| In the new car buying process, new car dealers are | | | | offered. |
| going to try to make as much money as possible from | | | | 3. Dealer financing is another area where a new car |
| each sale, and this is only reasonable as they are in | | | | dealer can make exorbitant amounts of money, |
| business to make money. But too often consumers | | | | sometimes more than the profit on the sale of the car |
| wind up paying way too much. There is nothing wrong | | | | itself. To take this advantage away from the dealer |
| with allowing the dealer to make a fair profit, but these | | | | simply arrange for your own financing beforehand. This |
| five methods are regularly used by new car dealers to | | | | puts you in the driver's seat by allowing you to |
| inflate their profits considerably and you should be | | | | negotiate what amounts to a cash deal on the price of |
| aware of them in advance. | | | | the new vehicle and protects you against interest rate |
| 1. Leasing is an increasingly attractive option to many | | | | and financing markups added in by the dealer to pump |
| new car buyers and they often think that the lease | | | | up their own profits at your expense. Of course, you |
| payments are set in stone for each car, but that simply | | | | can always allow them to try to beat the financing that |
| isn't true. Lease payments are most often calculated | | | | you already have in place, because competition is a |
| using the MSRP, or retail price, of the vehicle as a | | | | good thing for the consumer. |
| starting point. So if you accept the lease offered | | | | 4. Added accessories and options that are marked up |
| without actually dickering on the sale price of the | | | | many times over to the consumer is another way for |
| vehicle, you are most likely losing lots of money in the | | | | a dealer to make money. They will try to sell you all |
| lease payments that you make each month. You can | | | | sorts of extras like rustproofing, paint sealant, alarms, |
| also negotiate the down payment, the mileage allowed | | | | and more to add on to the deal. Just be sure that you |
| under the lease and other options too. | | | | know what they are charging for each option and that |
| 2. Dealers try to make lots of profit by combining the | | | | is a fair price. Do not allow them to tack on |
| sale, trade-in, and financing into one big package. This is | | | | outrageously expensive options just to inflate their |
| an excellent way to hide actual figures and amounts | | | | profits. |
| from each segment of the deal. The best deal for you | | | | 5. Dealers will often try to sell an extended warranty |
| will be had if you settle on a sale price for the new car | | | | at the sale of a new vehicle, but consider how long |
| first and independent of all other considerations. It helps | | | | you plan on keeping the vehicle first. Most factory |
| if you do your homework here and know what a | | | | warranties cover everything that you need for the life |
| dealer typically pays for that vehicle by consulting a | | | | of the coverage period. If you will be selling the car |
| reputable source like Consumer Reports in advance. | | | | before the warranty expires there is no need for an |
| Then you can start from that figure and adjust | | | | extended warranty, and would often be an |
| upward to allow the dealer to make a fair and | | | | unnecessary expense. |
| reasonable profit. Then only after getting the true sales | | | | A new car costs enough without having to pay extra |
| figure of the new vehicle, should you begin the trade-in | | | | for things that you don't need or having charges |
| negotiations. This keeps both the amount of the new | | | | tacked on that you aren't fully aware of. So do your |
| car and the trade-in amount out in the open where you | | | | homework and don't allow yourself to pay more for |
| can more easily see exactly what deal you are being | | | | any new car than you should. |