Buying a car be a complex process, especially when you factor in available models, market pricing, financing, and dealerships. While dealerships have greatly improved the buying experience, there are nearly 60,000 dealers in the United States, and some prioritize profit over experience.
Pay attention to these 15 red flags that dealerships wave. Some are subtle, while others deceptively try to take more of your hard-earned money.
Low, Low Prices
When shopping for a vehicle, you may see a vehicle priced lower than comparable models at other dealers. This can be suspicious. The dealer may be trying to hide how a customer qualifies for such discounts, like requiring a trade-in, finance, or even specific car insurance. Remember that if a deal sounds too good to be true, it probably is.
Hiding Vehicle History
A shady dealership may try to hide a vehicle’s history report or make you pay for it. This is because a vehicle’s history report details whether or not the car has a clean title. Since title statuses, like salvage, rebuilt, or junk, can mean a vehicle was in an accident or flood, you should avoid these vehicles as insurance costs can be higher. You should only have to pay for a vehicle history report if buying from a private seller. An honest dealer pays for the report for all their vehicles.
The Four Square Method
Shady dealerships and salespeople like to confuse customers with the “Four Square” method, claiming it makes understanding car deals simple. “Four Square” involves writing numbers for your trade-in value, purchase price, down payment, and monthly payment in separate boxes. The dealership is trying to get you to focus on one number to make you think you’re getting a good deal while working the other three to their advantage.
What should you do instead? You’ll want to know the total cost of the vehicle with and without your trade. This will provide the most precise picture of your purchase.
Yo-Yo
This one is called the yo-yo scam because the dealer tries to make you come back after purchasing a vehicle with what seems like a great interest rate and price. They’ll say the original financing offer fell through, but another bank has jumped in to save the deal with a much higher interest rate.
Some states have consumer protection laws that prevent dealers from waiting more than a few days before notifying customers of issues.
Bait and Switch
The bait-and-switch scam is a very familiar one. The dealership advertises a vehicle online or in the newspaper, usually at a rock-bottom price. Customers arrive on the lot to buy the car, and the dealership claims to have already sold it. They then try to push you toward a more expensive vehicle. Bait-and-switch scams are illegal in most states, but complex schemes mean that dealers continue to try to get away with them.
Verbal Warranties
The word verbal is very important here. If a dealership employee says, “Yes, we’ll cover that. You can take my word for it,” don’t fall for it. Get promises in writing, and don’t sign anything until you get it. The form or paper you seek is often called a “We Owe.”
Ignoring Your Information
Many car dealership websites and classified listings offer to “build your deal” while showing payment and warranty options. If you take the time to make a deal online, make the dealer stick to it. Salespeople and managers will try to talk you into adding services and features you don’t want. Ignore them.
They Take Too Much Time
If you’ve already decided on a vehicle, you should be able to get in and out within an hour. The average time in a car dealership tends to be much longer than that, usually around 3 hours.
Dealerships often make the excuse that building a deal takes time or that the finance office is especially busy today. The reality is often that they want to delay you until you are tired of waiting. A customer who is anxious to leave will spend more just to get out the door.
So, what do you do about it? Unless you are in a huge rush, return another day when you aren’t tired.
Credit App Before Test Drive
If a dealership requires you to fill out a credit app to run your credit before a test drive, it’s a red flag. The sales team is trying to evaluate whether or not you are a serious buyer and how much they can make off of you. In reality, a dealership only needs a driver’s license and proof of insurance.
No or Short Test Drive
A test drive is an opportunity to learn more about a particular vehicle. For used cars, the test drive is also a chance to see if the vehicle has any issues that must be addressed. Some dealerships have a set route around the area they ask you to follow. Don’t feel obligated to follow that path, even if the salesperson comes with you. A solid 15 to 30-minute test drive is needed to get used to a vehicle and hear all the sounds it produces.
They Don’t Tell You Your Interest Rate Till The End
If you are financing, many numbers go into your monthly payment. The interest rate is a significant factor here, and dealers can markup the interest rate beyond what banks ask for. The issue is that some dealers won’t break down the interest rate until you are under pressure to sign the paperwork in the finance office.
Don’t go to the finance office without knowing the interest rate, and avoid salespeople who claim they don’t know the rate either.
No Inspections
Most car dealerships will inspect vehicles with their service department to ensure they are safe to drive. Some dealerships have sincere care for the condition of the vehicles on their lots, while others don’t. If a dealership refuses to allow you to bring the vehicle to another mechanic or have a mechanic show up to inspect the car, you should walk away.
Negative Reviews
Look up a dealership’s reviews before going to one, especially on Google. There are a couple of potential red flags to watch for. Dealerships with little to no reviews are suspicious. Dealers who have been around for a while and are worth your time actively ask for reviews. Another red flag to watch out for is poor reviews.
They Won’t Give You Your Keys Back
A dealership will need your keys so they can appraise your trade-in vehicle. If negotiations break down later, this can create an unexpected but challenging issue for you. The sales team could suddenly hold your keys hostage, ignore you, and keep trying to pressure you into a purchase. This isn’t just shady; it’s downright weird.
Add Ons and Out the Door Pricing
Unfortunately, useless add-ons and evasive out-the-door pricing are common today. To be clear, a dealership must charge you for tax, title, and registration regarding out-the-door pricing. Most dealerships also charge a small documentation fee to help pay for paperwork processes, etc.
Walk away if the dealership tries to include add-ons that don’t make sense. Car theft deterrent systems, protective coatings, and nitrogen in the tires are just a few ways dealerships try to make hundreds of dollars on your deal without adding any value to your purchase. A vehicle warranty can be worth your money, but the dealership should not require you to buy a warranty to purchase a vehicle.
For Customers in the Car Buying Process, Knowing is Half the Battle
Dealerships try many ways to make more money. To be fair, they have a right to make a profit. Studying these tips will help you become aware of common methods, some of which you should just walk away from. Have you experienced these issues? What other tricks have you seen up a car dealer’s sleeve?
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