Most Common Extras at Closing

Description Your price Dealers costs
Rust proofing $800 $40
Extended warranty $1200 $300
Scotch guard $300 $5
Car alarm $400 $100
Paint sealant $300 $10
Credit/insurance costs $200 $30
Detailing and pin striping $299 $30
Total of extras $3499 $515
Extra monthly payment total $97 $0


As you can see, these extras will get you in the end. If you can, you should avoid them all together. They are worth far more to the dealer than they are to you.

By now, you should know all of the things that you need to know in order to buy your new car with the least amount of burden, and you have learned to avoid the common scams pulled by dealerships. This is the only guide that you will ever need when you get ready to buy a car.

You’ve learned:
· The various tricks
· Advertising tricks and misleading marketing
· How to get the best price
· How to negotiate your opening offer
· How to negotiate
· How to calculate your opening offer
· What the difference is between the factory invoice and MSRP sticker

If you have read this all the way through, then you need not worry. All of the advice listed here will save you a great deal of time and money.

You are now fully prepared to get your new car.

So what are you waiting for? Go shopping!

Closing Without the Extra Costs

So many people get ripped off after they have already closed the deal. They get you on the extras and the warranties at that point.

The extras are things like rust proofing, scotch guarding etc. It seems pretty straight forward but you would be surprised at how many people get taken on these.
The trickiest closing cost scam is the extended warranty because the language used is so confusing. This is not the warranty that the factory gives you for the car.

It is a warranty that covers the cost of fixing the car should it break down on you. To get around this, you have to know the dealer’s language.

Extended warranties often do cover any repairs that you require during your coverage period, but there is often some information that you are not told about.

For example, the extended warranty is usually effective only up to a certain amount of mileage or term period; whichever happens first.

They might also only cover certain types of problems. If your extended warranty doesn’t cover every part of your car, why bother?

Some extended warranties don’t cover the larger problems, but just the smaller ones. If your engine conks out, you may be left in the lurch.
You shouldn’t even consider buying an extended warranty if you are only leasing the car for a small time period like 36 months. Perhaps it is better only for longer periods of leasing like 60 months.

Many extended warranties don’t cover everyday wear and tear policies, only breakdown problems. If you do insist on getting an extended warranty, get one that covers both instances.

You will only really want to get a warranty on a more dependable car like a Lexus, Honda, or Toyota because extended warranties rarely cover the costs incurred in cars that are present at the time of purchase.

You will also want to get a warranty that is effective immediately. You will also want to get a warranty with a well established finance company and not one that go belly up in a year.

Don’t purchase an extended warranty directly from the dealer. Instead look at sites on http://www.LendingTree.com for an online warranty because being online gives you all the time to asses your warranty properly.
Watch out for deductibles because you don’t want to get stuck paying for deductibles that you thought were covered by the warranty.

Now let’s look at some of the extras that dealers get you on at closing. This can be very irritating how they try to weasel even more money out of you in the end on stuff that you really don’t need at all.

Of course, when you hear it, they will all sound dire. It’s bad enough that they will throw them up at you but look at this table to show how much they are really ripping you off by.

Some Sales Scams

As I’ve said before, there are many ongoing scams that dealerships will throw at you in order to bank some extra money from you. I’ve shown you the most popular, but let’s look at some more.

1. Written contract scam: This is basically when the finance manager sits you down and begins to write himself into frenzy, while quickly throwing numbers at you until you are so confused, you end up paying more than you agreed upon.
This may seem impossible for a person to get away with but believe me; it happens all of the time.
The finance manager is counting on you being confused and desperate to get out of there, so assumes you will simply go along with whatever he says. Most of the time, it works.
Avoid it by forcing the guy to slow down, and calculate right along with him to make sure that you are getting a fair deal and that you both come up with the same numbers.

2. Price beating scam: This is when the dealer tells you that they will beat anyone else’s prices or give you $500.

They simply ask you to get the price from another dealer and they’ll beat it. The hard part is that other dealers will not just hand over their information for you to take to someone else.

This deal is almost impossible to get because most dealers sell different makes and models anyway.

Avoid it by not buying into it in the first place.


3. I won’t get paid scam: This is when the dealer tells you that he won’t get paid if you don’t purchase the options package. This is a tug at your heart strings.

To avoid this simply tell them that you refuse to buy something you don’t want just so that they get paid. If it’s that much of a problem they should get another job.

4. No payments until scam: This is when a dealership advertises that you don’t have to pay for 6 months.
Next thing you know, you buy the car and they tell you that it is due for payment in 2 months. Some will not even be applicable at all.

They can claim a typographical error or that the deal was a week ago. It’s an outright lie, and you should get your deposit back.

Avoid this by asking the dealer to put that in writing before you purchase the car and make your deposit by credit card so that you can refute it.


5. The “We’ve Got it scam: This happens when you call a dealership asking for a specific car make, model and color and are told that they have it.

However, when you get there, you are told that they miraculously sold the only one they had before you arrived. Next they will tell you that they have another car similar to it for only $500 more.

Avoid this by leaving.


6. No Cheaper rate scam: This is when a dealership tells you that you can’t find a cheaper price anywhere else on the market.

Get real!

Of course, if you’ve done your research as I told you before, you already know that the prices don’t change on the value of a car.

Avoid this by simply stating that they must be right, and then leave.

7. The Phone call scam: This is when you have successfully negotiated a car, and the salesman suddenly gets a phone call with an offer for the car that is lower than the price you agreed on.

Then he casually lets you hear him state that he will call the man on the phone right back if you opt out of the deal.
Next, he tries to talk you down from your set upon price to compete with the guy on the phone’s offer.

Avoid this by telling the salesman that you will understand if he chooses to take the better offer.


8. Paperwork scam: This generally happens after you have already paid your bank draft for the financing of your car, and the deal has already been set in contract.

Conveniently, the salesman will write down the wrong date on the sales contract.

You are then told that you will have to finance the car through their company for extra fees within 2 days or you will be stuck with a higher financing and interest rates monthly.

To avoid this watch the salesman write your contract and check the dates before you sign them, just to be sure.

9. Factory Holdback scam: Dealerships depend on a buyer’s ignorance so that they can mark up your prices. Holdback is money paid to the dealer for about 2-3% of MSRP.

It is money that is given to the dealer from the factory when the car is sold. This is profit for the dealer for buying the car.

Most dealers will tell you that it costs them money so that they can charge you for it later. Basically, they can get the money twice.

Avoid this by letting the dealer know that you know better and will not pay it.

10. Insurance scam: This is when the dealership tells you that you must get your insurance from them or a company that they work with if you want to avoid paying higher interest rates.

This scam also applies to the dealership forcing you to pay life insurance or extended warranties due to “bad credit.”

Avoid this by leaving. What they are doing is wrong.

11. Turnover scam: This is when the dealership sends over many different salespeople hoping to wear you down and get you to hurry up and buy. This is also called harassment.

Avoid this by threatening to leave if they don’t stop it.


12. Hidden rebates: This is when the dealership advertises that the price of the car is lower than the MSRP.

What you don’t realize is that the fine print says that the prices include rebates. All this means is that the rebate that you were offered doesn’t exist because it was already calculated in the ad.

Avoid this by ignoring it or requesting it in writing that states the rebate is in addition to the price of the car.

13. Deposit scam: This is when the finance manager insists on a deposit before you have signed the purchase contract.

You will be told that the finance manager has to bring in a copy of the contract offer to his boss and he needs a deposit from you just to ensure that the boss will sign off on it.

It’s just to make sure that you are “serious” about getting the car.

Avoid this by refusing to give a deposit before the contract is finished a signed by both parties.

Dealers run this scam so that they can keep you there. Tell them that the fact that you made an offer on the car shows that you are serious.

What Kind of Buyer Am I?

If you want to save money while you are negotiating you should negotiate from the dealer cost up and not from the MSRP down.

You just need to remember that dealer cost is not the same as the factory invoice.

Some dealerships refuse to haggle over the cost of a car. Once you make your opening offer you should never accept anything higher than that, as far as costs go.

If the dealership that you go to doesn’t haggle, don’t sweat it, some other dealership will.

The reason some dealerships refuse to haggle is because they want to add extra fees to the MSRP. You will need to decide what kind of buyer you are in order to get a negotiating stance.

You do not want to set yourself up as a monthly payment buyer either because that is a guaranteed way for you to get a higher payment fee.
They will offer to take a little bit off of the MSRP. They will then ask you what you are looking to pay each month; this is where the extra money comes in.

Cash buyers are generally asked, “Are willing to pay each month?”

Tell them it doesn’t matter because you are looking for an even division on the cost of the car, not to haggle over the monthly cost.

Tell them that you are looking to haggle over the cost of the car, not the monthly payments. This is often used for cash buyers.

If a finance manager tries to get you to report your payment method before you have decided upon purchasing the car, don’t get sucked into it.

The method of payment doesn’t matter unless you are deciding upon purchasing the car. Finance managers ask so that that they can best decide how to screw you over.

Some dealers will offer you to give you a better deal if you finance your car through them. I can guarantee that this will not be the case.

Of course the worst thing that you could be an impulse buyer.

An impulse buyer is just another word for “victim.” Impulse buyers can often get sucked into the “hot” car of the moment and usually get taken for as much as $10,000. A dealer can see this buyer coming from a mile away.

If a dealer approaches you about the “hot” car tell him that you are not interested because it will not be worth the money next year as the new “hot” car will be out by then.

You don’t want to buy a car that is in demand because it is the easiest way for a dealership to mark up the prices. The MSRP always looks low, but it is the extras and monthly payments that will lose you money.

Remember the resale value of the car doesn’t change no matter how much money you bought the car for. It stilldepreciates in value from the factory invoice.

Negotiating Tips

Being a good negotiator doesn’t have to be difficult. Sooner or later everyone has to negotiate with someone if they want to get a good deal on a purchase.

When you are trying to negotiate with a car dealer, you should know that they are very practiced in the art already. You will need to know how to get through their “car speak” in order to be successful.

Since you now know how to calculate your offer and already know what the dealer paid for it, you should get a copy of the paperwork from a friend that recently bought a car, so that you can become familiar with what you will see on your paperwork. They are all generally the same.

If you’ve followed the above mentioned tips, you will also be pre-approved for a loan. The key is for you to get in and out of the dealership as quickly as possible because the salesman will definitely find more loopholes to up your charges if you stay.
Here are a few tips to successful negotiating.
· Remain positive and confident
· Don’t talk down to your opponent
· Show up prepared and ready to counter anything that may come up
· Bring ads from other dealerships with you as an extra weapon
· Finance your loan before you arrive at the dealership so as to avoid paying unnecessary extra fees
· Bring a friend with you for extra support

Something that you should look out for from salesmen is the extra little tricks that you will likely encounter that will try to force or rush into a buying decision.

You have to remember that they are trying to negotiate you into paying more money just as you are trying to negotiate paying less. Here are some of the things that you can expect to hear from them.

1. “These cars are flying off of the lot. It may not be available for the same deal tomorrow”. (Threaten to leave and they will ease up and try to change their strategy)

2. “This deal is only good for today. If you come back tomorrow I can’t guarantee that the deal will be the same”.

3. “I’m an honest man. Look at how many cars I’ve sold this weekend” (This is where he will show you his list of sold cars. If he does this, then tell him that he doesn’t need your money).

4. “I hate to tell you this but I have another offer on the table from a man that is willing to pay more money than this.
I am just waiting for his paperwork to be returned”.

(Tell him that if he promised the car to someone else, you don’t want to step on someone else’s toes and that you should leave then).

5. “To cover the overhead costs, we have paid $13,000 for this car (Just check your paperwork in your folder and prove them wrong).

Quick Tip: DO NOT confuse the invoice with the MRSP window sticker because they are not the same.

Contrary to popular belief, dealers don’t have to tell you the
They can offer you one dollar over the invoice. You should know that there are hidden factory incentives in the invoice price that lowers the cost of the car for the dealership. It’s no bargain for you.

If a dealership is very quick to show you the invoice, you should be aware that they are fully aware that they will be making money on that car off of you and they can settle at a lower price for the car.

Knowing this before you walk into a dealership can be your best negotiating strategy. See, they will tell you that you can afford to buy the car at MSRP hoping that you will not then wonder what the actual worth of that car is.
Knowing this information can let you make them the same offer.

If you offer a few dollars over the factory invoice (which is the actual worth of the car) then you can open your bid and let them know how much profit they can make off of your offer. Check out these websites if you want to know the factory invoice of a car.
http://www.InvoiceDealers.com
http://www.CarsDirect.com
http://www.Car.com
http://www.Autoweb.com

Dealers are always going to try and tell you that they paid less for the cars than they actually did so that they can make a higher profit off of the sale.

Salesmen often try and make you feel guilty by telling you “I’m losing my shirt off of this deal”.

In truth, you are the one that is losing your shirt off of the deal, so don’t buy into it.

To calculate what your offer should be to the dealership, you should get the factory invoice price (don’t forget to include the options in this price), and add 5% to that amount. That is how you should calculate your offer the dealership.

When I mention the options, I mean the ones that you can’t avoid. Some cars come equipped with a CD, sun roof etc. and these are fees that you can’t avoid paying so sure to account for these at the beginning.

You should also be sure to account for any buyer rebates as well in calculating your offer. So in the end your offer should be calculated like this:



Calculating your offer to a dealership is as simple as that. When you are considering how much you can afford for a car, be sure that you don’t get sucked into paying more than that.

If you are unwilling to pay more than your opening offer, let the salesman know that your offer stands firm and how they will profit from the offer.

In the end you will get what you want on your own terms. To be certain that you get the drift I will set an example for you.

You are hoping to buy a Toyota Camry. You do your research at DealersInvoice.com, and find that the invoice price is $19,922; MSRP is $22,385. The dealer may offer you the car for $22,000, and shows you the invoice.

You learned by researching that there is a $500 factory to dealer incentive; and a $447 holdback on the MSRP (2%).

Based on the above calculations, the dealer’s real cost is $19,922 (invoice) - $500 (incentive) - $447 (holdback) = $18,957. This is far below the factory invoice number.

Now, if you add the 5% for your offer to that price, which will up the car price to $20,379 due to the addition of $455 for the destination charge that is always present, you will see that based on the offer that the dealership offered, you just saved yourself $3410.

This may seem complicated but if your use a pre-designed spreadsheet from CarsDirect.com or AutoUSA.com, the program does all the calculation for you.

How Much Money Should I Offer the Dealer?

Calculating your offer to a dealership is as simple as that. W When you go into a dealership, you want to know all of the pricing and costs of the car that you are looking into buying, as mentioned earlier.

You should know the manufacturer’s cost and the dealer’s cost.

You need to calculate the cost that the dealer paid for the car and then make a reasonable offer to him if you want to get somewhere.

You should also know that the dealer’s price is not the invoice price from the factory. You should know that the dealer’s cost is much lower than the factory’s cost.

In order to make a fair offer to a dealership, you need to learn to read a factory’s invoice. Here is what you can expect to find on the factory invoice.
· Base model of the car on it
· All of the options packages
· Destination charge
· Holdback and dealer flooring help