5 things to know before going to a car dealership

In my early twenties, I had such a ridiculously bad day at a car dealership that it prompted me to take on a side job helping others get through the car buying process.

To date, I have helped about 100 people get a new car and at the same time get a good deal. I usually save them a few thousand, but more importantly, I get between them and the most insidious dealer sales tactics.

Are car dealerships really that bad, you ask?

No, I would say that 40% of the dealerships that I have worked with are honest, professional and efficient – and I treasure them and constantly refer clients to them.

But the rest of the time, I end up picking up some sloppy sales tactics that would cost my clients thousands.

And now that it’s a seller’s market – and the sales force is fighting furiously to sell what little they have – the tactic is getting nastier.

So, if my loved one were to walk into a car dealership without me, here are five things I wish they knew first.

1. Try to negotiate the purchase price in advance

If you walk into a car dealership without a pre-arranged price, you could very well be Bambi’s mom walking through the woods of West Virginia.

I know it’s a grim analogy, but seriously, if you walk into a car dealership without a predetermined price, you paint a target for all sorts of psychological artillery on your back.

To their credit, most dealers will negotiate with you over the phone. This is not their preference, since you are easier to manipulate personally, but they will do it.

Just select the model you like from their online inventory and request the best price to sell on the street (OTD) (more on that in a moment). Casually but confidently mention that you are just calling a few dealerships to get the best OTD price.

This will help you get a better deal.

If the salesperson refuses to discuss prices over the phone, kindly ask to be transferred to someone who will.

If no one at this dealership discusses prices over the phone, they are essentially admitting that it is their policy to manipulate customers on the spot.

Yes, no, thanks. Call another car dealer.

2. Flip the script in negotiations

When you discuss pricing over the phone, they may focus on monthly payments rather than the actual price of the car.

Dealers do this because it sounds cheaper, and the opacity of monthly payments gives them the opportunity to increase costs.

For example, instead of saying, “The sunroof option costs an extra $1,300.”

An experienced salesperson will say, “You can add a sunroof for as little as $21 a month.”

Often you will hear this old chestnut: “How much are you comfortable paying each month?”

Your response to any mention of “monthly payment” should be “let’s focus on the price on the street, thanks.”

3. Stay obsessed with out-of-home (OTD) pricing

So what is this “price on the street”?

First, some context:

Car dealerships are not car manufacturers. These are completely different businesses, and they often don’t even get along with each other.

For example, in 2022, dealerships are cheating customers with dealer markups. This is of great concern to automakers, as it casts a shadow over the brand and sends car buyers into the arms of competitors.

To make matters worse, automakers don’t get a dime from those profits; so it’s a loss for them.

Dealer markups are certainly not new. Even the Nissan Sentra sold at a premium in 1984.

However, they have a new tactic that I want you to know about.

Believe it or not, the dealer will agree a “price” with you over the phone. Then when you come in to buy a car, they charge thousands and sometimes tens of thousands of dollars in ridiculous fees. Things like:

• “Market corrections”, also known as greedy dealer markups.
• Pointless extended warranties.
• Overpriced extras ($75 ceramic coating for $1000, dummy “GPS tracker”, etc.).

I mean, I think this tactic works for them?

I think someone saw these $12,000 fees and thought, “Oh, you scoundrel, you! And just signed with a dotted line.

Otherwise, why would they pull these frauds if they never worked?

In any case, it is because of these “paying fees” that you always want to talk about the price of the outdoors. “OTD” is the dealer’s term for the absolute final price at which you can kick it out of the car park, including everything: tax, tag, ownership, and all the other stupid fees they try to put off for later.

In addition, once you have received the OTD vehicle price signed by the sales manager, you will now have something to offer other dealers and ask:

“Hi! Can you beat this number?”

4. Dealers will play mind games

A few months ago I got a call from my friend Kayla, who was buying a car and was already at a GMC dealer in town. She arrived unarmed—no pre-arranged OTD price—and soon realized she had made a mistake.

So I jumped in my car and drove to her dealer a few minutes later, happy to help, but also morbidly curious about what common bad deal tactics we’d be hit on for; especially since women are treated worse and paid more in dealerships.

My answer came quickly.

The clerk who helped her apparently disappeared over an hour ago. To make matters worse, he took the keys to Kayla’s rented apartment, leaving her stranded.

Kayla simply assumed that they supported the assessment of her current car. But we were the only ones in the showroom and most exchange evaluations take 15 minutes.

I explained to my poor friend that we had just received the classic double manipulation tactic:

• Take the keys from the buyer of the car so he can’t leave.
• Make them wait by kicking the clock and lowering their defenses.

Once again, I’m amazed that this tactic ever works. But it has to be, otherwise they wouldn’t have done it. Anyway, I whistled to the receptionist and politely asked for Kayla’s keys back.

“You all need to be patient,” she snorted. “They went back there and are looking for them.”

Do you think the police can help? They have flashlights.

Kayla’s keys magically appeared within 30 seconds and we left the dealership shortly after.

Three days later, I helped her get a Mazda CX-5 from a good car salesman buddy who, as you know, respects his customers.

5. If you feel uncomfortable for a second, leave.

Needless to say, never, ever give the dealer your keys or mention renting until you’ve negotiated an OTD price. With less incentive to mess around with you, the assessment will take the appropriate 15 minutes.

But even if you have the keys, feel free to pop up if you’re uncomfortable. You don’t owe the dealer anything.

Tired of waiting? Feel free to go out.

Feel like you’re overpaying? Don’t worry, get out.

Feeling discriminated against based on race and/or gender? Both reasons are good reasons why you should leave this dealer immediately and never come back.

I have regretted many times that I went to a car dealership, but I have never regretted that I left it. And if you’re uncomfortable with the salesperson helping you, just send them a text message telling them you need to leave.

And send you the best OTD price.

Summary

Car dealerships – with their questionable sales tactics, price gouging and gender discrimination – may one day disappear.

However, not all dealerships are bad, and in many cases you can get a good deal on a car, depending on the quality of the dealership, by following these tips.

Knowledge is power against dealerships, so be sure to check out one of these articles the next time you’re looking to buy a car from the market.

Featured Image: My Ocean Production/Shutterstock.com