Tricks Dealers Use to Rip You Off on Your Trade-In
In fact, selling a used car will usually earn a dealer at least double the profit they make on a new car.
It's no wonder they spend much of their time devising ways to buy your used car on the cheap and make a killing reselling it.
Most car buyers don't think much about their trade-in. They don't take the time to figure out its true wholesale value and so they end up getting screwed most of the time.
There are three main tricks dealers use to rip you off on your trade-in, let's take a look at them so you won't fall for it.
Mixing the Trade-In with the Purchase
3 out of 4 new car buyers have a trade-in, and the vast majority negotiate the purchase of their car along with their trade-in. This is one of the biggest mistakes you can make.
When you allow a dealer to combine your trade-in with the purchase, they can play all kinds of shell games and know how to push your hot buttons so you're happy with the deal, even though they've screwed you.
For example, if they see that you're more interested in negotiating the price of the new car, they'll give you a good deal but will rip you off on the trade-in. You got a good price on the new car, so you figure you got a good deal - WRONG!
It works the other way too. If you're concentrating on the price they offer for your trade-in, they'll give you a good deal but rip you off on the price of the new car.
Either way, the best way to defend against this is to separate the purchase of the car from the sale of your trade-in. You should always shop your trade-in to multiple dealers and keep that transaction separate from the purchase of the car.
Another technique many dealers use is to give you a low-ball offer on your trade-in. First, they want to see if you're a true sucker and willing to accept such a low price.
But usually, what it does is cause you to be taken aback by such a low offer. It makes you question the value of your vehicle.
As they increase the price in the back and forth negotiation, it seems like a victory for you - but they started out with such a low price that even with price increases, your trade-in is still way below wholesale value.
Again, the way to defend against this is to shop your trade-in to multiple dealers. You should encounter a dealer willing to pay true wholesale value along the way.
A common method dealers use is to get you to diminish the value of your vehicle using psychological tricks.
They'll have you walk around the car with them as they point out every single scratch, ding, dent, and worn out part. They may utter some comments under their breath - just loud enough for you to hear and make you question the value of your vehicle.
When starting the vehicle, they may pretend to hear a weird noise. Their methods are all designed to prepare you for a low-ball offer.
Just realize what's going on, and stick to your guns. Use our negotiation techniques and don't worry if they try these tricks on you. As long as you shop your trade-in to multiple sources, you will minimize your chances of being ripped off.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid