Can You Trust a Car Dealer?
May 18th, 2009 by Alex
I really don’t like car salesmen. My experience with them has led me to believe that they’re a bunch of crooks for whom exaggeration, document substitution, and lying are all tools of the trade. There are some salesmen who would gladly tell you anything to make the sale. You can’t trust people like that, yet sometimes it is impractical not to do business with these sorts of people. Maybe the money is good, but I don’t think I could live with myself if I had to make my living that way. It seems dishonest.
I recently bought a new car. There were some Internet-based sales being advertised and my current car was over 10 years old, so it was time.
I like my business to be neat and tidy, without any loose ends. To this end, I have no idea why no-haggle dealerships haven’t caught on in larger fashion. I’m not a haggler. But there must be people out there who enjoy it, else why would dealerships where haggling is a certainty continue to make sales?
After buying a car at a no-haggle dealership and then buying one at a “normal” dealership, I’m not sure you make out any better after haggling. Sure you can save a few bucks after an hour or two sitting down with the salesmen running figures back and forth to the sales manager and then the sales manager coming out to explain to you why your offer is completely unreasonable, but there’s a much higher potential to get burned. Even if you do get a great deal (and you could go on and argue about what’s considered a good deal; X dollars under invoice or X dollars over cost), a part of you will always wonder if you got screwed over. If they would have sold it for less. If they went back to the break room and congratulated themselves, thanking the stars for whoever came up with the “fake invoice” trick. You’d have to negotiate amazingly well to leave the dealership feeling like you weren’t screwed over. Buying a car should be an exciting time, yet the buyer is left with these emotions that indicate we made a mistake. I suppose if the the dealership gave you the car free of charge then it would be different, but what are the odds of that?
I hate being lied to, specifically when it comes to finances.
After the test drive, some initial banter, the running-back-and-forth I described above, then after making sure all of the numbers added up correctly (which they didn’t, originally), we finally agreed to a price. I had no plans to finance; I’d been saving for several years knowing that my car was getting older. The manager said he’d have to run a credit check. I said no. He said he had to. I asked him why. Why would my credit be any concern if I was paying cash?
A practical point: running a credit check won’t tell you whether a personal check will bounce. TeleCheck should, though.
He explained to me that they didn’t know who I was and that they needed to verify that I wasn’t a terrorist. I understand personal checks can be dangerous to merchants, so I asked about a cashiers check. Would that alleviate his concerns? He asked if I could get it tonight. No, the banks were already closed. He persisted about the credit check and I stood up to leave. I wasn’t going to budge. I offered to bring a cashiers check first thing in the morning. He went on for a minute about how he wanted to wrap everything up that night, but then agreed so long as I put down a deposit. A deposit of what, I asked (since they wouldn’t take a personal check). “$3000 cash or credit,” he replied. After a brief pause, “you do have a credit card, don’t you?”
His insulting tone aside, I gladly would have put the whole thing on a credit card if I had been able. Think of all those miles. But he said he couldn’t do that either. No kidding, the processing fees (which can run anywhere from 1-5% of the purchase price plus a per-swipe charge) would cut heavily into their profit. Probably more so than all the haggling I did. It wasn’t like I was leaving with the car that night and could somehow stiff them on the balance. Someone once told me that the minimum deposit to leave (thus making a contract valid) was one dollar. If that’s true, the $30-90 that they had to pay their credit card processor for the deposit was really just about tying up my cash. Or trying to, since my credit card isn’t a debit card. Since I had the cash to pay off the credit card before I left the deposit, it was the easiest cash-back I’ve ever earned. In retrospect, I should have whipped out the American Express; historically speaking their processing fees are higher than Visa or Mastercard.
If this weren’t enough, the sales manager said they’d still need to verify that I wasn’t a terrorist. I presume they were referring to the Specially Designated Nationals and Blocked Persons list. When I asked the salesman what was required to do that, he said my full name and home address. Apparently they don’t need a credit check to verify whether or not you’re a terrorist after all. A simple Find of that document will be all.
Apparently if you make a vehicle or property available to someone on this list, there will be hell to pay in the form of a large fine. For a car dealership is Maryland this is laughable, since Osama bin Laden is on the list a handful of times. The bluff about before-you-buy is just waxing patriotic so that you’ll gladly submit to the credit check (to prevent terrorism from spreading). I’d be surprised if the dealer didn’t check the list right before/after they photocopied your driver’s license for the test drive. The test drive would give them 5-10 minutes to alert the authorities (and before national heroes) if there was an actual match.
To me, running a credit check is an invasion of my privacy and inappropriate if I’m not requesting credit. To use it as a means of identification is insulting and dangerous. To later admit that my name/address could be checked against a publicly available list of known terrorists/associates — suggesting that they really just wanted to peek at my financials — is a slap in the face.
I don’t know how much of this is typical. I wish for everyone’s sake that is wasn’t, but I suspect that it is. The important part is that I’m happy with the car. I haven’t decided whether or not to return to the dealership for service, but I’ll definitely steer clear of the showroom. I still don’t trust those guys.
Thanks for sharing your experience Alex. I feel exactly how you do in regards to dealerships and new cars. Excuse my ignorance about the dealership wanting to prove you’re not a terrorist, but what is the benefit in that? A terrorist will most likely steal a car or buy a used one. After the purchase they will have all your information anyway. The biggest thing I could see is that in order to issue temporary plates so you can drive the car home, so they would need your information for that, however that is bad assumption on their part. You could have made arrangements to trailer the car home for example.
Did you do a trade-in or are you going to sell your previous car privately?
All this — and what kind of car did you buy?
That’s why I like Carmax. Of course, it’s not like I’m going to buy a car anytime in the forseeable future, either.
DJ: In the midst of negotiations, I discovered that my trade-in was worth more to me than the dealership was willing to give. I still haven’t decided what to do with it.
Snay: If I were looking at used cars, I would have probably checked out CarMax. If for no other reason, so that I could see a variety of cars in person.
Alex et all: I’m sorry about your recent experience in purchasing a vehicle. Car buying doesn’t have to be excrutiating. I know because I work in sales at a reputable dealership. A reputable salesperson will answer a customer’s questions properly and present the ‘deal’ in a clearly understandable fashion. The following information may not change your opinion-that’s striclty your call-but there might be something useful here.
* When visiting a dealership, be prepared to walk out if you are pressured in any way. Questions about your readiness to purchase are one thing. Pressure is something else and is unacceptable. It’s that simple. Remember, there are lots of good, honest businesses out there. Choose carefully.
*A car dealership, is a for profit business. A reasonable profit margin on a car is in the 2-3% range. Ask to see the invoice if necessary, yet understand that a car price that starts at or below invoice, prior to rebates/incentives is a rarity-usually a company demo…. Buying services such as Costco, etc., have contracts with dealerships that offer a fixed price over invoice, which is in line with the profit margins described above. Cars are like many other commodites regarding pricing. Also, keep in mind that BestBuy, Kohls, Bloomingdales, and Borders aren’t likely to show you, the customer, their invoice on an item….
* The credit check thing is indeed nonsense, unless you are paying with personal funds, drawn on a private account. I feel the same way about privacy invasion issues, however, a dealership protects itself from potential loss by affirming a person’s ability to make payments. I advise that a bank draft be issued for a cash buyer, thereby avoiding the problem altogether. The terrorist question? Ugh!! I’d have walked immediately.
* Credit cards are a problem for the time being as the carrying costs are indeed prohibitive. For example, we used to finance an entire purchase many, many years ago, through Visa, etc. Credit card issuers increased their fees. Then the policy reduced credit card acceptance to $1-2000. Now, the manufacturer has instituted a maximum deposit of $500 on a card. The reason? A credit card is another form of financing[!?]. A sign of the times indeed.
* I advise my clients on three options regarding trade-ins.1.] A dealership will take a trade at wholesale to wholesale-use Kelley Blue Book as a benchmark only!2.] You can sell it yourself and probably pocket $500-1000 over wholesale.3.] Carmax is a good option used to effect by some of my clients. However, Carmax isn’t necessarily the outfit they were a few years back.Their buying offers aren’t as generous, possibly due to the economy, but they are worth checking out.
* A word about processing fees. I hate ‘em! Fortunately, my dealership doesn’t have one. Some states, such as VA. dictate that a dealership advertising a fee must charge that fee under statute. That fee may be negated partially or completely by asking for a ‘better’ discount, while finalizing the purchase. Also, be wary of the ‘freight charge’ that is added to the purchase. All vehicles have freight included as part of the invoice MSRP. Some dealers will strip that freight out of an advertised price and then put it back in with processing/acquisition, etc.
Finally, when buying a car-the second most expensive purchase in one’s life[not counting weddings], check out the car you want, take a break to make your personal decision, then go back in to finalize things. Hope this helps!
Cheers
Ugh, I hate buying cars. I’ve (unfortunately) bought 6 of them in my life. I’ve had a lot of mixed experiences including a legitimate nightmare with a dealer in VA. I’ve bought new and used, and depending on the dealer, both have been good and both have been bad experiences. At the end of the day you need to find a dealer that you feel good about. Talk to friends and don’t hesitate to walk out. If they call you back, and you truly don’t want to do business with them, tell them that — and not to call you again.
My two most recent buys were fantastic. I had a two different friends recommend a dealer in Annapolis. The first car I essentially settled the deal on line. Literally had a VIN and a solid price (in writing!) when I walked in to test drive it.
The dealer was amazing. I went in on a Wednesday night for the test drive and told them that I wanted the car, but that I couldn’t finish the deal until Saturday. (I was paying cash and needed a bonus check to clear). The let me take the car home with $500 down on a credit card. I got a certified check and finished the deal in a half hour on that Saturday.
Because I’d had such a great experience with them on the first car, I went back this year. This time I went in without finding a car on line. We test drove a few different models and I went home to think on it. I talked with the salesman a few times over the phone and again found two cars I was interested on line (different models). I went in and he worked up numbers on both, gave me a quote on both and I went home to mull it over.
The next day, I went back and bought one of the cars, again with a cashiers check — Savings now fully depleted, but two “new” cars for the family and no car payment.
In both cases I felt I got a very fair deal. They made money on the deal for sure, but it is a business. There was never mention of terrorism or a credit check on either deal.
In 10 years, I’m sure I’ll be going back to them again — truthfully as long as I’m in the area I’ll probably buy from them for life.
damien: While I had a crummy time at it, I’m sure someone else might have had a great experience there. It all comes around. While the deal came off okay for me in the end, the attitude all but guarantees that they’ll never see a dollar from me when it comes to service. And that’s where the real profits are made.
We went to buy a used car at a dealer outside Houston, Tx this evening. We were paying with a personal check also… We were told that if we paid with a personal check, they had to check to make sure we were not terrorists and they had to run our (mine and my husbands) credit. I told them I did not want our credit ran for a cash transaction. The manager stated that if we had certified funds they only would check for us as not terrorists. But all banks are closed at 7pm on a Friday evening. (We called the bank to check.) to make a long story short- They ran our credit after all so we may leave with our “new” car. And they had me print out our bank balance online to “PROVE” to them we had the money to cover the check???? What is up with that????? They had no right to run our credit if I had to “PROVE” to them I had the funds in the bank anyway…. To top it off the manager asked how I survived on my income and the amount of our rent!! THAT IS NONE OF HIS BUSINESS!!!!! This was the most disappointing transaction I have ever made, no wonder why people hate car dealers!!!!