What You Need To Know About Buying A Car At A Dealership

September 28, 2017 By Richard Poulson

Going to a dealership to buy a car can be an intimidating experience. You’re not an auto expert, so how are you supposed to negotiate an automobile purchase without being taken advantage of?

It certainly doesn’t help that the salespeople at dealerships have a reputation for being notoriously tricky. Typically, much of their income comes from the commission of a vehicle sale, so they have all the incentive in the world to make a sale by any means necessary.

However, if you know what to expect, you can shut those tricks down and get a truly good deal – or, at the very least, you can walk away before you get ripped off.

1. The 20/4/10 Rule

So, you probably want a low monthly payment. Who doesn’t want a low monthly payment? In terms of your day-to-day life, that’s the aspect of buying a car that’ll affect you the most.

Dealerships will try to make a car look affordable by making the monthly payment as low as possible. But before you sign on the dotted line, take a look at how many payments you’ll have to make in the long run. If you’re making payments for 60 months or more, then the dealership is making a lot of money from you in the end. With a shorter loan, you’ll pay less overall.

Here’s a good guideline to go by: the 20/4/10 rule.

Agree to a 20% or larger down payment, set the loan for 4 years or less, and the monthly cost of the car should be less than 10% of your monthly income. Any car purchase that doesn’t meet those criteria isn’t a great deal for you.

2. Watch Out for the Bait and Switch

Another common tactic: a dealership will lure you in by advertising remarkably low prices. Then, when you get to the dealership, you learn that the low price is only for a completely stripped-down model. The upgrades you want seem strangely expensive, and all of a sudden the car is thousands more than advertised.

Instead of going by the prices, you see in print, radio, and TV ads, get on your computer and see if the dealership has an inventory of their cars posted on their website. Hopefully, these listings will include how much upgrades cost, so you can know before you go to the dealership what the prices of their products really are.  

3. Limited Time Offers Don’t Exist

Once you go back and forth with a salesperson about the price of a car you want to buy, they might eventually take a moment to collect themselves, let out a long sigh, and say that they can offer you a “one final, limited time offer” that’s much closer to the price you want. The catch, they say, is that the offer is only valid today. If you walk out the door, the offer is off the table. 

Don’t fall for this. The dealership wants to move its inventory and make a profit; the salesperson wants to make a sale and keep their bills paid. You have the upper hand. If an offer is made once, you can probably get back to the same numbers again at a later date. Don’t let the salesperson pressure you. Take your time, weigh your options, and make an informed decision.



Have any questions about buying a car? Feel free to contact us.

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