One of the most important car dealers’ secrets is that the car dealer usually buys the car from the manufacturer at the invoice price. When the car is sold, the manufacturer reimburses the dealer with the cost incurred for keeping it in the dealer’s inventory for 90 days. If the dealer manages to sell the car before 90 days, part of the held-back payment becomes a profit for the dealer although the car is sold at the invoice price. The dealer often makes more profit from financing the vehicle and selling "extras,” than from selling the car. Extras include extended service warranty, paint protection, scotch guard, window tinting, alarm systems, etc.
Here are another five things that car salesmen will never tell you:
Car Dealer Tactics
Car dealer tactics are many. The commonest car dealer tactic is to convince you to trade your old car for a new one. To clinch the deal, the dealer offers a good exchange on the old car. This tactic also ensures that you buy the car from the same dealer. It is a win-win situation for both the parties.
Car Salesman Tricks
The car salesman’s trick aims at selling the car as quickly as possible and at a higher rate of interest if financing is involved. The salesman will try to sell as many “extras” as possible so that he can gain a profit. Giving you a patient and sympathetic ear is another of the car salesman’s tricks!
Insider (Car) Secrets!
Most of the car dealers, car sales persons, and financial managers are ethical and honest. But all of them work on a commission basis. They think about their profit when selling the car. Car salespersons are trained to cajole you into buying the car. Therefore, your “buy decision” is often influenced by emotion rather than sound judgment. You are seldom given the time to think the proposal through.
Buy a New Car
Owning a new car is everyone’s dream. Today, getting a car loan is easier than ever before. However, your decision to buy the car should be need-based, and your choice of car should be based on your requirement. It should take into account your financial position. Moreover, you should ensure that you can set aside a fixed sum of money for its maintenance.
Buy an Old Car
Buying an old car is often better than buying a new car. Although old cars cost more to maintain and are more likely to break down, leading to heavy expenses, they are cheaper to own and operate. What’s more, your old car will not depreciate much. Cars lose most of their value during the first five years of use.
Some tips for buying the car may come in handy. Compare the different brands by the features and sweeteners they offer – like mileage, accessories, insurance, maintenance, and warranty. Choose a good dealer and a good finance company that quotes lower interest rates and EMIs. This way, you will save a lot on the car buy.
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