How Not to Get Ripped Off When Buying a Used Car
Hello, my name is Dwane Johansen and I’m one of the owners of Sun Toyota in New Port Richey, Florida. Sun Toyota is one of the largest pre-owned dealers in the country, and we sell more Toyota Certified Used Vehicles than any other dealer in the southeast. It’s no secret that used car dealers have an unshakable reputation for shady deals, dishonest stunts, dirty tricks, tomfoolery, shenanigans, and other undesirable actions that you should never have to deal with. Fortunately, not all used car dealers are guilty of these dreaded sins. There truly are a group of committed, ethical, honest, good, and professional independent car dealers out there who are actually looking out for your best interest.
Unfortunately, a few bad apples have spoiled the business for those of us who run a tight ship and an honest operation. Because there are a few bad apples out there, my personal advice to you is to arm yourself with as much information as possible about the scams the dishonest dealers try to pull so you can spot them a mile away and run down the street to another dealer who really deserves your business. The problem is in knowing how to spot the bad dealers and in being able to identify their tricks and scams. Below, I have listed the most common scams the bad guys like to pull. When you see one of these games being played, run the other direction!
Be on the lookout for the following tricks and scams!
SCAM #1: The fees! Dealer Fee, Administration Fee, Processing Fee, etc.
Dealer preparation fees are extra charges that the dealer adds to get the car ready for delivery. Dealers will tell you this fee will represent costs and profits to the dealer for items such as inspecting, cleaning and adjusting new and used vehicles and preparing documents related to the sale. The dealership does need to spend time taking care of these details so you can drive your new car home. However, these fees should be included in the dealers cost of doing business.
Documentation fees, which cover the costs of processing all the paperwork associated with a new car purchase, are something you don’t need to pay. A few states charge a flat fee for this item that is typically well under $100. Other states have no specific requirements, so a dealer can charge whatever it wants. These fees can range from as low as $49 all the way up to the $899 range. The simple fact is these fees are just additional profit to the dealer. Don’t pay the dealer these additional fees.
SCAM #2: Bump and Grind
This little gem is a classic “negotiating” tactic used in car dealerships across the country, and probably the world. It goes something like this:
• You finally find the vehicle you’re looking for and you decide to make an offer.
• In your mind the offer is a little low – but still seems fair. You’re willing to move a little bit, but don’t want to show your cards.
• You present your offer to the salesperson – he shakes his head. Here comes the story!
Then the salesman explains to you that he’s on your side, but he thinks he might get fired if he went to his manager with your low offer. He goes on to ponder the situation and decides that if you would just increase your offer by a little bit, maybe $200, he could take it to his manager. Being the reasonable person you are, you agree to increase your offer by $200. Heck, you were willing to pay a little more anyway! That’s bump number one, now comes "the grind."
• The salesperson disappears for 10 minutes or so.
• He says he’s going to go talk to his manager, but he tells a joke instead.
• He then takes a coffee break, visits the restroom, and has a quick smoke!
All the while, you’re sitting there believing he’s in the office “grinding” away for your benefit trying to work out the best price. You may even think to yourself that you’re a great negotiator and really have these guys working for your business. Think again! A few minutes go by and he comes back to where you’re waiting. “Aw shucks,” he says. “I thought $200 would do it, but I guess I was being a little optimistic, it’s gotta be more like $500 or the boss won’t even consider it.” At this point you have so much invested that you’re no longer willing to walk away, so you agree. There’s the second bump! The game can continue round after round through the price negotiation, trade appraisal, credit approval, add-ons, and more. In the end, much like a casino, the house always wins. When you spot the bump and grind routine going on, that’s a sure bet that you’ll wind up paying more than you wanted to!
How to avoid the bump and grind scam:
• Indicate the fact that you’re wise to typical car dealer games.
• Explain that you don’t think they’re that kind of dealer, but you’ll be on the look out nevertheless.
• Negotiate directly with the Sales Manager as a way to avoid the possibility of any bump and grind tactics.
By doing that, you’ll effectively shut down their negotiating engine and they’ll be forced to deal with old fashioned face to face selling. That’s what you deserve!
SCAM #3: Bad Credit Scam
After you’ve found the car and the price has been negotiated, you’ll usually enter the credit approval phase. This is where you complete a loan application which is forwarded to the finance department for approval. These days, approval can be rapid. Smart and honest dealers develop strong, valuable relationships with local, regional, and national lenders in order to provide their customers with the most elegant financing choices available. Dirty bird dealers use the finance process as another way to squeeze more dollars out of your bank account!
Here's how it works:
• The salesperson returns with your application looking all disheveled and frustrated.
• She explains that your credit wasn’t exactly as good as they thought it would be – and that they weren’t able to obtain financing through their preferred source.
• Your heart sinks and face turns red.
You’re embarrassed. You’re worried that you may have wasted all of this time and now you won’t be approved. This is a point of minor desperation for most people so naturally you start to explain your virtues to the sales person. "I pay all of my bills on time, this must be some sort of a mix up or mistake!" you nervously explain. She then tells you she’s going to have one last conversation with the finance manager to see what can be done. She says she's going to “go to bat for you”, but in actuality this is nothing but a coffee or smoke break. In the meantime, you’re sweating bullets and wondering how you screwed up your credit. At this point, you’re just hoping you can get approved! Ten minutes later, she comes back with a smile on her face. “Great news! I pushed my finance manager and made him call in a favor with another bank. He’s able to get your loan approved."
Relief! What she didn’t tell you was that the interest rate is two points higher than it should be. In many cases, bad dealers will misrepresent your ability to be properly financed. For instance, if you have A credit, they’ll tell you that you have B credit. If you have B credit, they’ll tell you C. They’ll use this as an excuse to mark up your interest rate to above competitive levels. But after the stunt, you feel lucky to get approved at all. You’ll take the loan no matter what and they know it! How do they do it? It’s all emotional. You pay the price over the life of the loan via a higher interest rate than what you deserve.
How to beat the bad credit scam:
• Get a copy of your credit report before you begin shopping for a car from Equifax, Transunion and Experian.
• Have a solid understanding of your credit score and what it means so that you won’t have the wool pulled over your eyes.
• Get a rate quote from your bank or credit union to use as a comparison at the dealership.
A savvy dealer can often beat the rate of your bank or credit union – but a dishonest dealer will convince you that you need to pay much more. Using a comparative rate as a benchmark will keep any interest rate games from being played. Ask your dealer for your Risk Based Pricing Notice. This is a notice that will show your credit score, the source of the credit report, and the date that the credit was reviewed. Car dealers deserve to make money for the service they provide, but you don’t deserve to pay an erroneously marked up interest rate either!
SCAM #4: Life Insurance Scam
There you are, sitting in the finance office, dotting I’s and crossing T’s, barely paying attention. The finance manager slips in a Credit Life Insurance policy. “It’s standard,” he explains. “It’s simply to protect your family in the case that you pass away before this loan is paid off.”
True! This policy will pay off your loan for you if you kick the bucket before you pay off the loan. That could be a good thing for your family if you’re not otherwise insured. But, it’s not standard, it’s not required, and it’s not for everyone. Credit Life Insurance is not required and is your choice to include it or not. It’s up to you. You should request a full presentation of the features and benefits of the policy and then talk it over with your family, taking your existing insurance coverage into consideration before making a decision. Under no circumstance should this be snuck in or presented as a mandatory item!
SCAM #5: Keys on the Roof
You may have heard a similar story before. It’s no wives' tail – this really happens. You come into the dealership with your existing vehicle to have it appraised for a trade in value. An hour goes by and you still haven’t gotten your keys back. Eventually, you’re ready to leave. Perhaps you haven’t struck a deal on the car you want? The sales person explains that the guy who has your keys is at lunch and won’t be back for an hour and his office is locked so you can’t leave yet. “Why not test-drive another car?”
This is just a horrible excuse to keep you around the dealership longer. They know that the more time you invest, the more committed you become, and the more likely you are to agree to terms you aren’t really comfortable with. In the most extreme cases, people have virtually been held hostage at dealerships for hours on end waiting to get their keys back. Another variation of this trick is for them to request your driver’s license before letting you take a test drive. Then, when you want to leave, they can’t find it, etc. A lot of “car guys” laugh about this sort of thing, but it shouldn’t happen at any respectable dealership.
How to keep this from happening to you:
• Bring two sets of keys to your vehicle.
• Make photocopies of your driver’s license and only give them the photocopy.
• If you get into a bad situation, get in your car and drive away.
• Call the police and tell them that the dealership tried to steal your car. You’ll get your keys back in no time flat.
Follow these guidelines and it will be impossible for them to hold you hostage!
A Final Thought On Scams
Of course there are many other scams, but these are the most common. I’ve included these common scams and ways to avoid them. By learning about these scams, you’ll be able to spot the others a mile away! However, I would like to point out that the most effective way to avoid these scams all together is to find a reputable, ethical, honest dealer whom you can trust and depend upon. Someone who has proven their commitment to your well-being and satisfaction, who stands up for what is right and demonstrates an unwavering sense of consumer concern. Look for someone who presents them self as an expert in the car business and a consumer-minded person. When all of these conditions are met, you have found an appropriate dealership worthy of your business!
In the Tampa Bay area, there are thousands of residents, friends, relatives, and neighbors who have been enthusiastically happy with the car buying experience they've received from Sun Toyota. That’s no coincidence! My team has worked hard to create a car buying experience that is unlike any other. I’m so confident that you will be thrilled when you work with me, that I state the following guarantee:
"We guarantee we will give you all of the information that you need to make a well informed decision as quickly and efficiently as possible – sale price, interest rates, monthly payments, lease payments, down payment options and a buy figure on your current car, even if you don’t buy one from us!"
But I wouldn’t want you to just take my word for it. Take a look at what some of my customers have had to say:
“This is the second new car I have purchased from this dealership, and for good reason. Todd was professional and courteous. He knew his products and provided me with the necessary information to reach a decision to select a car most suitable to my needs. Not only did he answer all of my questions, he anticipated well, giving me additional information I had not yet thought to ask for. I felt the transaction was fair to both parties, was conducted in a pleasant manner and professional in every way. Todd represents your company and your products very well. I would recommend him to others with enthusiasm and no hesitation.” - Clearwater, FL
"I had a previous experience renting a Prius and was completely sold on the car. Stopped by just to look at some of the vehicles and wound up buying a Series III 2011 Prius.Really enjoy the car and it does get great gas mileage The car has a surprising amount of room and is very comfortable. I hope to enjoy many thousands of miles with the car. My salesman, Warren Roe, was very pleasant and fair in the buying process. The young lady in the credit department was also very helpful and friendly. I found all of the people there to be like one big family. A pleasant buying experience. I look forward to visiting the new dealership location when finished this summer." - Palm Harbor, FL
"We had a very favorable experience at Sun Toyota. We were in Florida on vacation when the rear differential went out of our 2003 Tundra. We were hauling a 26 ft. camper so we didn't want to be stranded. Sun Toyota said they could fix the differential but with the truck being 8 years old we decided to buy a new Tundra.Bo Anderson was great to us. He helped us through the whole process even though we were out of state. It scared us to do this but he made us feel very comfortable. Within days we had a new truck with a cap, sprayed in bed liner and steps. Thank you, Bo. I would highly recommend you to all our friends. We will be back in the Clearwater area every winter." - Clearwater, FL
"I was very pleased in the length of time it took to make our deal. Everyone at Sun Toyota was very respectful of my time. If I had been able to make up my mind the deal would have only taken a matter of a few hours. I especially liked my salesman, Alfonso. He went above and beyond to meet all my needs. I really love my new Matrix and am very happy I traded with Sun Toyota." - Spring Hill, FL
So why not settle your nerves and eliminate the feeling of anxiety that comes along with buying a car! Call me today at 727-835-4360 to schedule an appointment.