7 Tips on Buying a New, Used Car and Not Getting Scammed by a Dealer
If you're shopping for a new car and you've decided you'd prefer to travel the path of used car dealership cars, then you've arrived at the right article! In the sections below, I've left you with a plethora of information to use (or disregard) to get you into the best new, used vehicle you can get.
Have you ever purchased a used vehicle from a dealership?
1. Be Passionate, Particular and Prepared
Knowing exactly what you want before you even think about approaching a dealership, will set you up as a person who is not to be messed with. It will also build up your confidence.
I've watched plenty of people go into a dealership before doing any serious preparation and they either ended up severely disappointed, or they got ripped off. If you don't want to experience either one of those scenarios, make sure you're Passionate, Particular AND Prepared.
You need to have some very important bits of information ready to go:
- Know your credit rating and history by heart.
- Know exactly how long you want to be into a loan and how much you can pay per month for that term.
- Know exactly how much you have and are willing to pay for your down payment, and exactly how soon you will have that in cash.
- Narrow down your choices to 3 vehicles. Know the make, model, year, specs, value and recalls for each of those cars.
- Have your financial proof ready to go. Your last 3 paystubs are a must, but tax returns, positive bills, bank statements and any receipts from any cash you make on the side, are extremely helpful.
Knowing all of this information in detail will help you avoid getting scammed into a bad load or a crappy car. It will also give you an edge which will allow you to subliminally say to the salesperson: "I know what I want and you won't scam me into anything that doesn't fit in with my plan."
2. Research and Investigate
Cover every angle and don't stop until you're so filled up full of intel that you might just puke. Seriously!
Dig in deep and research things like:
- Your local used car dealerships: Who are they, where are they, how long have they been in business, whose the boss and what's their rep with the BBB, Yelp or other popular review sites? Do any of your local dealerships stick out? Who can offer you the most bang for your buck that fits your credit rating and budget? And most important of all, what kind of vehicles do they have that you would be interested in driving?
- Your non-local used dealerships: I personally live in Seattle, which is not an area well known for being cheap. That doesn't mean you can't get a good deal, but it often times means that you can get a much better deal if you look outside of the big city. The same could be true for you. So after you look up all your locals, take some time to play detective with some non-local dealerships. Research the same intel on them that you would for any of your local dealerships.
- At least 3 vehicles you're interested in: For me, it was Jeep Wranglers, Dodge Ram trucks and Subaru Legacy's. None of those are what I ended up getting, but they gave my search a focal point. If the dealership had at least of these options, they might also have other vehicles I'd be interested in as well. What are your top three rides?
- Any vehicle the dealer has you look at: Many people get their hearts set on a particular type of vehicle, only to find themselves falling in love with something completely different. There's nothing wrong with this at all, so long as you take the time to research the new car of your dreams. In fact, it's this very tip that saved me several thousand dollars when negotiating with the dealer over the car I ended up getting. I knew how much the vehicle was worth inside and out. I knew what the defects and recalls were, and I even knew how much money they were making off of me. Knowing all of these made it easier for me and easier for them. There was room for negotiation, but not room for BS.
- Your credit and financial history: One of the very first questions most used card dealers will ask you when you inquire about financing with them, will be about your credit score. By knowing the answer, you can get a better ballpark estimate of what your options are through each dealer, especially if you want to hold off on having them ping your credit until you're ready to finalize a deal. Knowing your credit score, also enables you to look at the bigger picture for your budget. If you have zero credit, poor credit or you're a first time buyer, you're looking at higher interest rates and a loan of at least $5000. If you're credit is better than that, you can have a wider selection of loan amounts, ranges, interest rates and financing options. If it's worse, you might as well start taking your soon-to-be-co-signer out to dinner now, so they'll be all ready to sign when you need them too.
- Your insurance options: It doesn't hurt anything to do a quick check on the various insurance companies around you and what sort of monthly or bi-yearly deal they can offer you. It's likely that the dealership will have some sort of discount program worked out with their favorite insurance agents, but their discounts might not actually equal savings for you. If you've already gotten quotes from all the insurance agencies in your area, you'll know if you're getting a better deal from the dealer or if you're getting ripped. It's definitely better to be in the know, then to be in the dark, isn't it?
- Your financing options: This is along the same lines as researching insurance. You want to do it more or less so that you know if you're getting the best deal from your dealer or not. At the same time, you're also doing it so that you can show you're dealer you know your own situation and what you can realistically expect to get out of it. They're not likely to mess around with you much if you've already been following this guide, but they'll be even less likely to mess with you if you tell them you already know you can get approved for a better deal than they are offering you.
- Trade in Value: Make sure you have any trade-in vehicles appraised by multiple places before you take it with you. Don't trust the dealer to give you a good deal. Be realistic too, you don't want to overvalue or undervalue your old vehicle.
- Common and Uncommon car sales tricks: I didn't list this one last because it was the least important. To the contrary, I listed it last so it will stick out the most. While a-g are definitely important, they won't matter much if you aren't aware of the tips of tricks sales men and women can use to bend your will to their wishes. Something as simple as making you sit around the dealership for 3-5 hours while they "talk to their boss about getting you a better deal", is enough to get you to signup for a deal you never agreed to. There are many many other tricks they might use, so take the time to really dig in and get to know those tricks so you are fully prepared when you see them.
Don't Skip This Video!
Did You Know?
For every $10,000 a vehicle costs, most dealerships expect you to pay a minimum of $200 a month on the primary loan. That doesn't include taxes, fees, interest, warranties, GAP or any extras.
This means that if you look for a used vehicle that is less than $10k, you're likely to get a better monthly payment. You're also not going to be strapped into that loan for forever either.
Tip: Never Negotiate on an Empty Stomach
When you're hungry, you're more likely to experience an array of unpleasant and unhelpful emotional states like:
3. Understand the Art of Negotiation
Negotiation should never be one sided. Both parties need to understand that once they embark on this journey with each other, there will be plenty of bumps in the road. There are going to be various issues that come up, which you might not be prepared for in every way, just as there are going to be issues they are not experienced with handling - like having a prepared person like you come in.
When it comes to understanding negotiation, there are three basic things you need to understand:
- You are there to get the best bang for your buck.
- Your sales pro is there to make the most bucks for the least bang.
- You're both looking for the same thing in different terms.
That's right, your sales guy is trying to feed and fend for his family and livelihood, just like you are. You're just looking at it from two different angles. Though it's easy to see that if either of you were two trade shoes and a few miles of walking, you'd do the same things.
Know this makes it easier to understand that you and your sales person need to meet it the middle somewhere. The best way to take control of the process of meeting in the middle, is to keep your financial cards shrouded in mystery as much as possible. One of the best ways to do this, is to tell them you can afford way less than you can actually afford. If you can realistically handle a $300 payment every month, tell them you will not spend anymore than $150 per month of your payment. Be firm on this until you are ready to cut a deal. By that time, almost all salespeople will be about ready to pull their own hair out trying to get you to come up in price and will attempt to use several tactics to trick you into raising your price just a little so that they can make a deal with you on the car you want that doesn't completely suck for them. This gives you the negotiation power. When they are desperate to just get a little more out of you, you will have an extra $150 a month to play with. And more than likely, you won't have to spend even that much of your leeway budget. More importantly, when they get you to come up on monthly price, you won't be digging into your personal savings to do so.
With all that talk about monthly price, it's important not to overlook the overall price. Just think, if you are only able to pay $100 per month, it would take you 3 YEARS to pay off a $3,500 car or van, and that doesn't include interest. Do you really want to be locked into a loan for that long? Take the time now, before you're anywhere near a dealer, and think about how dependable your job and budget are. Consider what kind of loans you might be able to acquire, should you loss your job or have a major medical accident and still need to pay for the truck.
Once you have considered all of this, it will be easier to negotiate the overall price. Being able to do that, will keep your monthly price in your budget and the interest on the loan as low as possible.
4. Always Call First
Going into a dealership before you've talked with anyone is setting yourself up for a huge let down. Always call first.
You get many benefits from calling first. Benefits such as:
- You don't have to waste gas driving from dealerships to dealership, just to be turned down or find out they don't have what you want.
- You can get an idea for how much they really value their customers. If they are willing to treat you like a valuable human being over the phone without constantly nagging you to come in, you're less likely to be hassled when you go there to buy your new car.
- You can find out about the little annoying details like their ability to finance you, work with your credit and fit within your budget. If they say no over the phone, you can move right on to the next dealer, covering a lot more ground without leaving the comfort of your phone.
- You're not going to purchase a car over the phone. Unless of course, you just happen to be that wealthy and that trusting. Since that isn't likely if you're reading this article, then it is likely that you need to be careful with your money. Calling first will help you avoid one of the largest mistakes most people make - buying out of excitement. It's easy to walk onto a lot and get carried away with the excitement of looking, allowing the salesman to get you wrapped up into a new car that you could drive away right then and there without putting any money down. It always sounds too good to be true, and 9 times out of 10, it is too good to be true. By calling first you give yourself the opportunity to really think about what each dealership can offer you. Then, when you've made a rational decision about where you'd like to buy and what you'd like to buy, you can go in and get all excited.
Tip: If you don't have any friends who are well experienced with mechanics, make sure you check out the garages and shops in the area that will do pre-buy inspections. NEVER sign on the dotted line for a used dealership car that hasn't been thoroughly inspected.
5. Bring a Few Friends
Preferably, one of your friends should be a mechanic or very mechanically inclined and the other one should be your mirror. In sales, this is considered an intimidation tactic. Have you ever seen a whole family go shopping for a new car? It's chaos. The kids are excited about a beautiful sports car, the uncle is excited about another. The wife wants a brand new fancy van and the husband wants a big badass truck. Trying to get them all narrowed down to one vehicle, can be like torture for the dealership. And not because they can't agree on one vehicle, but because they all have different needs. So while the van might fit the practical needs of the family, something they can all agree on; Mom doesn't like the overall price, the kids want built in TV's and Dad noticed that the vans they've been looking at all have one mechanical issue or another.
One mind is easy to subdue and mold. Heck, even two minds are not that hard to influence. Three or more is where it gets difficult, especially if all three parties are interested in the purchase. So your two friends should remember that they are there to make sure you get the best deal possible. You need to stay within your predictable monthly budget, not get into a loan that will keep you locked in forever, and leave the lot with a car you're happy about.
When you go in, have your mechanic friend inspect every vehicle you take a liking to. Make sure they check for oil leaks, tire tread, mechanical deficiency's, body damage and interior functionality. It also wouldn't hurt to have them do some research on the types of cars you were interested in before you went to the dealership, so that they will also know what the street value of each car is. You should know this too, but you'll be wrapped up in other thoughts when you're in the moment. Your friend is there to remind you of what you already know so that you can use it as a bargaining chip.
Your other friend, "The Mirror" is there to play opposites with you. If the sales guy is trying to talk you into something really cool but way more expensive than you had planned for, it's their duty to remind you that it's out of your budget and way more than you need. It's there job to do whatever they can to make that way-to-expensive car look like the least desirable car ever. Later, when the dealer passes up a vehicle in the back of the lot that fits your short and long term budget, and has all the functionality you need; it's their job to show you how wonderful that car or truck is. The good friend they are, they are going to make sure that car looks like the biggest piece of candy in the world.
In my experience, bringing along more than four people can get confusing for you as well as for the dealer. You want to be formidable, but not chaotic. As a general rule of thumb, if you are married or seriously committed, bring your spouse and your two friends. If your single or not committed, then just your two friends. And please, do not make your spouse play either one of these roles. They are too invested in what you get to make any seriously rational decisions. Not to mention, whether they play a role well or not, you will resent them for not making you stick to your guns in one form or another. Don't do that to them or to yourself. Bring friends!
6. Be Busy!
When you interact with a salesman and woman, you never want to be seen as a person who has time to waste. Busy customers represent three things to a salesperson:
- Fewer hassles for them
- Less time to try to con you into something
- Someone who is likely dependable and who works hard
The sales force is trained to recognize and handle people who are very particular with their money. The particular people are the ones that will pay on time dependably. They are the ones that will be sure they cross all their t's, dot their i's and look over every last bit of the contract.
Those customers are also the ones who are not going to be tricked into sitting around a dealership for 4 hours working on a deal that realistically could have been completed in 30 minutes.
7. Never Sign Until You Get Everything in Writing
This tip might seem like a given, but it's rarely actually put into practice. When we get wrapped up in the excitement of having chosen, test driven and agreed to buying a new car, it's easy to forget that there was a dent in the rear quarter panel that you wanted fixed, or that the car had only three matching tires that the sales guy promised would be remedied.
These are things you definitely want to bring up in the negotiation process, but more importantly, you want to make sure you mention them when they have the contract and paperwork in front of you and that salivating sales person is pushing a pen at you.
Take the pen from them, but before you put down any signatures, politely ask them if they have put down the extras you asked for, in writing. Make sure that they write down anything they promised you in exactly the way you understood the promise to exist. If they said they would fix that dent or get you four brand new matching tires and you wouldn't have to pay one red penny more for it, then make sure that's what it says in the contract.
Also make sure that your overall price is the same one you discussed when you first negotiated about the car. If they are trying to get $5900 for a car that was originally only $5100, make sure they know you won't pay that much. Remind them that you were under the impression that the vehicle was supposed to be $5100 and that you've done your research and know that the vehicle itself is not worth $5900 anyway. Once they correct the price, and put their promised in writing, then you can sign at least one of their papers.
Before you sign any more, ask them about any return policies they might have or how they honor lemon laws. Be careful at this point, because this is when you're likely to glimpse just how experienced and confident your salesperson is. If they freak out about you asking and go on and on about how each car is sold as is and they would never sell you a lemon, then kindly ask them to remain calm and remind them that you are just looking out for your future and the future of your business with their dealership. Unless they know of some reason that the car should not outlast the life of the loan, then there is no real reason for them to worry, is there?
If it seems like they do have some concerns, this is your time to think about what you're getting into. If you've been a good used car buyer, you've already taken the car or truck for a pre-buy inspection, and you should have a fairly good idea about it's mechanical health and expected longevity. Mechanics are not infallible though, so if it seems like the sales guy is nervous about more than just what questions you'll ask before signing the darn contract, then step back and let them know you need another minute to think about the deal. This is likely to get them into a more giving mood, which might get the overall price lowered for you, or it might equal some extras, you never know.
Once you feel like the dealer has earned a little more trust from you, feel free to sign the rest of the papers. Just make sure that you read them first and that you make it clear that you want a copy of every page, especially including anything written in after the contract was printed.
Have you ever had a bad experience buying from a dealership?
Have Something to Say?
If you have something to add to the info I've provided, or you feel something I've written should be corrected, leave a comment below and let me know! Also, if you have any questions, I'm happy to answer them. Just know that it usually takes about a week for me to get back here and answer your awesome comments!
And please do leave your experiences here. You'll be helping countless readers who might not have the same experience that you do. So whether they are good or bad, tell us how your used car buying experience went.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.