New car dealerships have a few tricks up their sleeves when it comes to selling you a car.
Car Sales Tricks
Bait and Switch
First, the cars you see on television for those low prices are usually the cheapest models. However, you will notice they show you the best features, which they have a little disclaimer saying “optional”. They show you the best, yet tell you the price of their worst model. It is one of the oldest tricks in the book. What you see in the ads is not what you should expect to pay on the car you want.
Dealer reserve is when the dealers get a kickback from the financing deal. First they will tell you that your credit is not good enough to get outside financing, but that their finance company will give you the “best rate”. They validate this by saying you could not get financing elsewhere, so you should take ‘our high priced offer’. The dealer tacks on a few percentage points of interest to your bill, and this can result in the paying of extra thousands of dollars.
Dealer holdback is when the dealer has an extra 2-3% of their purchase price given back to them a few months after they sell the car. It is included in the invoice price, which is the price they pay for the car. This is how they can sell a car at the invoice price, and still make a profit (in addition to their manufacturer incentives).