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.
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