Saturday, September 3, 2016

How To Buy A New Car and Avoid Scams

Using our advice and tools, you'll get a great deal that is still more than fair for the dealership. If you aren't prepared then prepare to get ripped off, it's that simple. People have no problem taking weeks to plan a vacation, but don't spend a few hours doing research before they buy a $30,000 car. You will be able to save a ton of money if you follow our advice.

The Best Price Doesn't Mean You Got a Good Deal

A good deal means that you were treated fairly and the dealership made a reasonable profit. The most important thing you will read here on CarBuyingTips.com is to make sure that you don't just focus on the final price. Dealers will play the "Cash Flow Shell Game" so they can rip you off while making you think you are getting a good deal. An example:
  • They give you a very low price
  • Finance manager sneaks in fees
  • The dealer undervalues your trade-in
  • Your loan APR is increased
The buyer in this example thought they were getting a good deal because of the low price, but they actually got ripped off. We will explain all of the tricks to look out for and teach you how to avoid becoming a victim. To save the most money make sure you read the whole site. Don't just read half and think you have all the facts.
Begin by getting the lowest price using services like TrueCar, CarClearanceDeals andEdmunds. Don't stop there, if you miss one valuable topic on CarBuyingTips.com it can cost you thousands of dollars. Make sure not to be a "monthly payment buyer" and only look at what your payment will be - that is the worst thing you can do. Doing this or becoming a "trade-in buyer" is exactly what the dealer wants and you will play right into their hand. Once this happens you will get ripped off, I guarantee it!

When is the best time to buy a car?

There are two "best times" to buy. The end of December is a good time. Everyone is out buying XMAS gifts, leaving dealer lots void of customers, motivating them to cut prices and break year end sales records. Another good time to buy is July through October as dealerships sell off cars at lower prices to clear space for the new models.

All Prep Work Can be Done from Your PC, Tablet or Smart Phone

The last time I bought a new vehicle I was able to do all my homework without leaving my house. Back in the "old days" you would waste hours at many dealerships. Luckily the internet was invented so now you don't have leave the comfort of your couch. There are many great sites that allow you to relax, research and get quotes. Once you have determined the dealer with the best price, you take all of your research to them and calmly negotiate the best deal.
cars in a row
Exclusive to visitors of our site, try the CarBuyingTips.com Car Buying Service. It gives you special friends and family pricing, leverages volume buying power of large companies, employers, or membership groups. Choose your car and configure options online. You will get an instant price quote from a local dealer in the network. If you don't enjoy haggling, you'll love our car buying service.

Invoice Prices, Rebates and Incentives

As you follow this guide you will find that there are a few critical pieces of information that you will need to make sure you are getting a great deal. They are invoice price, rebates and incentives. We will cover these in more detail later but you should know that when talking about rebates and incentives there are some that are well advertised and some that are "secret" between the manufacturer and the dealer.
The most important thing to remember about the invoice price is that it is not the amount the dealer paid for the car. We will show you how to calculate what the dealer actually paid later in this guide.

What are secret incentives?

Secret factory to dealer incentives can be $1,000-$6,000 in addition to known rebates! Because of these secret incentives, if you buy a car at invoice, the dealer earns thousands more. You should haggle over this incentive, as many dealers willingly give up all or part of this incentive, making your cost lower.
If you want the most accurate, complete and up to date data for these three important items, I'd recommend buying the data as part of the FightingChance package. They will also make somebody available to talk to if you have questions about anything that comes up as you go through the purchase process.

Competition Gets You the Best Deal

Enter the dealership armed with "The Folder" that I will talk about in Chapter 3. Once they see that you are prepared it will work to your advantage. The deal will now proceed on your terms, not theirs. Don't enter a dealership without having multiple price quotes or you'll overpay by thousands. Commissioned salespeople fear "The Folder" because they know you did your homework. They rely on uneducated car buyers who don't do any research before they go shopping.
Top Recommended Car Price Quote Sites
TrueCar takes the haggle and hassle out of new car buying. Using their service you will get a Guaranteed Savings Certificate that will lock your price. This approach is perfect if you don't like dealing with all the normal negotiating hassles.
Get a Hassle Free Price from TrueCar.com
CarClearanceDeals.com searches clearance pricing from their network of dealers to get you the cheapest price. Use their simple form to select the make and model and start saving. Remember to get quotes from the maximum number of dealers to give you the upper hand.
Get a Quote from CarClearanceDeals.com
Edmunds.com offers the largest dealer network, offering you better choices when buying a car. Edmunds allows you to select dealers within 50 miles of your zip code and avoid dealers that you don't want to deal with.
Get A Free Price Quote From Edmunds.com
Cars.com gives you free, no-obligation quotes from up to 3 dealers. Just select your make, model, color and options. Getting quotes from multiple dealers pressures dealers to give you a discount.
Get a Quote from Cars.com
CarsDirect.com lists your purchase price online instantly with better prices than dealers and cool 360° views. As you check off options, the screen shows invoice price, MSRP and your low CarsDirect price.
Get A Free Price Quote From CarsDirect
The CarBuyingTips.com Car Buying Service lets you get a guaranteed price quote without leaving your house. This exclusive program leverages volume buying power of large companies, employers and membership groups to get you a low price on a new car.
Get Started with the CarBuyingTips.com Car Buying Service
Autobytel has 20,000 dealers, they give you free no hassle low price quotes, list car prices and dealer cost.
Get a Quote From Autobytel
California PlateRoadster Concierge Service for California Residents will get you a great price and handle everything for you. They will deliver your car to your home. The service is only available in California.
Buy a Car Using Roadster

Use Competition for All Aspects of the Deal

Competition also works to get you the best rate on your loan. The dealer is not the only one that can finance your car, online lenders are available. Once approved you will have a check in hand and know your interest rate before you even set foot in the dealership. You can use your low rate to negotiate with the dealer or use your online financing if they won't match or beat the online rate. We will cover this topic in more detail in our chapter on auto loans. Remember, price is only one component of a complete deal.
TrueCar gives you a great baseline on pricing. Check the curve to see how your quotes stack up to what other have paid. If the TrueCar price is better, print out the Guaranteed Savings Certificate and head to the dealership for a hassle free deal. Remember, you still have to pay attention to the other aspects of the deal that we discuss.
screen shot of truecar

Warning About Car Dealership Advertising

The number one goal of any car dealer is to get you in the door. If you aren't there they can't pull any tricks or scams on you. They hire the best advertising and marketing companies to come up with ads to get you there.
Optical Illusion
Advertisers spends millions in psychological wording research to trick you. Take a look a the image to the right. You thought it said "I love Paris in the Springtime" right? Wrong! See the extra "the"? It really says "I love Paris in the the Springtime." Your brain tricked you. Advertisers rely on your brain to trick you so they don't have to lie.
Pay very careful attention to the fine print when it comes to advertising. When you see a TV commercial it is impossible to read it unless you are watching on a DVR and you can pause it. I don't know why it is legal for them to put these legal statements in such a small font and displayed for such a short time that no human can possibly read it.
When an ad says 1.9% APR, look for the "*". The fine print will say "with approved credit only" or "qualified buyers only." The 1.9% reels you in. You must have perfect credit to get the 1.9% rate. Most people will not qualify. Other scams you may hear:
  • "We'll Get You Out Of Your Current Lease No Matter How Much You Owe!"
  • "We'll Pay Off Your Loan No Matter How Much You Owe!"
  • "We'll Give You $4,000 For Any Trade-In!"
  • "Don't Make A $5,000 Mistake!"
  • "No Reasonable Offer Will Be Refused!" (Except yours, because it's unreasonable)
In the examples above, the dealer is not doing you any favors, they want you to buy a car from them at full MSRP. They also want your trade-in so they can give you $4,000 below market value and resell it for a higher price. Sometimes an ad can make you think that trading in a car relieves you of your loan or lease obligation. It does not!
This important fact gets many buyers into trouble. You are actually taking on increased debt when you thought you were dropping one debt for another. They lied to you in their ad, they are not doing you any favors. They are piling on more debt. It's a very clever trick, but now you're onto them. Next time you hear those ads, you'll know what they're up to. The ads should be worded "We'll get you out of your current car, then roll what you owe plus penalties into your new car purchase so you can pay off 2 cars!"
Don't trade in a car you owe money on. Aside from adding to your debt, you are inviting other problems. Since the dealer doesn't care about your finances, it is possible that they don't pay the bank on time and this can lead to penalties for you.

How Car Dealers Profit From New Car Purchases

You think new car dealers have just one way to coax money out of you when car buying? Thank you for playing. Some new car dealers convince you to spend so much, you didn't know you were taken for a ride! Car buyers who brag of high trade in value were asleep at the wheel leaving money on the table in other parts of the deal.
  1. Offers you $3,000 to $4,000 below market price for your trade-in
  2. The new car purchase price when buying a car
  3. Marking up the rate they give you for new car financing
  4. Environmental package extras and new car extended warranties
The dealership is always trying to maximize their profit. Of course they should make a fair profit on the deal but they shouldn't rip you off. They trick you into a bad deal using what I call the "Car Dealer Cash Flow Shell Game™"

How The Car Dealer Cash Flow Shell Game™ Works

Let me teach you how the game works. Cash spent buying a car pours into buckets. For the best deal you want the most for trade-ins, discounted MSRP, low APR, no extras and few fees. Here's what you and I want:
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The car dealer has other plans. This is what the dealer wants:
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The dealer low balls your trade-in, charges full MSRP, high APR on the auto loan, high profit extras, dealer prep and ad fees and ends up with a huge profit. If you have bad credit they'll lie and say that credit life insurance is required, get more profit and call you 2 weeks later to tell you financing fell through and you need to come up with $2,000 more. A similar abuse of the situation occurs if you're upside down on your current auto loan.
If they know you're a trade-in buyer, they give you what you want for your trade-in. But look what else they do. They jack up the car buying price to MSRP, pile on extras and fees. The amount of cash involved doesn't change, it gets shuffled around the buckets.
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
Here's a good one. They bait you with 0% or a low APR. But then they jack the price to MSRP, low ball your trade-in, pile on fees and dealer extras. Note again that their profit is still the same large amount.
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The folks here at CarBuyingTips.com hope you had fun playing the Cash Flow Shell Game for buying a new car.
Dealers have perfected this system over decades. The odds are in their favor. Don't get me wrong, dealers have the right to be profitable. You should know how the game is played, so it can be played fairly and they can make a fair profit while you get a good deal.
In this guide I'll show you how to prevent losses in these areas. You have enemies to overcome including fear of the unknown. We'll turn that fear into a target rich environment of opportunities for a successful new car purchase.
Try to shop where salespeople are not on commission, but on a salary. They still want top dollar, they just don't have commission fever. Some no haggle dealers give good deals, while most do not.
You should shop in a competitive market. Make your offer as shown on this site, bounce it off all the car dealers and even "No Haggle" dealers will bite. Many "No Haggle" dealers have a "low" price on the windshield that you find out later included the rebate, so they actually charged you (MSRP - Rebate), which is no bargain. Dealing with a fleet manager can be helpful, since they are not on commission. If you make an appointment, show up, it's bad business if you don't. Good salespeople like an informed consumer because the process will be more efficient.
No matter how good the deal is that you negotiate with the salesperson it can always turn bad quickly in the "F&I" (Business) Office. Make sure to pay attention to everything in this guide so that you don't fall victim to this common occurrence.

Source: carbuyingtips.com

Saturday, August 27, 2016

How Much Car Do You Need To Be Happy?


“Check out the Maverick,” I said as we got out of the rental car upon our arrival at the Ramada. Juxtaposed against a backdrop of the premium-priced automotive exotica that characterizes the Monterey auctions held each summer during the weeklong lead-up to the Pebble Beach Concours d’Elegance, sat this Ford Maverick with a mild rat rod-ish patina – its paint, though shiny in places, was similar in color to red oxide primer, and it had burned through on the hood. The roof was painted white, not a vinyl top, as was typical of lower line cars back in the day. The rolling stock consisted of mismatched wheels – aluminum slots in front and Torq-Thrust-style in the rear all sans center caps – with slightly oversized tires and just the right stance to carry off a subtle 1970s street look.
Most other automotive press people probably wouldn’t have noticed it in their hotel parking lots, but the three of us did – immediately. Matt Litwin, Kurt Ernst and I made this trip to Monterey in 2013 to cover the aforementioned auctions and Pebble Beach. I had just started at Hemmings two months before, working from Pennsylvania. Because the home office is in Vermont, the first time I met them was at the airport in California.
Curious, we walked up to the Maverick to get a better look. For lack of a better term, this car was cool in a sleeper sort of way. I grew up with mostly GM cars and some Mopars in the family, so I hadn’t really gotten into Fords as much. My aunt, however, owned a 1970 Maverick in bright blue. One thing that always stood out about it was, despite the fact that it was an economy car, it was proficiently styled, featuring great lines and proportions. Where many low-priced cars come across like a three-quarter effort, the Maverick looks finished, down to the last detail.
Maverick_02_2000
We discussed it a bit more and wondered about what engine could be in it. The next morning, by sheer happenstance, as we were preparing to leave the hotel to cover the auctions and photograph priceless Duesenbergs, Corvettes, Ferraris, Porches, GT40s, Yenko Camaros, Shelby Mustangs and the like, our attention was drawn away when Matt and Kurt noticed that the hood was up on the Maverick. Like three kids looking in a toy store window, we watched from our second story room for a few minutes as the owner did some parking-lot maintenance on his Ford. The raised hood revealed a 302-cu.in. V-8 engine – we were pleased.
That night, after we got back from the auctions and had our daily fill of incredible highline collectible cars, I thumbed through a magazine that I brought with me, which consisted of a compilation of road tests from the muscle car era. (I found it at an antique store.) Sure enough, there was a Maverick road test in it. We read it to gain some knowledge regarding the little Ford in our parking lot while the hundreds of photos from a long day’s work downloaded from our memory cards to our laptops.
The next morning, I even looked up some old Ford brochures to learn a little about model year changes. Matt checked Hemmings to see what some of the going prices were for Mavericks. Had we become obsessed with a 40-something-year-old economy car in the midst of price-is-no-object automotive auction madness? Perhaps a little bit. Maybe it was just nice to know there are still cars out there that people who don’t have six-figure incomes can buy and enjoy – us included. While some may see this car as simply a worn-out old Ford, we appreciated the fact that the owners were out enjoying it and driving it far enough to what appeared to be a Goodguys event, judging by the sticker in the windshield, to require a hotel stay.
Maverick_03_2000
Our awareness of the unique and relatively affordable cars around us outside the auctions didn’t stop there. When we went to Pebble Beach, it was so crowded that they were parking cars out along the road adjacent to the ocean and we had to take a shuttle to the show. Our pre-dawn three-quarter-mile walk to the shuttle stop revealed some very interesting silhouettes parked along the shoulder under the moonlit sky. When we came back later in the day, we saw some amazing cars parked on that road.
While working these auctions was a once-in-a-lifetime-type opportunity to get close to some of the rarest and most expensive cars in existence and was a lot of fun, it was balanced by the additional benefit of tripping over a few desirable cars in the periphery that are attainable.
Comparing a Maverick driver to perfectly-preserved or concours-restored brass era cars, classics, exotics, muscle cars and race cars is unfair. Generally, in looks, performance, pedigree and rarity, they win. However, regarding enjoyment from behind the wheel, depending upon how it’s equipped, and pride in ownership, which has no price tag, the little Ford may give a few of them a run for their money – or for 95 percent less money, for that matter. It all depends on your tastes and what you want out of a car.
That raises the question: How much car do you need to be happy? Is there a certain model? Performance level? Price point? Could you be just as satisfied with 318-cu.in. Barracuda as you would be with a Hemi ‘Cuda? Can a nicely built Le Mans put a smile on your face like a GTO would? Tell us what you think.
Should you wonder if the Maverick made a lasting impression, consider this. When I attended Musclepalooza XIX earlier this year, I got to see Kurt and Matt again. The second thing Kurt said to me that day was, “Hey, did you see the Maverick out on the show field?” There were more than 600 cars there and that was the first one we discussed.

Source: hemmings.com

Thursday, July 7, 2016

Nine Safest Cars on the Road

Whenever you put your loved ones behind the wheel or in the car for any trip that they may make, we want them to be as safe as possible.

Click this link to find out which cars are the safest cars on the road.

Source: autoblog.com

Poorly-Selling Cars in September, 2015

Click Here to find out which cars made this list and why. Most car makers make many model cars that sell extremely well, but there are a few that sell so poorly.

Source: autoblog.com

The Least Reliable Cars in America


Click Here to read the post in Autoblog.com and you will see the cars that are least reliable and you may not want to purchase them as your personal family car.

Sunday, June 19, 2016

How To Buy A New Car and Avoid Scams

Using our advice and tools, you'll get a great deal that is still more than fair for the dealership. If you aren't prepared then prepare to get ripped off, it's that simple. People have no problem taking weeks to plan a vacation, but don't spend a few hours doing research before they buy a $30,000 car. You will be able to save a ton of money if you follow our advice.

The Best Price Doesn't Mean You Got a Good Deal

A good deal means that you were treated fairly and the dealership made a reasonable profit. The most important thing you will read here on CarBuyingTips.com is to make sure that you don't just focus on the final price. Dealers will play the "Cash Flow Shell Game" so they can rip you off while making you think you are getting a good deal. An example:
  • They give you a very low price
  • Finance manager sneaks in fees
  • The dealer undervalues your trade-in
  • Your loan APR is increased
The buyer in this example thought they were getting a good deal because of the low price, but they actually got ripped off. We will explain all of the tricks to look out for and teach you how to avoid becoming a victim. To save the most money make sure you read the whole site. Don't just read half and think you have all the facts.
Begin by getting the lowest price using services like TrueCar, CarClearanceDeals andEdmunds. Don't stop there, if you miss one valuable topic on CarBuyingTips.com it can cost you thousands of dollars. Make sure not to be a "monthly payment buyer" and only look at what your payment will be - that is the worst thing you can do. Doing this or becoming a "trade-in buyer" is exactly what the dealer wants and you will play right into their hand. Once this happens you will get ripped off, I guarantee it!

When is the best time to buy a car?

There are two "best times" to buy. The end of December is a good time. Everyone is out buying XMAS gifts, leaving dealer lots void of customers, motivating them to cut prices and break year end sales records. Another good time to buy is July through October as dealerships sell off cars at lower prices to clear space for the new models.

All Prep Work Can be Done from Your PC, Tablet or Smart Phone

The last time I bought a new vehicle I was able to do all my homework without leaving my house. Back in the "old days" you would waste hours at many dealerships. Luckily the internet was invented so now you don't have leave the comfort of your couch. There are many great sites that allow you to relax, research and get quotes. Once you have determined the dealer with the best price, you take all of your research to them and calmly negotiate the best deal.
cars in a row
Exclusive to visitors of our site, try the CarBuyingTips.com Car Buying Service. It gives you special friends and family pricing, leverages volume buying power of large companies, employers, or membership groups. Choose your car and configure options online. You will get an instant price quote from a local dealer in the network. If you don't enjoy haggling, you'll love our car buying service.

Invoice Prices, Rebates and Incentives

As you follow this guide you will find that there are a few critical pieces of information that you will need to make sure you are getting a great deal. They are invoice price, rebates and incentives. We will cover these in more detail later but you should know that when talking about rebates and incentives there are some that are well advertised and some that are "secret" between the manufacturer and the dealer.
The most important thing to remember about the invoice price is that it is not the amount the dealer paid for the car. We will show you how to calculate what the dealer actually paid later in this guide.

What are secret incentives?

Secret factory to dealer incentives can be $1,000-$6,000 in addition to known rebates! Because of these secret incentives, if you buy a car at invoice, the dealer earns thousands more. You should haggle over this incentive, as many dealers willingly give up all or part of this incentive, making your cost lower.
If you want the most accurate, complete and up to date data for these three important items, I'd recommend buying the data as part of the FightingChance package. They will also make somebody available to talk to if you have questions about anything that comes up as you go through the purchase process.

Competition Gets You the Best Deal

Enter the dealership armed with "The Folder" that I will talk about in Chapter 3. Once they see that you are prepared it will work to your advantage. The deal will now proceed on your terms, not theirs. Don't enter a dealership without having multiple price quotes or you'll overpay by thousands. Commissioned salespeople fear "The Folder" because they know you did your homework. They rely on uneducated car buyers who don't do any research before they go shopping.
Top Recommended Car Price Quote Sites
TrueCar takes the haggle and hassle out of new car buying. Using their service you will get a Guaranteed Savings Certificate that will lock your price. This approach is perfect if you don't like dealing with all the normal negotiating hassles.
Get a Hassle Free Price from TrueCar.com
CarClearanceDeals.com searches clearance pricing from their network of dealers to get you the cheapest price. Use their simple form to select the make and model and start saving. Remember to get quotes from the maximum number of dealers to give you the upper hand.
Get a Quote from CarClearanceDeals.com
Edmunds.com offers the largest dealer network, offering you better choices when buying a car. Edmunds allows you to select dealers within 50 miles of your zip code and avoid dealers that you don't want to deal with.
Get A Free Price Quote From Edmunds.com
Cars.com gives you free, no-obligation quotes from up to 3 dealers. Just select your make, model, color and options. Getting quotes from multiple dealers pressures dealers to give you a discount.
Get a Quote from Cars.com
CarsDirect.com lists your purchase price online instantly with better prices than dealers and cool 360° views. As you check off options, the screen shows invoice price, MSRP and your low CarsDirect price.
Get A Free Price Quote From CarsDirect
The CarBuyingTips.com Car Buying Service lets you get a guaranteed price quote without leaving your house. This exclusive program leverages volume buying power of large companies, employers and membership groups to get you a low price on a new car.
Get Started with the CarBuyingTips.com Car Buying Service
Autobytel has 20,000 dealers, they give you free no hassle low price quotes, list car prices and dealer cost.
Get a Quote From Autobytel
California PlateRoadster Concierge Service for California Residents will get you a great price and handle everything for you. They will deliver your car to your home. The service is only available in California.
Buy a Car Using Roadster

Use Competition for All Aspects of the Deal

Competition also works to get you the best rate on your loan. The dealer is not the only one that can finance your car, online lenders are available. Once approved you will have a check in hand and know your interest rate before you even set foot in the dealership. You can use your low rate to negotiate with the dealer or use your online financing if they won't match or beat the online rate. We will cover this topic in more detail in our chapter on auto loans. Remember, price is only one component of a complete deal.
TrueCar gives you a great baseline on pricing. Check the curve to see how your quotes stack up to what other have paid. If the TrueCar price is better, print out the Guaranteed Savings Certificate and head to the dealership for a hassle free deal. Remember, you still have to pay attention to the other aspects of the deal that we discuss.
screen shot of truecar

Warning About Car Dealership Advertising

The number one goal of any car dealer is to get you in the door. If you aren't there they can't pull any tricks or scams on you. They hire the best advertising and marketing companies to come up with ads to get you there.
Optical Illusion
Advertisers spends millions in psychological wording research to trick you. Take a look a the image to the right. You thought it said "I love Paris in the Springtime" right? Wrong! See the extra "the"? It really says "I love Paris in the the Springtime." Your brain tricked you. Advertisers rely on your brain to trick you so they don't have to lie.
Pay very careful attention to the fine print when it comes to advertising. When you see a TV commercial it is impossible to read it unless you are watching on a DVR and you can pause it. I don't know why it is legal for them to put these legal statements in such a small font and displayed for such a short time that no human can possibly read it.
When an ad says 1.9% APR, look for the "*". The fine print will say "with approved credit only" or "qualified buyers only." The 1.9% reels you in. You must have perfect credit to get the 1.9% rate. Most people will not qualify. Other scams you may hear:
  • "We'll Get You Out Of Your Current Lease No Matter How Much You Owe!"
  • "We'll Pay Off Your Loan No Matter How Much You Owe!"
  • "We'll Give You $4,000 For Any Trade-In!"
  • "Don't Make A $5,000 Mistake!"
  • "No Reasonable Offer Will Be Refused!" (Except yours, because it's unreasonable)
In the examples above, the dealer is not doing you any favors, they want you to buy a car from them at full MSRP. They also want your trade-in so they can give you $4,000 below market value and resell it for a higher price. Sometimes an ad can make you think that trading in a car relieves you of your loan or lease obligation. It does not!
This important fact gets many buyers into trouble. You are actually taking on increased debt when you thought you were dropping one debt for another. They lied to you in their ad, they are not doing you any favors. They are piling on more debt. It's a very clever trick, but now you're onto them. Next time you hear those ads, you'll know what they're up to. The ads should be worded "We'll get you out of your current car, then roll what you owe plus penalties into your new car purchase so you can pay off 2 cars!"
Don't trade in a car you owe money on. Aside from adding to your debt, you are inviting other problems. Since the dealer doesn't care about your finances, it is possible that they don't pay the bank on time and this can lead to penalties for you.

How Car Dealers Profit From New Car Purchases

You think new car dealers have just one way to coax money out of you when car buying? Thank you for playing. Some new car dealers convince you to spend so much, you didn't know you were taken for a ride! Car buyers who brag of high trade in value were asleep at the wheel leaving money on the table in other parts of the deal.
  1. Offers you $3,000 to $4,000 below market price for your trade-in
  2. The new car purchase price when buying a car
  3. Marking up the rate they give you for new car financing
  4. Environmental package extras and new car extended warranties
The dealership is always trying to maximize their profit. Of course they should make a fair profit on the deal but they shouldn't rip you off. They trick you into a bad deal using what I call the "Car Dealer Cash Flow Shell Game™"

How The Car Dealer Cash Flow Shell Game™ Works

Let me teach you how the game works. Cash spent buying a car pours into buckets. For the best deal you want the most for trade-ins, discounted MSRP, low APR, no extras and few fees. Here's what you and I want:
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The car dealer has other plans. This is what the dealer wants:
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The dealer low balls your trade-in, charges full MSRP, high APR on the auto loan, high profit extras, dealer prep and ad fees and ends up with a huge profit. If you have bad credit they'll lie and say that credit life insurance is required, get more profit and call you 2 weeks later to tell you financing fell through and you need to come up with $2,000 more. A similar abuse of the situation occurs if you're upside down on your current auto loan.
If they know you're a trade-in buyer, they give you what you want for your trade-in. But look what else they do. They jack up the car buying price to MSRP, pile on extras and fees. The amount of cash involved doesn't change, it gets shuffled around the buckets.
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
Here's a good one. They bait you with 0% or a low APR. But then they jack the price to MSRP, low ball your trade-in, pile on fees and dealer extras. Note again that their profit is still the same large amount.
Trade-In
+
Selling Price
+
Interest Rate
+
Add Ons
- Insurance
- Rust Proof
- Sealant
+
Extra
Fees
- Prep
- Admin
=
Dealer's Profit
$$$$
The folks here at CarBuyingTips.com hope you had fun playing the Cash Flow Shell Game for buying a new car.
Dealers have perfected this system over decades. The odds are in their favor. Don't get me wrong, dealers have the right to be profitable. You should know how the game is played, so it can be played fairly and they can make a fair profit while you get a good deal.
In this guide I'll show you how to prevent losses in these areas. You have enemies to overcome including fear of the unknown. We'll turn that fear into a target rich environment of opportunities for a successful new car purchase.
Try to shop where salespeople are not on commission, but on a salary. They still want top dollar, they just don't have commission fever. Some no haggle dealers give good deals, while most do not.
You should shop in a competitive market. Make your offer as shown on this site, bounce it off all the car dealers and even "No Haggle" dealers will bite. Many "No Haggle" dealers have a "low" price on the windshield that you find out later included the rebate, so they actually charged you (MSRP - Rebate), which is no bargain. Dealing with a fleet manager can be helpful, since they are not on commission. If you make an appointment, show up, it's bad business if you don't. Good salespeople like an informed consumer because the process will be more efficient.
No matter how good the deal is that you negotiate with the salesperson it can always turn bad quickly in the "F&I" (Business) Office. Make sure to pay attention to everything in this guide so that you don't fall victim to this common occurrence.

Source: carbuyingtips.com