OK, we all know car dealers play tricks on unwitting customers, but what are the most common (or most dangerous!) tricks to watch out for? Although Private Fleet was established, in part, to help cut through this mass of disinformation and skulduggery, if you are planning to go out there yourself, heed the following top five dealer tricks to avoid.If you can’t bear the thought of running the gauntlet, or you see the value in getting a professional to do the work for you and guarantee to save you more money than you can save yourself, then just give us a call!
1) The Sacrificial Lamb. This is where you see an ad, in the paper or online for a car that seems to be priced extremely sharply – well below the competition. So, you call up, have a chat and are invited to come in and have a look. However, in the 30 minutes it takes to get to the dealership, shock – horror, it has sold. What an amazing coincidence and a terrible shame for you the excited customer. However all is not lost, the dealer has some similar cars that may be of interest….
Moral of the Story: If it looks to good to be true, it probably is.
2) The ‘Expected Car’. Perhaps you’ve been shopping around for a new car only to be told by dealer after dealer that there are no cars available – it’s going to be a factory order and you’ll have to wait three months. Then suddenly, a dealer announces he has one on the way! Woo hoo – you’re only going to have to wait one month through this dealer. So, you slap down a hefty holding deposit and sit tight. Four weeks later, you get a call… unfortunately the car we had lined up for you has been delayed by two months. The dealer is terribly apologetic but it was out of their control. Of course they are happy to give the deposit back because, after all, they’ve not kept their side of the bargain. Trouble is, if you do cancel and place an order with another dealer, it’s back to the back of the queue and a three month wait again. So, you reluctantly agree to wait for the car…
Moral of the Story: Unless a dealer actually has a car in stock, delivery times are likely to be similar from dealer to dealer.
3) Robbing Peter to pay Paul. This is where the dealer offers you a fantastic price on the new car to which you enthusiastically commit, only to be told your trade-in value is way below what you’ve been offered elsewhere. The reverse can also happen – what’s the benefit of a great trade-in price if you’re paying full RRP for the new car? Leveraging discount or margin off one side of the equation to ‘match’ your expectations can be terribly confusing.
Moral of the story: Concentrate on the changeover price (new car price less trade-in price).
4) The 3.5% Interest Rate. You see signs plastered all over the dealership advertising their special rate. Wow – that’s less than half the rate of the average home loan, how can they offer that for an asset that depreciates so rapidly? Thing is they can’t – well they can’t unless they have something to offset the loss. Interest rates are always based on risk and cars are risky items to finance. They depreciate rapidly, are prone to accidents and theft and so, in the worst case scenario, lenders may struggle to recoup their funds in the event of a repossession. That’s why true car finance rates will always be more than home loan rates (after all homes generally appreciate in value and don’t usually go missing!). So where do they make up this loss? The car purchase price of course – you’ll be forced to pay top dollar if you want that rate!
Moral of the story: If you’re financing, concentrate on repayments for like terms – not the interest rate
5) The Bargain Demonstrator. A dealer offers you an ex-demo car they have available with a measly 2,000kms on the clock. You agree, that’s nothing for a car – it’s as good as new. However, before you jump in, remember what demos are used for – test drives! The average test-drive probably clocks up around 10kms max. That means 200 people have been putting this car through its paces, giving it a real workout. Put it this way, it’s had a hard life. Combine this with a likely ‘old build plate’ and a probable compromise or two (it’s not my first colour choice but it is nice…) and suddenly the deal doesn’t seem quite a rosy as first thought.
Moral of the story: Demo’s are used cars – compare the price against a brand new one and make an informed decision
This article has been compiled by Private Fleet, Australia’s number one car buying service. Established in Sydney in 1999, the company now employs 30 full-time staff members and organises the purchase of well over 300 new cars a month for private buyers across Australia. With a national network of some 620 car dealerships, Private Fleet’s competitive tender process ensures fleet discount pricing and delivery to the door – no matter where you live.
PLEASE NOTE: Although these dealer tricks do happen, the vast majority of car dealers in Australia are honest, professional and do the right thing!