Avoid These Top 5 Ways You Get Hustled When Buying a New Car

How to Avoid Getting Hustled When Buying a Car

Whether you know it or not, there’s a lot of hustling that goes on at a car lot. The industry has been given a bad rap for sure…but there is usually a kernel of truth in most stereotypes, right?

Today I am going to share with you the top 5 car lot hustles, and then show you how to decrease your exposure to them so that you can walk out of a car lot knowing that you are paying a fair price.

Hustle # 1: Unexpected Fees

When you shop at the car lot, you are given the price of the car itself. This is generally the price that you negotiate as well. However, there are lots of fees that will be tacked on after the negotiations are finished and before you get to drive your flashy, new ride home.

Standard fees that you should expect to pay are things like sales tax, registry costs and a documentation fee. Other fees that are a little dicier include things like Dealership Fees (aka “S&H” or “Dealer Prep” or even “Shipping”) and dealer-added advertising fees.

How to Decrease Your Exposure: Some states regulate the documentation fee, while others do not. If you are paying more than $100 for the dealership to process your paperwork, then you should negotiate it down. After all, isn’t processing paperwork part of the cost of doing business? Any dealership-added fees are completely negotiable (though that doesn’t mean it will be easy to do). Remember, if you cannot negotiate down some of the fees, then you can always negotiate the car price further down in order to offset the additional costs.

Hustle # 2: Dealer Add-On Markups

Something can happen to a car between when it leaves the manufacturer and when it is waiting to be sold out on the car lot: the dealer adds on extras. The reason for things like mud flaps, rear-bumper protection, floor mats, an alarm, paint protection coatings, and the like is because dealers can add on a product with a little bit of value and then tack on a steep markup on the overall price you will pay.

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How to Decrease Your Exposure: Some dealer add-ons are worth it, many are not. Be sure to look closely in your contract and ask if there are any dealer add-on costs. Negotiate your way through this minefield as best as you can.

Hustle # 3: Greater than 250 miles on the Odometer

It is reasonable to expect a certain number of miles already on your new car’s odometer. This is because of test drives, moves around the lot, moves from a different lot, etc. However, be sure that your “new” car can still claim it has come right off of the manufacturer assembly line. And if it can’t, then you can use this to your advantage.

How to Decrease Your Exposure: Edmunds.com says that if there are more than 250 miles on the odometer, then you can use this as a way to negotiate a lower price.

Hustle # 4: Padding Attached

There are three potential transactions that you will be making at a car sales lot, and salesmen like to group them all together: trade-in value, new car price, and financing. When they group all three into a package deal (or two, depending upon your situation), then you can believe that they are padding each. That’s because an entire package deal often looks better and clouds the specifics of each of these transactions, thus taking away your mental alert system and negotiating power.

How to Decrease Your Exposure: You need to negotiate these three transactions separately. That way you will know whether or not you are getting a fair deal on each, regardless of the other transactions. If they insist on a package deal, then request that they give you a breakdown for each of the transactions so that you know what you are getting.

Hustle # 5: Sticker Price Padding

The sticker price on the car’s windshield is supposed to be MSRP (Manufacturer’s Suggested Retail Price). However, they may just put an inflated price on there so that when you negotiate, they will “give in” at the price that they wanted anyway.

How to Decrease Your Exposure: Do not go to a car lot blindly. Have a particular make/model in mind that you wish to buy, and then research online to find out what the actual MSRP is. This way you will know if they are misrepresenting the vehicle’s price. If you don’t happen to know what type of car you want to buy, bring along your smartphone (or a friend/family member who owns one) and look it up on the spot.

Since you are in the market for a new vehicle, I would like to leave you with one final note on car warranties. Tom Torbjornsen in his book “How to Make Your Car Last Forever,” explains that a car warranty is often misunderstood. Customers see these as an entitlement, whereas it is actually an agreement between you and the car manufacturer. You need to follow specifications outlined as recommended in your manufacturer pamphlet to fulfill your end of the responsibility, and the manufacturer will then be obligated to perform any repairs due to a defect from poor workmanship or a failed part for the time/mileage set forth in the terms of agreement. In other words, when the car lot salesman discusses “warranty” and how great it is, just remember that it will likely cover a lot less than you think it should.

Image credit: dolgachov

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