How Dealers Use "Menu Selling" to Rip You Off
Dealerships can make half their profits selling "back end" products such as extended warranties, GAP insurance, and paint/interior protection.
The way they present these products is through a menu of packaged items - usually color-coded to psychologically induce you into choosing one over the other.
Here's an example of what you may see:
The problem with menu selling lies in the way they present the costs. Instead of listing the price of each item, they list the additional monthly payment you'll have to pay which makes these products look cheaper than they really are.
A $1,000 product will only cost about $14 per month on a 72 month loan.
Many consumers assume they have to choose one of the packages and since the additional monthly payment doesn't seem so bad , they fall for this simple trick.
First, realize that you don't have to choose any of the products.
If you do want them, ask what the actual dollar amount is for the product, then do some comparison shopping.
You can always buy these products and services later or even from a competing dealer or online service.
Don't ever blindly agree to a product package - this is one of the easiest ways people get ripped off.
My Recommendation for Car ShoppersTrueCar No-Haggle, Edmunds Price Promise and Ryde Shopper are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
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About: Gregg Fidan
Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.