Car-Buying Secrets Dealerships Don’t Want You to Know

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Updated on Wednesday, December 4, 2019

Buying a car is one of the biggest purchases most of us will make and dealerships don’t have the best reputation for making the process easier or cheaper. Car buyers are increasingly distrustful that they’re getting the best deal possible at the dealership. We’ll let you in on nine car-buying secrets dealerships don’t want you to know. These tips will help you navigate the car-buying process and may even save you money.

Secrets dealerships don’t want you to know

Here are the biggest tips that could help you save the most money in car buying.

1. Focus on price, not the monthly payment.

Twenty bucks, give or take, on your monthly payment might not look like a lot, but it adds up over the life of a five-year (or longer) loan. Dealers are counting on the fact that your focus will be on your monthly budget and work hard to inch up that payment. Even a few dollars can mask a high APR, add-ons and other fees, especially if they’re spread over a long term, as long as 84 months.

TIP: Focus instead on the “out the door” price, which is the total of the car price plus all taxes and fees.

2. You’re in charge.

Salespeople like to mix numbers — new car price, trade-in value, financing — which makes it more difficult for you to keep track. You can insist on talking about each thing separately by using a favorite dealership tool to your advantage. It’s called a “four square,” a sheet of paper divided into four boxes, and is used to (mis)direct your attention to all of the advantages the salesperson wants to discuss. Write on the four square yourself to direct the salesperson’s attention to what you want to discuss. You can see an example of the four square below and read up on the people you might meet at the dealership here.

3. Use NADA to value cars like a dealer.

The National Automobile Dealers Association (NADA) value is what dealers and lenders use to figure out how much a car is actually worth. And you can look it up for free on the same site they use: NADAguides. If the vehicle price you’re quoted is significantly higher than its NADA value, it might be best to keep searching or get ready to negotiate.

TIP: NADA isn’t the only pricing guide — you could also check Kelley Blue Book and Edmunds to see if their prices line up with NADAguides. Dealers may have access to industry-only guides like Hearst’s Black Book or the Manheim Market Report.

4. Get your own loan.

Get preapproved with a lender of your choice before you go to the dealership. Dealerships make the most money not from selling cars but from setting up their financing. Dealers can and often will raise a lender’s APR and take the difference as profit. The best way to know what APR you deserve is to apply for a loan directly. You could start with your own bank, credit union or online lender. We’ve also rounded up several of the top lenders for used and new cars.

5. Take the rebate, not the low APR financing.

If you’re offered the choice of a rebate or a low APR, take the rebate. You might sell the car before you can take full advantage of the savings from a low APR, whereas the rebate is money saved now.

TIP: It involves more legwork on your part, but you could “double dip” by financing with the manufacturer in order to get the rebate and then refinance later (but not too much later) with a different lender in order to get a lower APR.

6. Say no to add-ons (probably).

Dealerships also make money on add-ons such as GAP insurance and extended warranties. In most cases, it’s best to say no. But some could be worth the price if they are set at a fair price. Typical GAP insurance shouldn’t cost more than $400. Prices on extended warranties vary greatly — you stand to get the best price if you do some research beforehand.

7. Use your phone as you go.

Don’t be afraid to whip out your phone to look up competitor pricing on cars and add-ons, even in the dealership office. Some fees, including destination charges or taxes and title fees, are generally non-negotiable, but you might be able to negotiate add-ons.

8. Waiting forever? Go eat.

Long waits at the dealership might be because the staff is sincerely busy or it could be a tactic to wear you down. If you are waiting for an excessive amount of time, tell your salesperson you’re going to lunch or dinner or grabbing a coffee and will return later. That will either make the process move faster or give you a nice break.

TIP: No, it shouldn’t take an excessive amount of time to shop for and buy a car, but you’ll have to set aside some time. The average buyer spends about 14 hours from the moment they begin researching online or talking with friends and family, test-driving cars, to the day they sit down with the seller, the latter step eating up about 20% of the time.

9. Read the paperwork.

Even when you’ve followed all of these car-buying secrets to get the best deal on a car and car loan, don’t overlook the final details. It’s important to understand everything you’re signing even when (and especially when) you’ve spent hours at the dealership or are excited and want to drive away ASAP with your new wheels. If details have changed or you’re feeling pressured, it’s OK to walk away. In most cases, that car will still be there another day.