Dealer's Tricks - bait & switch, etc.

bajabill

every customer should know that payment is the result of - loan amount (cost minus downpayment), interest, and number of payments (lets keep taxes and leasing out of it). I would think this to be common knowledge and if a salesperson encountered a cusotmer that did not understand it, a decent individual would explain it in simple terms.

I think the benefit of talking montly payment is that people tend to round numbers off. Rounding a MP to the nearest 5 bucks is like rounding the purchase price to the nearest 250 (for around 17000 loan). People would more quickly notice a 250 price difference than a 350 vs 355 payment.

qbrozen

I've been pushed into payment shopping way too many times. My most recent preparation for this was to write down the monthly cost of every $1000 based on the lowest rate I could get outside of the dealership. In other words, I wrote down "60 months @ 7.25% = $19.90/$1000" and did the same for 66 months, 54 months, 48 months, etc. That way, whatever monthly payment they hit me with, i could just plug it into my equation and see the sell price. Sure, they would be using a different rate, but that's even more reason to get outside financing. And they realize it pretty quickly when you turn around and say "$400 a month??!! I am NOT paying $20,100 for this car!!" They're actually trying to charge you $18K but at a much higher rate. And they usually respond with "$20,100??!! No, no, that's $18K!" And there it is! you've just lured THEM into talking buy price instead of monthly payments. Usually works pretty well unless the salesman is real experienced and savvy.

I've run into a couple of salespeople who I had to ultimately YELL at to get them to give me the sell price, NOT the monthly payment. And I didn't do deals with those people.

bajabill

simply say "I dont care about the payment, it will be determined after the sale price"

The financial person is the one who gives out the interest rate and has to be competitive with banks etc. At this point the sale price has been determined.

Question, do dealers get a fee from banks for loans made with the banks.

qbrozen

"has to be competitive with banks"
not a chance. As has already been pointed out here (and as I've experienced in the real world), dealers can tack on several points to your interest rate to make extra money on the deal.

And, like I said, simply stating "i don't care about the payment" doesn't always work. as a matter of fact, it can be downright hard to push the salesperson away from the monthly payment discussion. This is what they are trained in, remember?

hiwaysanity

must always be the rule, in any business transaction. If I courteously asked a sales person the selling price of a car more than once, without getting an answer, I would consider his sufficiently discourteous to leave at that point.

How can a person politely refuse to answer a direct question? If I look a salesman in the eyes and say: "I understand, that's the monthly payment. But I don't want to discuss payments, I would like to know the selling price of the car, and then all of the dealer fees that apply." then anything he says other than getting me the selling price is insulting. Any additional evasion would get "Thanks for your time." from me as I head for the door.

bajabill

are you referring to actual interest rate?

Why would you sign a loan for 8 percent when advertised rates are 6 (always call at least one bank if you are financing). I have never found a financial officer or eqivilent to try to pull any wool over my eyes, ever. That may just be me however. I actually have very few problems communicating with salepeople either. Never once have I entertained a long conversation about payment thresholds with a salesperson. I think most of the problems people have is with conversation in general. If you emit signs of weakness, or lack experience, the chances of falling for tricks and outright deceit are greater. If you buy a different car every couple of years on average it can even be kind of fun. I find the little gamesmanship actions to be so predictable that they do not get me excited. I just say very little in response, look them in the eye and smile. With me, (my wife will definitely vouch for this), I can say a lot with a silent look. The sales person can read me and it is obvious I am not impressed with the level of mental combat. Buying a car is so simple, do you want the car? If yes, for how much? For me, the first question is the hardest and most time consuming (days - weeks -months?). After I decide to buy a car, I typically am shaking hands in 15 minutes because I have found a person I want to work with while looking for the particular car I want to buy.

Another thing is expectation. I dont claim to know the entire perspective of the dealer. I also dont expect them to be an authority. And, I dont expect a fiduciary obligation to protect my interest. Common courtesies? yes. The golden rule (the traditional one)? within business sense reason.

zueslewis

and it's not "insurance regulations" or any other garbage that would require me to ride with you. Well, maybe it is. Hundreds, perhaps thousands, of cars are stolen each year during unaccompanied test drives. PLEASE don't take it personally.

The main reasons to ride along on the test drive are: (1) Most of the questions a customer has come up within the first few minutes of the drive. If I'm not with you, how can I show you the car and answer your questions. You may, as most people do, form an opinion based on an assumption about an option or characteristic. I think it's just being helpful to be available to the customer. (2) Most "trial closes" for a sale are done on the test drive. Simple as that. How can I sell you a product when I don't demonstrate it and answer your questions, then, if it's right for you and you say so, I'll ask you to buy it. It's just good salesmanship.

Whether you want to be "turned" or not, I, as a manager, would never leave it up to some brand new kid freshly hired away from the sneaker store to decide to let you go or not. Most customers seem to like the "warm fuzzy" feeling when someone in charge takes time to thank them for coming in and answer any questions they may have. The new guy probably DID NOT answer all your questions, right? Even if you just popped in for a minute.

There certainly are stores out there that make the salesman hold your ankles to prevent your escape and the sales manager comes over like a bar bouncer to keep you there. I would never be associated with a store that had such a poor product and poor seales staff and had to resort to that type of action.

The reason I'm doing the job I'm in now and have left the car business is because stores like I've described have ruined the buying experience for most consumers, therefore making the job of selling and financing automobiles into a chore. I'm on a one man mission to right the wrongs of society, help out the legitimate dealers, dog the bad ones, help with lemon law, dealer fraud and breach of warranty cases, help little old ladies cross the street, - oh, sorry, reverted back to my Cub Scout days. God Bless America!

qbrozen

Its pretty amazing, but I had it happen. One time in particular I'm thinking of happened just a few months ago at a dealer in Lakewood, NJ. Both my wife and I were there. The salesperson we were dealing with had only been working there a week, so, when it came time to talk numbers, the sales manager came over. He wrote down "$550 a month" on his 4-square thing (that's what its called, right?). I looked at it and said "ok. But can you tell me the price of the car?" His response was "$550 a month." I said, "yes, $550 a month, but what about the sell price on the car?" He said (I'm really not joking here), "You would pay $550 a month." I looked at my wife and she sat there, dumfounded. I looked back at the manager and said "ok. How about we try this, what are you giving me for my trade-in?" He gave me that number. I said "ok, fine. Now, how much are you charging me for the new car?" (Again, this is no joke) He said, "That car will cost you $550 a month including the negative equity on your trade-in." This time I said "Ok. Forget the trade-in! Forget the monthly payment because I won't finance it through you anyway! What will I pay, in cash, for this car!" And, immediately, my wife chimed in "He wants to know how much you want for the car. Why is this so hard?" FINALLY, after that, he told us (and what he told us was the sticker price!). At THAT point, I got up and walked out.

Sure, you could say that I should have gotten up and walked out before that, but I'm a tad more patient than that. In any case, once I ask a question, I RARELY stop asking it until I get an answer. Its sort of a self-torture thing for me.

Oh. And on a side note, that young salesman called me on the phone the next evening. I told him straight out that they would never see me in there again (and this was a shop, unfortunately, that I bought a car from, for my wife, just 8 months prior to this).

qbrozen

oh. You posted that as I was typing my last response.

Anyway, yes, padding the rate happens all the time. I have a story for this, too.

I was buying my first new car (actually, it was a Dodge Dakota pickup) from a dealer in Toms River, NJ. My father was there helping me because I had NO experience with new cars at this point. We went around and around for hours on this (I really had no choice because it was a rather rare truck with the options I wanted) and arrived at a good sell price. We then proceded to ask the monthly payment and interest rate. We were told that the rate was 9%. Since the banks, at that time, were 8.5 or so, we figured the 9 was good enough to leave alone in the name of an easy transaction, and we certainly didn't know how to do the math on a loan to figure out what the payment SHOULD have been based on 9%. In any case, naive me signs everything without ever checking the interest rate printed on the sheet. It wasn't until I got home with my new truck and was perusing my first new-car paperwork when I saw that the interest rate was an appaling 12.9%!! We went back to the dealer the next day mostly because my father wanted to give the sales manager, who flat out lied to us about the interest rate, a piece of his mind. Then we went down the street to the bank and refinanced the truck at 8.25%. Since then, I ALWAYS check the interest rate that is on the contract.

zueslewis

Man, I hated those things! Luckily, the dealership I was working at was in the middle of Wyoming and the 4-square was just an experiment. We found we could make as much gross profit writing the deal up normally and asking for your business.

The 4-square is designed for a "liner/closer" atmosphere where the former sneaker salesman or movie theater usher, or whatever the kid did before he sold cars, can establish perameters between the dealership and the customer. The 4-square really works in credit-challenged environments. The closer then comes in and takes your head off with a big axe.

That's the legend, anyway, never seen it happen in person.

bajabill

Next time, sternly look at him, calmly reply.

OK, 550 a month, no down payment, 2 percent simple interest, 1 year loan, no prepayment penalty, no balloon. Bring me the paper and the keys big guy.

zueslewis

SOLD!! That'll teach 'em!

But then you have to climb up on the roof of the dealership and get the keys for your trade!

bajabill

do the banks that the dealer suggest pay a fee to the dealer for the service? Recently, I have been using the manufacturer lending, but I think some dealers can arrange financing thru a local bank.

qbrozen

yeah, i guess that might get their attention. I'll have to try that next time.

zueslewis

they may pay the dealer a flate rate, depending on the size of the loan, or the dealer may be paid on finance reserve, the difference between the "buy" rate and "sell" rate. As a finance guy, I've closed deals with over $3000 in finance reserve that put $150 in my pocket just from the financing, not to count the warranty and insurance.

I don't know of many dealers who would write loans for banks and not get paid to represent and control.

bajabill

I would not expect them to enter a business deal with the bank and not be paid for it either. I was a mortgage broker for a couple of years and that is how I derived my income, retail minus wholesale price of money.

zueslewis

Ford Fairlane, Ford's lender for the "Credit-Challenged". That's where I made the huge finance hit after a FIVE point overwrite on a $22,000 car. That was back in my "take no prisoner's" days.

audia8q

Considering that Fairlane has only been out a few years...how long ago was your "take no prisoner days"???

Rich

zueslewis

seems like along time ago, but it was 1999.

bajabill

20/20

thats 20 points (percent fee) and 20 percent interest rate. Really kicking them when they are down. Oh yeah, how about a 5 year balloon to boot.

rbrenton88

I heard a radio ad this morning for a Kia dealer. The offer was that they will pay off your existing lease for up to 3 years in order to sell you a new Kia.
Can you imagine the depth some people would be buried in the new car??

Borderline dirty IMHO.

mackabee

I've used the 4square worksheet for about three years now. There's nothing intimidating about it. The way I use it is like this: first square is the selling price of the car, next square is the trade acv, bottom left square is the money down if any, and the bottom right square is an estimate of the monthly payment. The customer has all the information right in front of him.

: )

Mackabee

mackabee

Chill out Frank, not all dealerships are like the ones you are accustomed to dealing with.

: )

Mackabee

timadams

Let me ask the car guys a question. My initial thought about a salesman who refuses to discuss price with me would be to simply walk out. But I live in an area with only one Honda dealer, one Toyota dealer, etc. So threatening to walk out may come across as an idle threat, or actually doing so would mean a road trip.

How would the following be received by a salesman: "If you mention monthly payment one more time, I'm going to see the sales manager or general manager and ask for a salesman I can deal with."

What would the SM or GM do if I followed through with that? Would the first numbscull salesman be cut out of the deal? Would I actually get a decent salesman?

jelliot2

The first salesperson would still be paid. In reality, by staying on the subject of payment, in many stores he's doing what he's told. I've seen salespeople "fired" in front of irate customers, just to be sent to hide out for a little while.

If you don't want to discuss payment, then don't do it. Getting mad at the salesperson won't help. Either leave, or take control of the converstaion and keep it on the track you want it on.

stickguy

Maybe it's where I shop, but I can't recall a sales conversation every starting with monthly payments. Occassionally I would get an early probe about financing or down payment, but one=ce I said that I wasn't concerned about it (only wanted to discuss price), it didn't come up again.

You can alwasy say you have the money all arranged (so it is effectively a cash deal ) to avoid all the payment nonsense, and once the deal is in writing, ask about financing (that is, give them a chance to make you an offer you can't refues). This should also give you a better shot at getting offered a good rate the first time, if they think you hvae a back/online/credit union check in reserve.

Anyway, regardless of how the finagle the negotiations, the final deal has to be spelled out on the contract (price/DP/financing terms). It is hard to feel sorry for someone who signs a legal contract committing them to pay a large sum of money without reading it first.

qbrozen

Sometimes, some people are a little more trusting then they should be. Just for that, they do not deserve to get screwed.

BobL242

Zueslewis, or anyone else that can answer this question for me. My lease (98 4runner) is gonna mature at the end of the month. I plan on handing the truck back to the dealer and might not be buying my next vehicle from them. I was told by the finance company that I would receive a bill within 10 business days ( after turning truck in) for the wear and tear on the vehicle. My question is do the dealers try to add any phony charges for wear and tear? Would they profit somehow by doing this? Would I be better off getting a independent third party to do the appraisal? Are the dealers able to be trusted? Any info and advice would be appreciated. Also I would like to thank all the posters on here. I will use alot of this information during the process of buying my next car.

bretfraz

Lemme take a shot at this since I went thru this scenario about a year ago. First, a couple questions:

1. Has the finance company contacted you or mailed you paperwork about a pre-maturity inspection? This is usually done 60-90 days before lease end.

2. Have you reached out to your finance company about lease termination procedures? Please respond with details.

OK, what happens with a lot of leases (but not all) is the finance company will hire a third party inspector to inspect your truck. Some will come to you (like mine did) others you will have to go to them or a dealer. They have an inspection form and they go over the entire vehicle. Takes about 20 minutes. You get a copy stating any discovered damages and charges. You will know upfront what it will cost you in damage fees. Now this procedure is determined by the finance company not the dealer. It'll be hard for the dealer to phony-up charges as they are not billing you nor collecting payment. You may want to question some of those charges but don't waste time questioning the dealer - it's not their procedure.

When lease maturity date arrives you take your truck to a Toyota dealer, meet with the person who handles lease terminations, do a little more paperwork, and you're done.

The finance company will send you a bill that will include any damages, disposition fee, and anything else you may owe them. Your contract will tell you the disposition fee and additional charges (if any). Send them a check and you are done.

It's an easy process unless you decide to make it a hard one. If your truck has a lot of damage or worn parts you may want to replace them before turning it in. Discuss this with the finance company before spending any money so you know what to do.

BobL242

First off, what's a disposition fee? The finance company called me to ask what my intentions were at the end of the lease. I told them I was handing the truck back to the dealer. They told me to make an appointment with the dealers lease manager. That was it until today, I received a letter telling me I would receive a bill for the wear and tear 10 business days after I handed the truck back. The letter also stated I had the right to choose a independent appraiser that would be acceptable to both the finance company and myself. The letter doesn't say who will do the appraisal if I did not choose the third party appraiser. I just took for granted it would be the dealership. I guess I'll call on monday and ask some questions. This is the first (and last) time that I lease. Thanks for your help.

BobL242

I did lease it through toyota motor credit corporation. Glad to hear it is done by a third party. I just find it hard to trust the dealers. ( bad experience when I leased this truck) Thanks for your input.

zueslewis

I agree with you that there was nothing intimidating about the 4-square. I just hated peeling customers off the ceiling after showing them first pencil - but then you can get the explosion reaction with any written or verbal closing tool.

What was really scary was when the customer would look at the form and say "Yeah, that looks good". You knew at that point you DIDN'T have a deal. You should probably hold him for the sheriff because he's a credit criminal.

zueslewis

on this one. I do independent inspections like lease returns and follow up with a report to the leasing companies.

Expect to pay for abnormal dings and dents, tire wear, paint issues, etc. Keep in mind anything that would HAVE to be done to a used car before it could be sold by a reputable dealer. A knick in the glass or a rock chip on the hood are not a problem.

Also, if you've installed aftermarket stereos, alarms or exterior accessories, a big no-no is to leave "scars" where these items previously resided.

zrock

Hello,
Me and my wife recently were shopping for a used Outback and the dealer asked my wife a lot of questions like address, SSN, date of birth and said it was for some "registration info" in case we made a deal.. However, he was writing all of this on a form entitled "credit application". I asked him why he needed this info, why he was writing it on a credit app. and to make sure he wasn't doing a check.. He assured us that he wasnt running the credit and that this form was all he had available. I was wondering if he just straight up lied and did it anyway (after reading some stories of salespeople doing this).. Also, we have redirected our efforts and are looking at new Outbacks and are considering going back to the same salesperson... However, if there is a good chance he lied then we will definitely go elsewhere. Any thoughts?

thanks

zueslewis

in the early stages of a car deal to run credit at first contact with the salesman and the sales desk. They DO need your permission to do this, regardless of how "standard" a procedure it may be.

The problem is, unless you go all the way to your state's attorney general, there's not much you can do about it except not give the dealer your business. It may have put you in a better negotiatign position, depending on how upset you are with their management.

Bear in mind - an arrogant sales manager may just pass on taking your business instead of listening to your complaint.

To directly answer your question - NO, they aren't supposed to do that without your permission and YES, he lied to you. Probably because he was trained that way by his manager.

hiwaysanity

your SSN to a salesman?

hiwaysanity

for a person's SSN is, I agree, normal stuff. Giving it to him, in the circumstance described in that post, is foolish.

zrock

Thanks for your responses to my situation. I would not characterize my wife giving out her SSN as foolish unless the overall assumption is the the salesperson is NOT your friend, is NOT someone you should ever trust, and that the odds of him/her doing you harm are probable. I would like to think that all salesman are not malicious. The good thing is that we now know not to go back to that dealership (Marin Subaru) because of this. We are glad to get a clear picture of their ethics before we ever paid them a penny and they should know they lost out on a sure sale. Thanks to sites like Edmunds, we will hopefully be a lot more carefull going forwared.

thanks
again

zueslewis

don't go gettin' soft on us.

zrock

I dont think it was a misunderstanding..... When he asked for the info, my wife offered to write it down for him but he refused. (we then would have clearly seen what form he was writing on). Since I was sitting at a different angle I started to wonder why he was asking so much info since we hadnt really talked turkey yet and I noticed what form he was writing on and said, " I am wondering why you are writing all of this info on a credit application?". He responded by saying that he could not run any credit info without our approval and not to worry while he continued writing. He then got up and left for about 2 min... It then hit me what he was likely doing but I "assumed" that he wouldnt lie so blatantly. My wife is running her credit report to look for an 'inquiry' and if one exits, she will be filing a complaint with the BBB. Thankfully, her mother is an asst. DA for LA County so we now know to keep her informed before we make the same mistake again.
It is too bad because I sort of like the guy but I dont trust him any more than I could kick him now. Thankfully, there are a lot of Subaru dealers in the area and I cant wait for the new car.

zrock

You are probably right about the DA's spending their time on REAL crimes. However, you would have to agree that this does not mean you can discount a concerned mother over her daughter and the amount of free legal advice ....

Anyway, we would have likely bought the car yesterday from that particular dealer. Now, if that dealer was the only one around, then I would give them the benefit of the doubt. But they are not. There are quite a few franchise dealers around the Bay Area. I am a big fan of competitive, open markets and if you make a mistake, dont expect that person to say anything good about you. This is business and not personal. Maybe the salesman should have given 'us' the benefit of the doubt and be a straight shooter. I respect brutal honesty, not deception.

afk_x

How do you know he actually RAN your credit report? Just having the information necessary to run it doesn't mean he actually did.

armtdm

My problem, which occurs whether the ride was taken with a salesman or not, is that the salesman rarely know the product in detail. 99% know nothing of the maintenacne requirements, whether it has a timing chain or belt, are they 60,000 mile plugs or 100,000 mile, etc.etc. Some don't even know regular or premium fuel. They need to study the info on the cars they are selling. I should not know more about the car they they do!!! They may know option packages, colors and that crap, but maintenacne and under the hood, forget it!

isellhondas

The casual reader here would read these postings and react in fear and disgust toward the car business and anybody involved with it.

What frankrichards calls "normal" things, certainly do happen in many dealerships.

The person who started this topic had the misfortune of working in a "system house" or so it seems and will be forever jaded by the experience...too bad. There are good stores out there.

ONCE AGAIN, my advise is to deal with a long established family run store that you were REFERRED to by a friend or relative. Deal with the salesperson that he/she sent you to.

STAY AWAY from the stores that run full page screamer ads every week.

And...if ANYTIME during your visit, you feel uncomfortable....LEAVE!

It's really quite easy!

isellhondas

You can micro-analyze everything to death and make your car buying experience a time consuming gut wrenching miserable experience.

Of course, some people probably enjoy this!

odd1

Don't get all riled up or we'll see the return of Snurple.

zueslewis

it was actually a very good experience. I started this discussion with the intent of pointing out, first and foremost, that there are some great dealerships and dealer groups out there. I've worked for 4 - two small, 2 large. The last experience I had was with a group in Northeast Pennsylvania and I couldn't believe the night and day difference. These guys are complete and total thieves! 80% of the used cars they buy at auction are severely damaged or lemon law buybacks - they buy those cars intentionally.

You wrote, "The person who started this topic had the misfortune of working in a "system house" or so it seems and will be forever jaded by the experience...too bad. There are good stores out there."

It wasn't a "system house" - it was a small (5 store) group that expanded rapidly within the last 5 years - mostly due to incredible used car profits made by selling wrecked pieces of junk, pawning them off as good Chrysler "in warranty" program vehicles.

zueslewis

the dealer in Goldsboro, NC, whose sales manager bragged to me how people there were stupid and he "stole" 95% of all the rebates from the customers by playing an elaborate shell game - the way he juggled the numbers was actually pretty impressive, but illegal (by defrauding the State of tax dollars) and immoral (by stealing from customers). I thought I should make people aware that things like this occur.

I quit my job there when I found out what was happening. That's a one-horse store, too - pretty shocking.

zueslewis

and a good tactic used by many a sales manager.

The manager states "these people only buy cars every few years, you sell cars everyday - so why are you still making mistakes?"

One manager always said if we were in the construction trade and kept making mistakes, like mistakes are made on the sales floor, we'd either have some pretty crooked buildings or no job, or both.

isellpotiac

of these posts, I want to know where are all the customers that are getting ripped off buying new cars. The new car market is sooooo competitive it is a MIRACLE if I make any more than a flat on a deal. Of course there is an exception every once in a while but it has nothing to do with the customer, it has to do with the vehicle they buy. For instance, I will gladly sell a Grand Am for $200 over because that is what my competition is doing. If the customer wants to buy a 2002 Trans Am it is going to be an entirely different story. I pity the person that will study edmunds and show up with all his downloaded paperwork and offer me $200 fair profit on a Trans Am. Without being rude I broom this guy in less than 5 minutes. It is at this point that the dreamer decides that all car guys are scum and he will extract his revenge by posting about it on edmunds. There is some good info on the net about the car buying process, but until the net starts cutting checks for trades it does not mean much to me.