid for the 7 year 75,000 warranty but for 900$ its peace of mind for her. The dealer
    markets some fairly worthless add-ons also. Priorities for life is nothing special. You get oil changes every 5,000 miles and they get to hard sell you on services you probably dont need. They do inspections for life also which I can say inspections at a dealer will cost you a lot of extra $$$.

    We ended up with 2 salespeople as I had discussed the car with one and then when we went to look at the car another person inserted herself into the sale. She was useless and did nothing for the sale except ruin the deal. We ended up dealing with 2 other dealerships who not only beat the price they were offering a better car!!

    Priority called us back all week and made crappy offers of ‘keyless entry’ for 600$ but they would ‘waive the cost’ and other things we didnt need. When it was explained that we were picking up a car saturday suddenly they could match the price.

    We ended up getting the car there as it was close to the house and the salesman was a friend. I can say that she got a good deal as her out the door price with warranty and fees was slightly more than what they originally offered a base model to us for.

    Points to note (these were actual events at a dealer):

    -Putting a person on the spot by saying “whats your friends name”, “Where did he get his car?” or other ‘fact pulls’ just pisses off a buyer.
    -When someone says that they already have a person they want to deal with LEAVE. It pisses off a buyer to beat away flies
    -Dont lie that you paid MSRP sticker for the car to a buyer. Thats a BS scam only a fool falls for.
    -Dont whip out a buy order when someone says that they will not be purchasing a car that day. Again it pisses a buyer off.
    -Trying to make a buyer look uninformed is asking to end the sale.
    -Telling a Buyer that “we will run out of cars to sell” is the most ignorant statement you can make and it tells us you are a sleazy seller
    -If you start selling me a product at 2800$ and the price drops to 1200 just from me saying no once I know it can go cheaper.
    -Dont assume which person is paying for the car. You never know if a son is giving his mom a thank you present for being a good mom.

    I still feel like I got run through a wringer from those guys… More than likely we got shafted somehow.. But the car is loaded and the price was really good compared to what people posted on edmunds.

    V

  60. Norcross says:

    I learned from my dad (who purchases a new car every two years, pays extra on the payments, then trades it when he’s not underneath is anymore). Here’s what he does.

    1. Do all the research, including add-ons and whatnot
    2. Get your financing out of the way from a bank.
    3. Put together a price comparison of other brands in the same car class
    4. Look at dealership inventory on-line to make sure they have what you want
    5. Walk in and say: “This is the car I want. This is what I am going to pay for it, tax / tag / out the door. I can hand you the check right now, or I can leave. Do we have a deal?

    Works every time. It’s amazing to watch the salesperson battle in their head the desire to haggle against the commission for 5 mins of work.

  61. JustThatGuy3 says:

    @moparlepore:

    That’s a really good way to go to jail.

  62. Blue387 says:

    Question: should I pay in cash? Went car shopping at a Ford dealership last month and my father blurted out we were paying in cash. We left shortly after.

    Should I mention I have a potential trade in but might give it charity instead? How would it affect my sale?

  63. Car ownership must be the American way.

    Look at the expectations we’ve developed over simply buying a car – it’s a massive hodgepodge of individual theories, individual experiences, and unsubstantiated ways to beat the system. It’s a combative affair, laced with unending suspicion for authority and prizing individual fortitude.

    Gotta sound the pessimist’s bell on this one, because if this is what it’s like to purchase a necessary commodity in this country, something is way out of whack.

  64. battra92 says:

    #6 is right on!

    One thing I tell EVERYONE to do (though it should be bleeding obvious) is to get preapproved by a bank/credit union before you go down and don’t sign anything. I was ready to walk out of the finance room when the guy told me I could only get an 8% loan with my credit. I stood up and was ready to leave and said, “Well, my credit union thought otherwise.” The ball in his court he magically found a deal to beat my best car loan offer from the local banks.

  65. A.W.E.S.O.M.-O says:

    @Blue387: Paying in cash is fine, but for the love of God, don’t tell them until you’re done negotiating the price of the car. Brush off any discussion about financing. The dealership might give you a little more leeway on the price under the assumption that they will profit off of you on the financing later, but once the price is settled and you disclose you’re paying cash, they’ll have a hard time going back on that price.

  66. TPS Reporter says:

    One tactic I have used is keeping your mouth shut. I had the sales manager at a Toyota dealer in Indy come down from $13495 to $8450 on a Toyota truck I wanted. It was a very basic model, only had AT, AC as the options. It was a lease truck and certified. It was 4 years old and had 40k on it, but I looked on carfax and the dealer had the truck for about 5 months. I told him I wouldn’t pay more than $9k for a vehicle, tax title and all. So he kept coming down in price, I just kept quiet (really mulling it over). We even left to go look at another truck and get some lunch, then came back and took a 2nd test drive. My wife agreed to the deal if they put new tires on it. I told the salesman that, he went and asked his sales manager and came back and said they would split the cost with me. I told him sorry, but that was the deal my wife wanted. He stuck out his hand and said “4 new tires on us and a price of $8450″. I shook it. Sometimes my wife and I play the “My husband/wife won’t go for this deal”. It’s kind of like their game the salesman play “I am on your side, I want you to have a good deal on this car but my mean old sales manager won’t let me.”

  67. TouchMyMonkey says:

    @DCI Gene Hunt: THIS. That’s why I’d rather buy a car like I’m buying a toaster. Give me THIS car at THIS price and THAT’S IT. Sure, they get the full markup set by the manufacturer, but they don’t get to nickel and dime me on the other crap. Since my trade-in usually isn’t worth the cost of towing it to the nearest junkyard by the time I get around to getting a new car, if I get more than $500 for it, I consider myself a winner right off the bat. I don’t have to bring my old POS back home with me, and they gave me an extra few hundred bucks to facilitate the deal.

    My last two cars were like that.

    1988 Dodge Colt – 130,000 miles and burning oil. Could have spent some money and hung on to it, but I needed something bigger and newer. Traded for $700 on in 1999 on a Honda Accord I still own.

    1991 Honda Civic – 175,000 miles and a failing fuel pump that would have required cutting the gas tank from the rusted-solid straps to replace it. Sold to a friend in 2003 for what I would have gotten in trade (about $600, I think). Got a ’02 Corolla, which we sold privately a year later for a ’02 Subaru Forester (which I miss), which we sold privately after Hurricane Katrina for a ’05 Scion xA (which I want to hug whenever someone mentions $4 gas).

    Both cars were driven in the Northeast in the most brutal winter weather imaginable, so getting a dozen years out of them was doing pretty good. When I trade old broken cars, I come out ahead because the salesman usually wants to flatter me (and make the buying decision come quicker) by offering more than it’s worth. If I were ever to try trading a new-ish car, I’m sure I would get royally screwed, so I don’t do it. YMMV.

  68. MD4Prez2032 says:

    Who buys cars anymore? Used bike salesmen aren’t like this, FYI.

  69. theblackdog says:

    Has anyone here tried USAA’s car buying service? Apparently you can tell them the make/model of the car you want, and they’re the ones who deal with the dealer. Is it worth looking into or would you be better off doing it yourself.

  70. Carencey says:

    @Eyebrows McGee: Oh, I had a run-in once with a salesman at Carmax that was SURE that even though his sales price was higher than what I had been quoted at a different dealership, they could finance for less and come out cheaper. He was just stunned when I pulled out my vintage graphing calculator with the formula programmed and did the math right there to prove him wrong. He had already been asking about “my boyfriend” (noting that I wasn’t wearing a ring) and evidently hadn’t thought that I was capable of doing math myself.

    @Kevin Cotter: I love the prenegotiated price programs that Costco, AAA and the credit unions operate. They’re a great tool for starting the shopping and evaluating dealerships, as well as for rookie shoppers like I was last time, and you’re under no obligation to buy through them if you can get a better deal elsewhere. I did end up buying my first car through the program, exactly because I ended up with a salesperson who found the car I wanted, told me the prenegotiated price up front, and didn’t try to jack me around with dealer extras — and then the other dealerships wouldn’t come down to that prenegotiated level (which at the time was $1000 below invoice plus any factory rebate). Plus, if you still run into salespeople who try to jack you around by NOT telling you a number or a number that is other than what the program agreed to, it’s really fun to report them back to the program — at least in my experience with the credit union program, they took that very seriously.

  71. jackal676 says:

    If a salesman pulls the “Oops, we seem to have misplaced your keys/license,” pull out your cell phone and tell them you’re calling the police if your items aren’t back in your hands in two minutes. That is a form of imprisonment. If your stuff doesn’t magically turn up immediately (which it will), actually call the police.

  72. no_face says:

    @HurtsSoGood: “1991 Honda Civic – 175,000 miles and a failing fuel pump that would have required cutting the gas tank from the rusted-solid straps to replace it.” — If you remove the rear seat and carpet there is a access panel for the fuel pump.. just a heads up incase you get another one.

    Blah to new anything.. got my buell used but never licensed from HD w/ 120 miles on it for 6300.. they were asking 8k. Got to be willing to wait them out…

  73. Rectilinear Propagation says:

    Has anyone here tried not haggling? Just telling the dealer, “I want this car with these (or no) options and I want to pay X” and then just repeating X if the dealer says, “How about X + Y?”

    I’ll have to buy a car next year and the idea of having to play mind games or wear somebody down depresses me. I want to go in, tell them what I’ll pay for the car, and leave. Whether I’m leaving in a new car is up to them.

  74. Rectilinear Propagation says:

    @no_face: Why does the car dealer have your keys and license?

  75. EdnaLegume says:

    @Rectilinear Propagation: because you’re about to drive off their lot with one of their cars for a test drive

  76. EdnaLegume says:

    my husband is a sales manager. he’s been selling cars for 12 years. What people don’t realize is cars are no different than any other retail purchase. Dealerships buy cars at wholesale and sell to the public at retail. New cars have very minimal markup, used cars are where they mark up.

    For every bad car salesman, there’s 3 stupid people that think they’re smarter than the salesman.

    I’ve never heard of the “oops we lost your keys” bit. That may be exclusive of my husbands dealership but if you don’t want to do business with them, they show you the door. They do enough business they don’t need to play games.

  77. nick_r says:

    “How does this car compare to, say, a train, which I could also easily afford?”

  78. battra92 says:

    @Rectilinear Propagation: When I went looking for a car I told them I wanted no bells and whistles. They kept asking about sunroofs and XM and stuff and I said, “the only feature I want is Auto Transmission” everything else is meaningless.

    They did give me the lowest model on the lot because I’ve found most dealerships don’t even carry the crank window, manual lock etc. ones, especially in leftovers.

  79. JustThatGuy3 says:

    @Rectilinear Propagation:

    Definitely can work, but much easier to do remotely, than at the dealership. Send the offer to multiple dealerships (see my post above), make it clear that you’re serious, and if your offer is realistic (i.e. you aren’t offering to pay $3k below invoice for a Prius), somebody will take it. If nobody does, that means that your offer isn’t really viable. Always assume that the dealer will make some money off selling you the car – don’t expect they’ll make very much money, but if you go in assuming that you’ll somehow come out with 100% of the value in the deal, you’re cruising for failure.

  80. fdx3k1 says:

    Here is what I did and it worked:

    My wife wanted a Ford Freestyle and I found an 06 model still on the lot (last summer). Called the Internet sales number and asked why it was on the lot. Found out it had been in an accident, but only the front passenger side fender had been damaged, but was replaced.

    Did my internet research and came up with our “price we can afford” number. We went and test drove…..car was perfect. Told them that I needed to feed the kids and would be back…they paid for the meal to get me to return.

    Came back about an hour before they closed. We went back and forth on the trade in first. Told them I wouldn’t take less than 11k (2003 Mits Eclipse GSX in bad shape). They finally agreed.

    They came back and said they would sale the car for $30k (36k sticker – it is loaded). Told them that I wouldn’t buy a “used” and wrecked car for that. They said ok, thanks for coming in. Told them that their negotiations skills were kind of crazy. Offered them $23 for the car, but I wanted 11k for my trade in and for them to throw in the extended warranty for free. They spoke to the dealership manager (over heard the conversation when walking to the bathroom) and he said “just sell that car and get it off the lot”. We got a great deal and they ended up sell our Mits for $7500 at auction.

    So if you can find one that has been on the lot for a long time, they will sell it to you for cheap but you have to haggle for a while to do it.

  81. MercuryPDX says:

    @homerjay: Have to agree. I used Phone and Fax to get my Jeep 9 years ago. I assembled a list of what I wanted from extended options (light bar, alarm system, etc.) to color preference (Black, then Green, Then White) and a firm delivery date. Then I contacted several dealers, faxed them the list, and played them against one another until I got what I wanted. I saved up the money, so on the delivery day I just went to the “winning” dealership with a cashiers check, and was out of there in thirty minutes.

  82. Noris159 says:

    @Jeb_Hoge: Carmax’s prices are surprisingly competitive. I was shocked.

    @pandroid: Those cars have pretty low margin on them anyway. You’re maybe paying an extra $500 on the inability to negotiate. That’s not including financing, however. If “now” price is a factor, look at American cars. They’ll do anything to sell you a car.

  83. krom says:

    #5 was paraphrased wrong by the esteemed Consumerist editor who posted it.

    Consumerist’s version says:
    Usually, leasing only makes sense if you know that you are going to be keeping the car for several years.

    CNN’s version says:
    First of all, leasing makes sense only for people who know – really know – they will not be keeping a car for more than a few years.

    In my experience with leasing CNN’s version is correct. Leases are designed for people who drive a reliable amount (the lease comes with a fixed annual mileage allowance, and higher allowance means higher lease rate; overage incurs a penalty at lease end), can keep the car in excellent condition (unrepaired damage will be estimated and due at least end), and intend to turn over the car at the end of lease period — presumably to head into another lease on another new car. Of course, you can usually buy out the car at the end of the lease or even roll it into financing, but at that time the buyout cost is based on presumed depreciated value of the car — not based on the original price minus what you’ve paid in lease payments.

    When I was a first-time new car buyer, the lease sounded appealing, because it is (moderately) lower payments for a shorter term and the opportunity to roll into another new car at the lease end. However, you’re more limited with the car and more responsible for it; rather than with a financing option in which you own the car after the term. After having leased a new car (and bought it out at the end for various reasons), I would have advised myself to take the slightly higher payments of a financing deal.

    Particularly considering I still have and use that car 8 years later, and it (still) gets great mileage.

  84. keith4298 says:

    I just went with the brute force attack. Got 5 dealers within a half hour from my house and called each in succession dropping the price another $10 and then $5 a month. By the time I called the original place back, I was $50 down from his original price.

    An added benefit is that you can say that x dealership is already offering me $XX,000.

  85. SinisterMatt says:

    @vdragonmpc:

    I hate to quibble on details, but last I checked we are not in a recession. The economy is still growing, albeit slower, but that is a discussion for a different time and place.

    Anyway, The last 2 times I bought a car, I went to the auto auction. Most Major cities have them, and yeah you are competing with dealers at times, but you can get a great deal. There is also a lot of junk cars and you can get hosed. If you know what to look for you can usually do pretty good. The best part is you don’t have to haggle with salesman.

    I bought a 2001 Nissan Altima with 80,000 miles on it at the auction for about $6500. Blue book at the time stated it as $8500. Score!

    Cheers!

  86. Rachacha says:

    @cmdrsass: Nope, no lime green beaded seats with bright orange trim.

    I generally like all of the the high end “packages” (Navigation system, power everything, sunroof, different trim packages, larger engine etc.). These “high end” option packages are almost always ordered by the dealer with leather seats, because most people who buy above the barebones stripped down model want leather seats. The problem is, I HATE leather seats so I almost always have to special order from the factory.

    It really throws the dealers off guard when they show you a “luxury” vehicle, and they ask you to sit down and feel the supple leather and you reply with “no thanks, I want cloth seats please! :-)

  87. Orv says:

    @SinisterMatt: A recession hasn’t been officially declared yet. We may be in one, but we don’t know yet. Often recessions aren’t officially declared until after the fact.

  88. Eysmahn says:

    @just that guy 3

    The sales tax doesn’t vary based on where you buy the car, it is supposed to be based on your home/billing address… if they say otherwise they are trying to get more money out of you.

  89. Maymar - now with 37% less anonymity says:

    @weave: For what little it’s worth, I’ve seen brand new cars come off the transport damaged. At least with cars on the lot, you can verify the condition the vehicle’s in when you’re ready to purchase it.

    I’ll be working on a succession of $500 beaters for the next several years though, so all negotiation tactics are slightly irrelevant for me.

  90. 2006Jeeptj says:

    What about the:
    * Undercoat
    * Extended Warranty
    * Fabric Protection
    * Dealer pin stripping or after market add ons that are cheap yet somehow add up to thousands to the price.

    Please don’t act interested in any of these items. Stay away from the dealers who are pushing the extended warranty when you havn’t even finalized the price on the car yet.

    Also never say, I’m putting $$ cash down. the more cash down, the more you can pay. Keep that to yourself until the price is negotiated and you are paying for the item.

  91. Orv says:

    @Maymar – now with 37% less anonymity: Buying a beater from a private party is its own kind of fun. You learn to separate your mental dialog from your mouth, out of politeness, so that you say things like “I don’t think I’m interested in this one” when you’re really thinking “this car is overpriced by a factor of three, and is a genuine hazard to life and limb.”

  92. Rachacha says:

    @2006Jeeptj: With regards to the extended warranty, look online! There are several factory dealers who sell the extended warranties online at STEEP discounts (over 50% of what my local dealership quoted me). When I asked them how they can offer it soo cheap, they said that they work on volume (and presumably get kickbacks from the dealer for high volume sales).

    You just need to make sure that the warranties are manufacturer warranties, and not a 3rd party insurance policy.

  93. Jesse says:

    It pays to go out of city too. Some of the dealers in smaller surounding communities are more willing to deal than the in-city mega dealers.

    If I can save $1k+ by driving an hour, why not?

  94. JustThatGuy3 says:

    @Eysmahn:

    Exactly. If you’re out of state, though, they may not _collect_ the sales tax from you – you have to pay it when you register the car. For example, if you buy a car in New Hampshire (no sales tax) and register it in Massachusetts, you have to pay the Mass sales tax. Some dealers will collect that from you and remit it to MA, some won’t bother, and you have to pay it yourself.

  95. Mr.SithNinja says:

    The “invoice” is a lie.

    It is nowhere near what the dealer “paid” for it. There is still holdback and dealer incentives that they don’t have to disclose. That is why it is not that unusual to get a car “below invoice”. Trust me, if the dealer sold it to you they made something somewhere.

    #6 is good advise but should be plan A. Make the dealer work for a better rate than you already have. A lot of times they will have unadvertised rates for people who have the credit score to qualify. If YOU go to your bank and are approved for 4.9% and a dealer offers 2.9%, it’s a no-brainer (as long as the price stays in line). If you DON’T know what you can be approved for, a dealer can hit you at 6.9% instead of 4.9% and make money on those extra points by selling the deal to a bank that would have approved you at the 4.9% but now gets to charge you the 6.9% that the dealer got you to agree to.

    More money is ofter made on the back end (financing) than the front end (sales price) because of this.

    @A.W.E.S.O.M.-O: You couldn’t be more correct, sir.

  96. thatguy01 says:

    @EdnaLegume: Stories like “unhorsing” go back to the rootin’, tootin’ days of the Fifties and the Hull Dobbs System. The absolute worst of that stuff doesn’t happen these days as a matter of policy.

    I did have a salesman hand me a contract with a changed selling price once.

  97. DeadWriter says:

    Here’s one. If anybody is pressuring you for an answer, then the answer is no. Tell them that.

  98. WeAre138 says:

    The most satisfying experience I’ve had in purchasing a new truck was when I had the cash to pay for it in full after selling my house.

    I researched the two trucks I wanted to get, figured out what their value was and about what the dealerships paid for them. I wrote a check out for the amount I was willing to spend (which was about $4,600 under sticker) and left the “Pay To:” field blank. I took the check in told them this is for *that* truck right there (pointing at it) and said “All I have on me is my ID and this single check. I’ll either fill it out to you guys or your competitor across the street.”

    Negotiations lasted about 5 mins and I drove off the lot with my brand new truck at what I thought it was worth. I wish I could say that every large transaction went that smooth for me!

  99. TouchMyMonkey says:

    @Rectilinear Propagation: They usually ask for your car keys so they can do an ‘appraisal’ of your trade-in. I have no idea why they’d need your driver’s license. Anyway, this ties you up for the better part of an hour, since they take your car and disappear with it while the salesman works his magic on you.

  100. MercuryPDX says:

    It really throws the dealers off guard when they show you a “luxury” vehicle, and they ask you to sit down and feel the supple leather and you reply with “no thanks, I want cloth seats please! :-)

    Bonus points if you offer to show them the scarring on your legs and backside from a “Horrible black leather seats in the hot sun” incident… ;)

  101. Bruce says:

    When it comes to negotiating with car dealers, I learned all my negotiation skills by watching the movie, The Fifth Element.

    “Does any one else want to negotiate?”

    /Sarcasm…

  102. donkeyjote says:

    @Bruce: Kill the manager and the rest of the salesmen lose their composure >:D

  103. mzs says:

    @Antediluvian: Being willing to leave is very good, but being nice is important as well. If you were a jerk to the salesman, they will not call back.

    One sleazy thing to do though is to buy a car with an extended warrantee. In most states there is grace period that lets you back-out. Often you have to pay a fee for this, but you may be able to save money. It is sleazy because it effects the salesman’s compensation, ie he gets less than he expected.

    @TotallyStumped: I don’t know if VW does this, but some manufactures pay the dealers for each month the car is on the lot past a set time.

  104. tad49 says:

    There is a reason most salesmen treat buyers like dickheads, its because most buyers ARE! I sell cars privately…here is an example. “why is this car dearer than others? I can buy this model out of the paper for $500 less”…..I said, “Then go & buy one.” & walked away. He bought it!

  105. Mr. Guy says:

    i just re-read that foursquare post from March of last year, and while it was brilliant, this little throwaway line from one of the commenters was what really struck me:

    Now that gas is nearly 3 dollars in Chicagoland… I bike everywhere.

    NEARLY three dollars a gallon… a year and change ago… we were so lucky and we didn’t even know it.

    with gas now around 4.50/gal in places like NYC, Chi, LA, and other major cities, the question is really, why would you buy a car at all these days….

  106. avlight says:

    The winter suggestion is excellent.

    When I go get a new car, I usually do it in January, 25° outside, and at 6 PM at night. Why? Because dealers are not selling due to people paying Christmas credit cards off. Guess what, salesmen need to pay off Christmas too….. Also dealers like the feel good at themselves when they go home so they negotiate better at the end of the day.

    What I do is I look at a car online, then on Sunday morning when the dealer is closed and the salesmen are at church repenting for ripping people off, look the car over real good, then if I am still interested, I go look up the worth values, number crunch, and come up with two figures

    the ‘in the ballpark lowball’ (you can lowball yourself too low out of a deal) and the ‘absolute max I would pay that I think the car is worth’

    I look at the car again with the salesman, test drive it and begin the deal by offering the ‘in the ballpark lowball’ (they usually do not bite on the in the ballpark lowball). The dealer counters and run’s his sales pitch as I block him out of my mind…. I hold firm to the in the ballpark lowball. He goes back to the manager.

    I never reveal the ‘absolute max I would pay’ figure (If the dealer asks, I hold firm to the lowball) and every time I have dealt, the dealer at the very end of the negotiation when I tell him it’s the ‘do or die time’ comes back with the final offer between the ‘lowball’ and the ‘absolute max I would pay’ figure (more towards the lowball side).

    It’s like Reaganomics win-win. I ‘win’ by getting the vehicle below my ‘maximum worth value willing to pay for price figure and the dealer feels he won by ‘believing’ that he got me to crack and budge upward even though I knew what I was willing to pay the ‘absolute max I would pay’ figure but ended up paying below that price.

    Plus, he goes home to his wife happy, feels that his life has a purpose, brags about how he made me ‘crack’ to his other sales buddies the next morning (but if he knew the true story… He Budged) and has commission to pay off some of his Christmastime maxed out credit cards

  107. Orv says:

    @HurtsSoGood: I think they copy your driver’s license a) so they know that you’re actually licensed to drive before you drive off in their car, and b) so they have enough info to file a police report if you never come back from your “test drive.” I suspect this is an insurance requirement for them.

  108. @Rectilinear Propagation: My first bit of advice would be to ask people you know about the dealerships around you. There are great dealerships out there, used and new lots. There are also horrible ones, and in my experience the larger ones are the worse ones.

    In my town, there is a used place my brother has had several good dealings with. When I went to look at a car at that lot, the first thing out of the salesman’s mouth was “How is your credit?” I have never gone back to them. There are also several good new/used dealers here and one conglomerate that I wouldn’t buy a car from regardless of its price.

    Most of the advice here is pretty good. The keys are to look at your final price, interest rate, and trade-in value. Negotiate these one at a time. If possible, get financing in advance or pay cash, but always start with agreeing to a price and then working on the trade and then how you’re paying for it.

    It’s pretty simple, and you’re likely to get screwed at least slightly your first time. Take someone who’s been through it with you to help guide you if you’re uncomfortable.

  109. yagisencho says:

    arsbadmojo – great points, and I used all three this past April.

    We’d spent half the day with the salesman, enough time that when he offered me $1500 below blue book for our trade-in, and I started to walk out the door, the dealership magically offered full blue book value for it.

    It wasn’t a stree-free experience, but pretty painless as far as such things go.

  110. smart42 says:

    Drove in with a Dodge Caravelle…tranny shot and motor down three quarts so I parked it real tight nose in.
    Look man I say, I need a bigger car, this here Chevelle has a cop motor and suspension. Runs like a champ but I still need more room. I like that Caprice over there…how much?
    swap plus 200$ was the final deal.

    Small victories, I think the Herb Tarlicks are still winning on the flag lots of life.

  111. smart42 says:

    FLAG LOTS HAS TO BE YOUR NEXT FEATURE!

  112. TwoScoopsRice says:

    Years ago, young and pretty broke (but with great credit ratings), we were looking for a new-to-us car. We hit the row of used car dealers and got the full-on salesperson pressure.

    After the 3rd shop, seeing the car my husband really wanted, I did the “tired wifey” routine of no, we’re not doing the check thing and just pulled out two credit cards and smiled. Told them that between the two cards, we could buy that year’s model off the lot if we felt like it, and did they really want me to use my last check in the checkbook (showed them the check) as an “earnest offer” for the “sales manager”?

    The look on the sales guy’s face was priceless.

  113. Nick_Bentley says:

    I bought my last car and got a huge deal on it and even upped my trade to a fair level. Go into the dealer that has the car you want a half hour before closing on Superbowl Sunday. By the time you get to making an offer/deal they were itching to get out of there and got no argument in chopping $6k off the whole thing, which given the price of the car was really sweet. The pregame stuff was starting and they had it on the radio and I could tell none of those guys wanted to stay another minute and basically agreed to everything just to get the day over with.

  114. Trojan69 says:

    When it comes time to talk numbers, I insist on two things. One, always quote me the out-the-door, all taxes paid, title and plates assigned to my possession price. Two, I will not pay ANY “documentary” or “conveyance” or “convenience” fee. I will pay the regional advertising fee and the freight fee. But in any quote to me, there are to be ZERO additional charges.

    One time, they tried to pull the “doc” fee after the deal was agreed upon. “You mean to tell me you aren’t going to buy this $20,000 automobile over $100?”, the sleezoid said to me. I replied, “You mean to tell me you won’t sell me this car and take the commission you’ve spent the past three hours trying to get over $100?” I stood up to leave and three seconds later, he relented. They still made a profit, and rightly so.

  115. mrosedal says:

    I have so many friends who have been stuck with loans with such a high interest rate that their loan payment was only paying interest. Talk about total price not monthly payment.

    What I have done is get a bank loan before I go.

  116. toyotaboy says:

    I love that movie “6.. miles of cars”

    Another good movie is “suckers”

  117. MrEvil says:

    @thatguy01: Definitely not in Texas. In Texas you pay 6.25% of the vehicle’s purchase price. Your trade-in is considered part of your payment. Which is why Texas has such a thriving private party market for vehicles.

    @MercuryPDX: Ditto, I absolutely HATE LEATHER SEATS! Why anyone thinks sitting on the hide of a dead animal is luxurious is beyond me. The leather sweats, you sweat, you just end up this damp wet mess wherever your skin touches the leather. The perforated stuff I can live with. A dealer tried to sell me a Lariat F250 and I told him “I’ll only buy it if you take enough off the price to get this SOB reupholstered.” Oh yeah, I walked away from that dealer.

    The dealer I bought my truck from in Missouri was pretty easy to deal with. Aparrently they were desperate to get it off the lot (despite Diesel fuel at the time being cheaper than gas at $1.25/gal) and took 4 grand off the price without flinching. Heck they didn’t seem much concerned about it as all they required for a test drive was a photocopy of my licence and handed me the keys. I didn’t give the dealer a royal screwing, but I did get a fair price.

  118. KingPsyz says:

    @4ster:
    WRONG, WRONG, WRONG…

    Anything to do with price that you’re told over the phone holds about as much weight as a crepe paper water glass.

    There’s two numbers you get over the phone, a lowball figure to entice you in or a MSRP quote. An honest phone sales person will tell you so too.

    Your best buy is really biting the bullet and spending an hour or four at the dealership. Listen, everyone wants something for nothing what are you gonna be willing to put up with to earn your discount?

    And to be honest, the industry is moving towards a pure pricing model like with Scion. Word is when Toyota splits Prius as a seperate line it will also adopt a pure pricing policy which will thirll those paying 8k over MSRP right now in hot markets.

    Also, if you call me and ask for fleet, you better be a business owner and looking for 2 or more vehicles. If you ask for fleet and then ask for a single loaded vehicle under your own name we aren’t giving you fleet pricing. It’s a sham and you can thank edmund’s dot communists for that.

    You really want the deal with the least ammount of effort, use the dealership’s website. Send a submission and be clear in what you want in your car. Being obtuse or vauge is not helping you. The reason we and most dealers give internet customers a discount is because they’re simple deals.

    If you complicate it then the incentive for the dealership to get you out at bottom dollar goes away.

    Be willing to come in still, don’t expect to negotiate fully online unless you’re dealing with a dealer in a different state. Most dealerships employ “internet managers”, these are usually former or current top salesmen who get more leadway with uppermanagement and will generally have a price menu they can make your deal off of.

    Despite what this site will love to say, there are some people in car sales that love to help and get their customers the best deal. Call or email in and just like in Road House BE NICE. Being a hardball isn’t going to endear you to anyone but your own ego.

  119. KingPsyz says:

    @MisterE:

    No you think you’re in control and really just being kind of a jerk.

    When you go to sears to buy jeans do you demand a price 10-15% below the listed price? Do you come in with another retailers credit card and demand they charge it there?

    So why do you do that with a car? Because you can?

    Granted the auto industry is to blame for allowing it to continue, but lets put it this way. If everyone is getting a discount, who’s covering the difference? Other customers are.

    AGAIN, what have you done to earn this discount you’re demanding?

  120. JustThatGuy3 says:

    @PSN: kingpsyz:

    What have I done to “earn” this discount? Nothing, other than being willing to buy the car. The dealer doesn’t have to offer me the discount. Heck, he doesn’t have to sell to me at sticker, he could demand $100k over sticker. I can also walk. It’d the dealer’s choice whether he’d rather sell the car to me for invoice less incentives or not sell the car to me at sticker.

  121. KingPsyz says:

    @JustThatGuy3:
    Let’s just stop at the nothing part. Where else can you buy a retail good for whatever price you deam “willing” to pay?

    And dealers wouldn’t need to sell for over MSRP if there weren’t people demanding to sell them a vehicle a dealer’s cost.

    Something to keep in mind, when I said “what have you done to earn this discount” I don’t mean you shouldn’t get one, I mean you should be willing to spend a little time and let the management decide what they want to do to make the deal.

    Generally internet customers get the best deal, but we’ve had people walk in off the street and buy a Prius for invoice cause they caught a manager wanting a deal, where at the time our internet price was $500 off MSRP.

    And to all the commenters suggesting being rude, or demanding. Don’t… I don’t come into your job kicking dicks out your mouth or pissing in your cheerios. Don’t do it to us.

    You come in a pleasent mood and knowing what you want and you’ll still get the deal. If you think your salesperson is skeevy. ASK FOR ANOTHER ONE! You’re not obligated to work with the first person to say hi.

  122. GearheadGeek says:

    @MrEvil: You are incorrect sir. In Texas, the sales tax on motor vehicle purchases is on the net of price less trade-in.

    [www.window.state.tx.us]

    One reason we have a thriving used-car market is because we have weather that doesn’t promote rust, as long as you live away from the immediate vicinity of the Gulf Coast.

  123. JustThatGuy3 says:

    @PSN: kingpsyz:

    “Let’s just stop at the nothing part. Where else can you buy a retail good for whatever price you deam “willing” to pay?”

    Everywhere. There isn’t a single good where I’m not free to walk away. The dealer doesn’t have to sell the car to me at the price that I’m “willing” to pay, but he can’t MAKE me pay more than that.

    The dealer puts a price on the car: sticker price. I’m free to pay that price or offer a different price. The dealer is free to accept my offer, counteroffer, or tell me to take a hike.

    The problem that dealers face is that the product that the Honda Accord that dealer A sells is EXACTLY THE SAME as the Honda Accord that dealer B sells. New cars are a commodity, like iPods or Campbell’s Soup.

    I don’t support being nasty, and I don’t want to waste the salesman’s time, or have mine wasted. When I come in, it’s because I want to test drive. Once my test drive’s done, I’ll let the dealer know that I’m not buying that day, but, if and when I decide I do want to buy from that dealer, I’ll give him the chance to match my best price, plus $100 (for the test drive fee).

    After that, there’s no reason for me to be in the dealership except to pick up the car. I use the program described above (nobody has to contact me, it’s up to them if they want to accept my offer or not), and get the deal done. Then, I come in and pick up the car.

  124. KingPsyz says:

    I never said you should be forced to purchase something, I asked what other retail situation do you ask for a price other than what is listed on the product?

    Granted it’s a large purchase, but people seem to haggle more on cars than they do on TVs or houses now.

    Personally, I think haggling is a waste of everyone’s time. Car dealerships as we know them are not long for this world.

    The car dealership of the probable near future will be simpler afairs where you come and test drive on a demo unit, order color and options and drive home. No price back and forth, no floating pricing on ad ons if any at all.

    Everything will have a straightforward price and that’s that.

    The manufacturers prefer this because it prevents bad media from people like that scumbag on the Prius story the other day.

  125. JustThatGuy3 says:

    @PSN: kingpsyz:

    For items where I know there’s the opportunity to haggle, and someone who has the power to haggle, I’ll do it. Cars, real estate, jewelry, appliances, etc.

    Not going to do it at Walgreens when buying toothpaste.

    Frankly, I’d be fine with the model you discuss, the problem is, there’s always going to be some wiggle room. Even Saturn dealerships haggle – the car price is fixed, but all of a sudden your 1993 Civic is worth $12k on the trade-in.

    The manufacturer can’t really require dealers to stick to a fixed price (it’s Manufacturer’s SUGGESTED Retail Price), and the dealers have tremendous political power (big donors at the state level), so any attempt by the manufacturers to go direct is almost certainly a non-starter.

  126. Mr.SithNinja says:

    @PSN: kingpsyz: You couldn’t be more right about all of this.

    I sold for 3 years and when I worked at VW when the convertable Beetles came out we were told that any offer that was less than the $5000 over MSRP was not even to be put on paper. Why the hell should it be discounted when we had people begging to pay full pop?? One of the best days I have ever had as a salesman was when my Closer heard me talking to a guy who was demanding to see the invoice and was only going to pay $500 over cost, blah, blah, blah, and being a total prick about it. I was politely trying to explain why it wasn’t possible when my Closer
    called me over and told me to tell him “Get the hell off my lot.” The look on the guy’s face was catharic for me. It is the one thing that every sales person who has ever had to deal with J/Os like that and had to stand there and take it, has wanted to say. After he called me just about everything but my name, he left angrily and I was at peace. An hour later I sold 2 Conv. Beetles to a guy who was buying them for his twin daughter’s 16th Birthdays. Life was good.

    People have to remember that it is a supply and demand business. If you are looking for a garden variety Civic that they have in bunches, yeah you can expect to get a deal, but don’t go in making demands and being a prick because a lot of places would rather knee cap you and move along to the next one than work with you.

  127. JustThatGuy3 says:

    @Mr.SithNinja:

    Again, not recommending that people be jerks, but the example you give (Beetle Convertible just after release) is definitely the outlier. For the vast, vast majority of vehicles, the product is readily available from multiple dealerships.

  128. james says:

    Bring cash and you can knock down the price considerably.

  129. humphrmi says:

    Boy I’m way late on posting to this thread, but here goes.

    Last time, I took my kids to the dealership. We’re talking an infant, 1-year-old, and six year old. Then as they ran around the dealership, we ignored them.

    This gave us leverage in two ways: one, if we needed to take a breather from negotiations, my wife would say she needed to nurse the baby. Easy out. Second, while I was ignoring the kids, the salesman was distracted because they were opening car doors and honking horns (which I got very good at ignoring, or at least pretending that I was ignoring.) This changed his priorities somewhat, and gave us some leverage.

  130. @Psychodad1961: You know, I want to take you with me the next time I buy a car. What’s your rate? lol. The part about making them take their awful decals off? PRICELESS.

  131. cecilsaxon says:

    I told the Scion Dealer I loved my car- and then haggled away on just about ever one off fees they tried to hit me with. Fixed pricing may afford a high margin, but at least you get to enjoy the moment and not put your poker face on. Its called a dealership (dealer-ship)- deal get it?

  132. KingPsyz says:

    @cecilsaxon:
    Actually champ, Scion gives dealers a $600 profit per Scion. Far from a large margin. Toyota dealers are required to offer Scion and at pure pricing to remain in their good graces.

    Dealers that don’t participate or loose their Scion contract for what you just described also loose a ton of allocation.

    If your Scion dealer did allow you to haggle on fees they could loose their contract and possibly their Toyota license to sell. So if you expect me to belive a dealership risked an entire business for one deal you’re sorely mistaken or found about the dumbest Scion champion ever…

    @james:

    One of the biggest misconceptions in the car business. Dealers loose money on cash deals, why do you think this is helping you?

    You want a good deal, finance with the manufacturer on a model carrying an incentive rate and bring a decent down and some good credit with you. The dealer still gets backend profit because it’s financed so they can move more on the front end.

    When you buy cash their only source of income is in the vehicle itself, so they’re less likely to move. If you do find a lot where somehow cash gets you a better deal, your either at a fly by night used car lot or you just think you’re getting a deal and the dealer might be sitting on a large dealer incentive.

  133. snoop-blog says:

    Never buy a used car in the winter. Only on the hottest summer day.

    A) to test out the a/c

    B) if the car was in a flood, your less likely to notice any smells in the winter. I once bought a vehicle that didn’t smell until the summer, then the moldy must was very strong after sitting with the windows up in the sun all day.

  134. snoop-blog says:

    I am a car salesman, and yes I have a phd in messing with your head, and I could tell you the absolute best way to get the best deal but why would I?

  135. bagumpity says:

    FYI – if you have cash, it might actually be in your advantage to say you don’t know anything about your credit or how financing works. Ask them if they can drop the price a few hundred more if you take a higher interest rate. Then pay the whole thing off the first month. Make sure there’s no pre-pay penalty first, though.

  136. oldwiz says:

    @JustThatGuy3:

    Exactly! The proper thing to do is just call the police and tell them you problem. Make sure the salesman hears you. Tell the police you plan to file charges.

  137. KingPsyz says:

    @bagumpity:
    not really, only if they finance you with a 30 day waiver of intrest.

    otherwise be it over 1 month or 72, you’re still paying that total percentage ammount.

  138. fkafl says:

    Here’s one for ya; “lie” about the interest rate you’re getting from the bank. I told the dealer I was getting a 4.75% car loan through my bank (it was actually 5.0%) so he got me a loan for 4.5%.

  139. bagumpity says:

    @PSN: kingpsyz: Please explain more. Are you saying that your first payment includes the interest for the entire loan? How could that be possible?

    From going to Edmunds and using their auto loan calculator, the monthly payment on a $10,000 loan at 7.09% for 60 months is 198.43. Multiply that by the number of payments, and you get $11,905.80 (the total cost to repay). The difference (amount of interest paid) is $1,905.80. Unless there’s a pre-payment penalty, the most you’ll pay in interest by paying off the loan on the first month is roughly $13 ($198.43/1.0709). Assuming you can get them to drop $100 in the price of the car, you’ve saved yourself $87. Granted, that’s not a lot of money but it’s enough for a good meal.

    I’m no accountant, so I won’t be offended if someone more savvy corrects my misunderstanding.

  140. texmandie says:

    @bagumpity: I think what he means is that you will still have to pay 1 month’s interest, which at 7.09% would be (7.09%/12 = ) 0.59% of the purchase price, or $59 on top of the $10,000 in principle, putting you $41 ahead rather than $87. The way amortization works, a greater percentage of early payments is interest on the principle than in the later payments. You have to pay the interest racked up that month on the remaining unpaid principle, then anything else on top of that goes towards reducing the principle.

    Thus, if your loan is amortized over 60 months rather than 36, but the interest rate is the same, you will pay exactly the same amount of interest in that first monthly payment, but the overall payment is lower because you and the bank have agreed that you have 60 months to repay the balance rather than just 36. In subsequent months, the interest amount paid on a 60 month loan will be higher than a 36 month loan simply because the remaining principle balance is higher, and not being settled as quickly.

  141. bagumpity says:

    @texmandie: Good explanation, thanks. I did some research on my own, and it’s also possible that he might be thinking of a RISC (Retail Installment Sales Contract).

    In a RISC, you’re simply agreeing to pay the amount of the sale plus a finance fee. Because the fee is usually equal to the interest you would have paid on the loan, it’s easy to assume it’s the same thing as an installment loan. It’s not. Using the same $10,000 and 60mo @ 7.09% example the total finance charge would be $11,905.80. In a RISC, you simply agree to pay back this entire amount. The schedule is more or less up to you, except that you can’t miss a payment. There’s no penalty for pre-payment (the dealer is happy to tell you this- it’s true) because paying off early doesn’t change the amount you agreed to pay.

    In an installment loan, you pay a percentage of the principal every month, spread out so that the payments are equal. If the amount of principal is reduced via a pre-payment, the amount of interest is reduced thereby. They handle the change either by reducing the monthly payment or reducing the number of payments. You might also be subject to a pre-payment penalty or “rule of 78s” schedule on the unpaid interest.

    My own situation went like this: I bought a new car and got $1500 cash back for going through their financing. I also asked for, and got, $100 of their “dealer finance reserve.” It was a simple interest installment loan (good thing, since I had no idea what a RISC was or how they worked). The only requirement was that I had to keep the loan three months or pay a pre-payment penalty. I paid all but $100 on the first month, then made two more payments of $50 and a payoff payment of something like $9. So for $9 in interest, I got $1591. The loser in this deal was the financing company, who paid the dealership 4% of the finance charge up-front and received only $7 in interest in return. They lost close to $2000.