Buying A New Car Without Getting Ripped Off!

I have over 20 years experience at a new car dealership. I have sold cars, been in fleet sales, a fleet manager, leasing manager, finance manager, inventory manager, and produced vehicle advertising. In general I would say that a new car dealer is very motivated to get the maximum possible revenue from each customer. (This is also true for most businesses) Dealership management typically adheres to all rules and regulations and will not allow deceptive selling practices. The general problem for the consumer is that they are usually less skilled at the buy/sell process than the dealership staff. The staff does this all day, every day; the customer may buy once every few years. I can’t tell you all that I know on one page. I will try to give you a few tips to help level the playing field.

The first tip is to go slow in the shopping process. The dealer will usually press for a commitment to buy TODAY! Don’t be rushed to buy. There is almost never a great deal today that will be gone tomorrow. First choose the type of vehicle you want, and decide which options you need. Then you can contact multiple dealers for a price quote. It may be better to do this online or by phone. At this time you should find out what factory specials are available. Consider the advantages of a low rate vs. a larger rebate if that is the case. Are you eligible for any special pricing plans such as X or Z plan because of being a close relative of a factory employee or because of the company you work for? After you narrow your choice of dealers, don’t be afraid to play them against each other. Dealers HATE to lose a deal to a competitor and will likely go lower to get the deal.

The second tip is to only buy the car and nothing else from the dealer! Make it very clear that you don’t want, and won’t pay for, paint sealer, fabric protector, service coupon books, paint stripes, alarm system, window tint, life insurance, tire warranty, etc., etc., etc. Any of these things can be gotten later, if you have to have them, at a lower price. If you want an extended warranty, call a few dealers after the purchase and get it at a discounted price. It is common for the finance department to “load the boat” with extras. READ the paper work they present, especially anything with price figures. Tell them to take off any extras and walk if they won’t. (They won’t let you walk too far!)

If you have a trade in, negotiate that separately from the cost of the vehicle. If possible get a bid from a place like CarMax for an indication of your trade-in wholesale value.

Shop for your own financing and only use the dealer arranged financing if they meet or beat what you can get elsewhere.

A typical profit for the dealer can be about $3,000 including the vehicle and financing. On some customers the dealer might make $10,000 or more in profit. If you use these tips you may be able to reduce the dealers profit to a small amount.

Tips For Putting Used Car Websites to Work For You

Millions of used car buyers have discovered the advantages of searching online for the vehicle best suited to their needs; you can experience the benefits of researching and shopping on used car websites, as well. Read on to find out how you can find the car of your dreams through a reputable online vehicle search service.

What types of information are available on a used car site?
The best used car sites offer a wide range of information. You will find detailed information on each vehicle being sold, including the year, make, model, mileage and general condition, as well as the asking price. Photographs of the vehicle are also provided, and in some cases, the site will provide a detailed history of the car; a vehicle history can tell you whether the car has been involved in a crash and whether any major repairs have been done. Some websites also provide vehicle reviews, so that you can compare various makes of cars.

Where do the vehicles come from that are sold online?
Depending on the site you are using, you will be able to search for vehicles locally or nationally. Many sites pull information from dealerships across the country; often, a group of dealerships in your area will provide a used car site where you can find pre-owned vehicles for sale in your area.

How do I know whether I can trust an online used vehicle dealer?
Your best bet is to visit used car sites that are well-known and have an established reputation. Sites like and (run by the National Auto Dealers’ Association), among others, are legitimate resources for researching and purchasing used vehicles.

Can I get financing through an online used car dealer?
Many used vehicle websites will provide links to lenders who can help you finance the purchase of a quality used car. Some of the larger sites that are affiliated with national dealer groups will have their own financing available. Be sure to shop around for the best rates and loan terms before you commit yourself to a lender.

With used car websites, you no longer have to deal with the hassle of visiting one dealership after another, only to learn that they do not have the car you are looking for. When you shop online, you have access to information on millions of used cars, and you can search for exactly the type of vehicle you want. Get the best deal possible from reputable dealers all over the country, and take the guesswork out of buying a used car.

10.5 Hints to Help You Get a Car Loan

1. Know your credit score.

Get a copy of your credit report. Review it for errors and make any corrections before you try and get a loan. If there are major errors in your credit report, consider delaying your application until the corrections are completed. This will make sure you keep the car dealers honest. If you desperately need transportation, try renting a car short term until your credit report is straightened out. You may actually save money on fuel, insurance and repairs by renting which you can add to your down payment.

2. Have an explanation for your credit issues.

Don’t be apologetic. Bad things happen to good people. Be specific about any problems or crisis that caused your problem. Let the bank know about any major upheaval in your life that may have led to your problems such as an illness or a natural disaster, like Katrina, or 9-11. Make sure that you can substantiate your claim.

3. Don’t lie about anything on the credit app.

Lenders will turn reject your loan if they find you lied to them.

4. Know your income.

Make sure you can prove what you make. Have your proof readily available.

5. Save your down payment.

More down means more car. Larger down payments can sometimes get a lender to view your application more favorably.

6. Know what the payoff on your trade-in is.

If you are trading in a car with a payoff, get a ten day payoff from the lender. If you have a warranty or additional policies bought with the vehicle, find out if you can cancel them. This will lower your payoff or entitle you to a refund after the vehicle is paid off.

7. Know what your car is worth.

Check out NADA or KBB first. Go to CarMax and see what they will buy it for. Use these figures to negotiate the best trade in value. Remember, If you get more than the payoff, that amount becomes down payment.

8. Buy what you need, not what you want.

Set realistic expectations. Don’t buy more payment than you can truly afford. Rebuild your credit first, than rebuild your image later.

9. Don’t be argumentative.

Nice people get better deals than people who give sales reps a hard time.

10. Try other sources to get a loan.

Check online. Lenders such as Capital One, HSBC, Roadloans, and CitiFinancial all have websites which let you apply direct to them for a loan. You may get better rates and terms from lenders online than from a dealer.

Check your credit union or insurance co. They may have a loan program or lender relationship. A good payment history with your insurance company may help you get a loan from their bank. Credit unions can sometimes do automatic payroll deductions, which guaranty you pay the loan, so they may be more receptive.

10.5 Don’t go from dealer to dealer.

Excessive inquiries can be a reason a lender declines your application.


Don’t be misled by “Every application is accepted”

Just because a dealer says your application is accepted, that doesn’t meen that your loan is approved. Accepting your application means that the dealership will take your infomration to submit to a lender. It’s up to the lender to approve your loan application, not the dealership.


Adverse action notification under the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA) requires a creditor obligation to furnish certain information to a customer seeking financing
whenever a decision is made that is adverse to the customer. This means that a dealership must submit your application to a lender for adecision or THEY (the dealership) must furnish you with an Adverse Action Notice describing why THEY (the dealership) declined to approive your request for a loan, AS SUBMITTED. Unless the dealership has their own finance company, they are required by law to either submit your application to a lender or tell you what information the dealership has used in order to decline your request for credit. If a dealership dopes not submit your application, they may be in violation of these two federal laws!

Geoff Cohen is a seasoned auto professional, with over 30 years experience. He has done it all, from sales rep to F&I Manager, New Car Manager, Used Vehicle Manager, up to GSM and GM. He has also worked as an area sales manager for a major sub-prime lender as well as run his own BHPH and Auto Leasing/Brokerage company.. He is the National Accounts Manager for AutoLending Network and is a contributing author to, a blog about Special Finance solutions for auto dealers as well as F&I Magazine and World of Special Finance Magazine

What the Salesman Doesn’t Tell You: Understanding Auto Depreciation

The question in the back of your mind after you’ve bought a used or new car is always, “I wonder how long I can drive this car till I have to sell it.” Hand-in-hand with selling your car comes the question of what will it be worth in the future. This price will be contingent upon the automotive depreciation of your car, how much it loses its value from original price paid to price sold. The question of depreciation pricing especially comes into play when buying a used car…are you paying the correct price, or is the salesman taking you for a ride.

The standard rate of depreciation of automobiles in the U.S. market can be estimated at around 15-20% of the car’s value the prior year. A 1 year old car will be worth around 80-85% of the original cost, a 4 year old car will be worth around 80 – 85% of the 3rd year value, etc.

New cars have the most staggering and quick depreciation, with first year depreciation hurting the most due to the “off the lot” value drop. This occurs due to the fact that the customer pays retail price at the dealership, which is the price the dealer chooses for the car. As soon as you leave after signing on the dotted line, the car is worth the wholesale or actual price of the car, which could range from 5-15% less than the original, retail value of the car.

“The retail price is what you would expect to pay for the car at a dealership. The wholesale price is what you would be offered if you sell it to someone who will turn around and resell it to someone else. The wholesale price is essentially the same as the trade-in value.” –

Let’s say you bought a brand new 2006 Z06 Corvette at a 7% retail markup…you know the salesman…at the dealership for around $74,000. The wholesale price plus a year of depreciation would place the 1 year old price of your Corvette at around $60,000. The second year value of the car (60,000 x .83) would be around $49,800, third year value (49,800 x .83) at $41,334.

Depreciation is a particularly important issue when buying a used car, because you need to know the value of your wanted car compared to the asking price of the dealership. Here are a few pointers to finding the information for yourself, so you can possibly avoid the expensive lemon.

1. Do Your Homework – Consult as many resources as possible, especially reputable automotive tools such as Edmund’s Automobile Buyers Guide and Kelley Blue Book. Find out the price offered by the officials and arm yourself with that knowledge before you start seeing the plaid sport coats of salesmen.

2. Compare the local market to the CarMax’s – Don’t take the easy way out and go to the most popular brand name. Look at local markets and classified ads to see what is in your area.

3. Don’t be swayed by aesthetics – Scratches and slight dings are not the end of the world for a buyer as they are for a dealer. Many of these exterior damages are easily rectified and offer the buyer a much lower rate.

4. Financing Through Credit Union – It’s true, your local credit union can offer great deals on financing you next new or used car.

5. Use The Internet – Not that you have to be told, but the best friend a buyer has during the process of securing a car is the web. All the aforementioned resources are available of the Internet, as well as the ability to search almost every market a car can be found.