Avoiding New Car Dealer Tricks

Posted on October 23rd, 2008 in Automotive News,Opinion by Julian Edgar


Top 5 car dealer tricks

Buying a new car can be a big decision and sometimes a stressful one. Going from dealer to dealer, getting the best price, working out trade-in value and arranging finance is not always a straightforward task and there are those who may prey on this confusion.

PrivateFleet.com.au, Australia’s biggest online car buying service, can help to make car buying easy, offering independent advice on vehicle selection, a high standard of service and can save you approximately 15 percent off the dealer price.

“We do all the hard work for our customers,” said Private Fleet director David Lye. “We know all the tricks of the trade and like most industries there are dealers out there that don’t have customer’s best interests at heart.”

Private Fleet can help you to avoid the tricks some car dealers play on unwitting customers, however if you plan to go out there alone, here are the top five dealer tricks to be aware of.

1) The sacrificial lamb

This is where you see an advertisement for a car that seems to be priced very low, well below the competition. You then call up and are invited to go in and have a look, however when you get to the dealership, the car has strangely and coincidently been sold! Although the dealer is quick to assure you that they have other similar cars in stock, though not with the same low price tag.

Tip: If it’s too good to be true, it probably is.

2) The expected car

When shopping around for a new model car, it’s normal to be told by dealers that the model you are after is not in stock and there will be a three month wait as they order it from the factory.

There are some dealers who may tell you they have one on the way and it will arrive in one month. So you pay a large deposit but a month later you get a call from the dealer saying the car will be delayed by two months. The dealer is very apologetic, saying it is out of their control and offers to refund your deposit. Although this puts you back to waiting another three months with another dealer, so you agree to wait for the car.

Tip: Unless a dealer actually has the car in stock, delivery times are likely to be similar from dealer to dealer.

3) Robbing Peter to save Paul

This is where a dealer offers you a fantastic price on a new car only to tell you your trade-in car value is way below what you have been offered elsewhere. The reverse can also happen where you get a great trade-in price but pay full retail price for your new car. They can look like great deals, but are they?

Tip: Concentrate on the changeover price, which is the new car price less the trade-in price.

4) The unbelievably low interest rate

There are dealers who may offer incredibly low interest rate car loans, sometimes even half the rate of a typical house loan. You may ask yourself, “How can they offer that for an asset that depreciates so quickly?” The truth is they can’t, unless they have something to offset the loss, for instance a premium price.

Interest rates are based on risk and cars are risky items to finance. They depreciate rapidly, are prone to accidents and theft and in a worst case scenario if the loan defaults, it may be difficult for lenders to recoup their funds in the event of repossession. This is why true car loan interest rates will always be more than those for home loans, as most houses appreciate in value and do not usually go missing.

Tip: If you’re taking out a car loan, concentrate on repayments for like terms, not the interest rate.

5) The bargain demonstrator

This is where a dealer will offer an ex-demonstration car that has only done about 2,000 kilometres. However, before you jump in, it pays to remember what demonstration cars are used for, test drives. The average test drive usually clocks up around 10 kilometres. This means that 200 people have put the car through its paces, giving it a real workout, a hard start to the cars new life. Also, it will probably be an ‘old build plate’ meaning it was actually manufactured in the previous year, even though the dealer is selling it as a current model. Combined with a few other probable comprises, such as colour and added extras and suddenly the deal is not quite as great as you first thought.

Tip:  Demonstration cars are used cars, compare the price against a brand new one and make an informed decision.

11 Responses to 'Avoiding New Car Dealer Tricks'

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  1. Ben said,

    on October 23rd, 2008 at 2:10 pm

    If it wasn’t for that “Media Release” at the top you could have almost believed that paragraphs 2-4 were a not so subtle “we bought Mr Edgar’s opinion”

    That said, it does have some good stuff in there. I knew demonstrators were test drive cars, but I didn’t think of the 2000km as being 2000 hard km, with a single oil change at 1500… And of those 2000 thrashed km, about 800 of them would have been before the engine was properly up to temperature.

  2. Jay said,

    on October 23rd, 2008 at 7:24 pm

    I used to work for a premium German brand dearlershit. I was ordered to swap the interior trim from a 17 000km used car to a brand new car before delivery.

  3. Dave said,

    on October 24th, 2008 at 3:02 pm

    Not all demostrators are used for test drives. A friend working at a well known auto company gets super cheap leases on new vehicles that will be sold as demonstrators in three months. To give you some idea of the way these cars are treated my mate asked whether the car needed premium fuel (which it did). Response – “put the cheapest fuel you can find in it and flog the sh*t out of it”

    I will never buy a demonstrator vehicle after seeing the way these cars are treated.

  4. Lee said,

    on October 25th, 2008 at 10:46 am

    Actually, in a lot of cases, most of the kms on a demo car will be put on them by the salesmen. Generally in the industry they get a company car to drive. Doesn’t necessarily mean they’re any easier I’ll admit 🙂 You have to look at the type of car as well – it’s pretty hard work and not much fun to ‘flog’ a standard little fwd runabout, and not often what the people test driving them are likely to do with it, whereas if it’s a high powered sports car you have to expect people to put it through it’s paces.

  5. John Kirkham said,

    on October 28th, 2008 at 2:17 pm

    Was also in the car game many moons ago. The demo’s we’d use were treated very well. Most of the reps were mid-thirties so were over the ‘Fangio’ driving style of the younger set and, add to that, test drives were so rarely ‘thrashed’.

    By the same token, I believe a new car/vehicle should be driven hard right from the start. The number of old fogies who would come in, telling how they use to ‘bed in’ their new car with towing a trailer or, a boot full of bags of ‘whatever’… I know older cars needed that with larger tolerances back then but, even today, new vehicles like having the piston ring score their bores.

  6. Andrew said,

    on October 28th, 2008 at 3:49 pm

    Can’t say I’ve had too many opportunities to flog a test car, usually the salesman is sitting next to you, or wife. Old rule of thumb when buying a car, if you and salesman are smiling at the end of the deal you haven’t got the best deal. They love nice people, so don’t be overly nice. Get down to business.

  7. david said,

    on November 10th, 2008 at 10:22 pm

    I just bought a brand new Camry Grande this Wednsday but only find out today that the new car delivered was actually manufactured in May this year. I was expecting the new should ne made somewhere around Sep/Oct.

    Any ideas if it is normal?

  8. Lee said,

    on November 14th, 2008 at 4:03 pm

    For something like a grande it probably is – by far the majority of camrys would be base models, so they probably do a batch of upspec ones at a time then sell them off slowly

  9. Jason said,

    on November 19th, 2008 at 8:04 am

    Yes it’s quite normal for vehicles that in dealers showrooms to be up to 6 mths old. (Especially in the case of your higher spec Grande).
    When you specifically ‘order’ a vehicle that they do not have in stock (and they can’t obtain it from an alternative dealership) then you can expect it to be only a month or so old (for locally built models) or around 2-3 mths old if fully imported.

  10. used cars uk said,

    on August 17th, 2010 at 8:58 pm

    As said ealier, it is a usual practice where cars in the showroom are few months old. I have recently bought a new camry but it was about 3 months old as well.

  11. Andrew said,

    on September 10th, 2010 at 4:54 pm

    Thanks for sharing such an important information. Actually I was in a process of buying a new car. So I will make sure that dealer doesnt handover demostration car to me.