Going to a car dealership is a lot like walking through a mine field.  You’ve got to know where all the bombs are buried so you can walk out alive.  The car buying process is laid out to extract the maximum amount of money from a consumer.  To help you avoid the mines, here are some of the top secrets that car dealers don’t want you to know.

1- You could save up to $10,000 driving a few hours south

Importing a car into Canada takes a little energy but can result in big savings.  By importing a car from the U.S. you can save 20-30% off the price of a new vehicle.  Incidentally, that’s about the same percent a new car depreciates when you drive off the lot.  So another way to think about it is you are completely wiping out that depreciation.
What’s your time worth?  Let’s say you spend 4 hours working out a deal before you leave home and another 10 hours picking up your car, filling out paperwork and going through Customs.  If you saved $10,000 on a car, that’s $714 per hour.  Even if you only saved $5,000 on a car, that’s still $358 per hour!

2- Buying based on the monthly payment is the wrong mindset

One of the first questions a car salesman will ask when you enter a dealership is how much do you want to pay per month.  This is a devious little trick!  Once you commit to a monthly payment amount, they can sell you a more expensive car by changing the financing terms.  By adjusting the interest rate, length of loan, or down payment amount, they can fit a wide range of car prices into the same monthly payment.
Plan your budget around the total price of a car and calculate affordable monthly payments at home using an online loan payment calculator.  When talking to a salesman, only negotiate based on total price, not the monthly payment.

3- Everything is negotiable

Everyone knows that the price of a car is negotiable (and to see just how negotiable, Car Cost Canada is a good resource).  But, did you also know just about every other aspect of a car sale has some wiggle room.  The amount of your trade-in, the interest rate offered, and the amount you pay for an extended warranty can all be negotiated.  You can even negotiate maintenance appointments and car washes.

4- Sometimes the salesman needs a deal more than you

Both salesman and dealerships have monthly sales quotas that are tied to compensation.  Salesmen are much more likely to give you a bigger discount at the end of the month when they are trying to meet their numbers.  Often times the amount of bonus tied to selling several cars will greatly exceed the loss made on a single sale.  If you time it right, a couple hundred dollar discount for you might be profitable for a salesman if they are poised to make a thousand or more in bonus money.  For the best deal, start the car buying process in the last couple days of the month.

5- Your trade-in is the second biggest money maker for a dealership

Car dealers know you have a limited number of options to get rid of your old car.  So they will buy it from you for as little as possible and turn it around for a hefty profit.  Before you go to a dealership, do some research on CanadianBlackBook.com to find out how much your car is really worth.  Consider selling it to a private party if you’ve got the time or bring an appraisal with you to the dealership to ask for more money.

6- The Finance Office is the biggest money maker

Most people put all their effort into negotiating the price of a car and then let down their guard.  Car salesman encourage this.  After you settle on a car price, they will congratulate you and make you feel like you’ve won the lottery.  But there’s more work to be done.  The Finance Office wants you to use their financing and buy warranties, insurance, and add-ons like rustproofing and fabric protection.  All of these items have very high profit margins for dealerships, but most are unnecessary.  Shop around for financing and insurance outside the dealership and you’ll likely find much better deals.
Do you have any tips that car dealers would prefer to be kept a secret?
The car buying process extracts the maximum amount of money from a consumer. Here are some of the top secrets that car dealers don’t want you to know.

About Geoff Cudd

These tips are from Geoff Cudd at the Car Negotiation Coach who teaches people how to buy a car and negotiate the best possible price.

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