The Most Surprising Car-Buying Secrets That Your Dealer Won’t Tell You

Since 2015, new car sales in the United States have exceeded 17 million annually. Whether you’re a first-time buyer or a veteran of the dealer song and dance, buying a car is still a big undertaking. Even though most consumers arrive at the showroom floor with some kind of car-buying game plan, knowing a little insider information may help buyers finesse a way into a better deal.

MarketWatch’s Charles Passy has unearthed valuable and pertinent car-buying secrets to shed some light on how the market has evolved over the years and how that evolution can impact your wallet. Here are the most surprising car-buying secrets that your dealer isn’t telling you. 

1. The best deals are not found in the showroom

buying a car

Don’t go into the showroom looking for the best deal on a car. | Justin Sullivan/Getty Images

The days of walking into a dealership showroom and haggling for the best deal may not be extinct, but they are certainly endangered. Today, companies like TrueCar act as a middleman between thousands of retailers and consumers, claiming to save buyers an average of $3,221 on their purchase. Also, many regional dealerships have online platforms that enable car shoppers to wheel and deal via email and text, avoiding the awkward back and forth on the showroom floor.

Next: This evolution in the industry is important to know.

2. Conglomerate dealerships are taking over, which means you could pay more

AutoNation dealerships are sprouting up all over the country. | Automation

Corporate car dealerships like AutoNation and Van Tuyl Group penetrated the market after the Great Recession, swiping business from local namesake dealerships. AutoNation, for instance, has over 250 dealerships across the United States.

Because of this, consumers are finding they pay more when buying from a corporate dealer. In order to sidestep that, be sure to comparison shop before pulling the trigger.

Next: You may live in a state that doesn’t regulate this fee.

3. Some states can tack on as much as $2,000 worth of fees

GLENDALE, CA - MARCH 23: Allen Zimney and his girlfriend Leila Alvarez, with the help of Star Ford salesman Greg Bowles, shop for a Ford Edge at the Star Ford dealership on March 23, 2012 in Glendale, California. New car sales in March are expected to top 1.4 million in the U.S., on pace for 14.6 million within the year.

State fees can wreck your car budget. | Kevork Djansezian/Getty Images

Have you ever heard of a dealership fee? They exist in every state, but unfortunately, they aren’t equal.

For instance, in Iowa, the fee is no more than $146, whereas in other states it can climb up to $2,000. To avoid being blindsided when you’re signing the paperwork. If you’re in doubt, ask before you start negotiating.

Next: Don’t fall for this tactic.

4. There’s trickery in those advertisements

Beware the bait and switch. | Source: MARK RALSTON/AFP/Getty Images

As the old saying goes, if it sounds too good to be true, it probably is. Such is usually the case when it comes to dealer advertisements showcasing insanely low pricing.

The Federal Trade Commission has been debunking false ads for years. That’s because too many dealers will opt out of disclosing the fine print just to get potential buyers in the door.

Next: Could you be swayed into buying a used car? 

5. They’ll make more if you buy a used-car

Mazda vehicles sit on the lot of a Mazda dealership November 18, 2008 in Countryside, Illinois. In an attempt to raise some desperately needed cash Ford Motor Company reportedly plans to sell 20.4 percent of its 33.4 percent ownership of Mazda. (Photo by Scott Olson/Getty Images)

Profit margins are higher on used cars. | Scott Olson/Getty Images

More money goes into a dealer’s pocket when they sell you a used car. Why? According to a NADA report, a dealer can make three times more when selling a used car than a freshly-minted one. Also, because of the particular differences in mileage and the overall shape of a used vehicle, dealers are able to finagle the numbers more than they can with new cars.

Next: This common add-on isn’t helping you.

6. Those add-on warranties and packages aren’t worth it

LINCOLNWOOD, IL - MAY 13: Customers look over Cadillacs offered for sale at a GM dealership May 13, 2009 in Lincolnwood, Illinois. In an attempt to shore up the industry General Motors announced plans to cut 2600 dealerships while Chrysler has made plans to eliminate about 850.

Avoid those add-on warranties. | Scott Olson/Getty Images

Once you’ve decided to purchase your brand-new car, brace yourself for the onslaught of extended warranty offerings. Whether the package offers to maintain your vehicle’s new appearance or protect what’s under the hood, Consumer Reports data shows that these hardly ever pay off. Unless you’ve bought a lemon, an extended warranty is usually a gamble not worth taking.

Next: Do you know your credit score? If not, you may be paying more. 

7. Your credit score may be better than what they tell you

Credit score concept on chalkboard

Research your credit score before walking into a dealership. | iStock/Getty Images

Before you ever step foot into a showroom, know your credit score. It’s not uncommon for a dealer to pull out shenanigans when it comes to financing your new car.

The better your credit score, the better your financing should be (and vice versa).

Next: Here’s how Tesla may changing the industry to help your wallet.

8. Tesla may be changing the car-buying game altogether

Could Tesla’s direct-sales model spell the end of the traditional car dealership? | Joe Raedle/Getty Images

When Tesla hit the market, its approach was radically different. There is no middleman, no person in which to haggle.

Instead, Tesla sells its electric vehicles directly to customers. Due to this removal of the mediator, dealer commissions are removed. GM has mentioned finding a way towards its own direct sales model.

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