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Auto dealers are masters at figuring out how to squeeze more profit out of unsuspecting consumers. The whole dealership model is built around one basic principal - maximizing the profit on each customer by taking advantage of their ignorance. There are many things that the dealer knows that he would prefer that you didn't. If you want to buy a car, read read these 5 auto buying tips.
1) Factory to Dealer Incentives:
The car dealer will often have factory to dealer incentives that they won't tell you about. These essentially guarantee a dealer profit even if you buy the car at invoice. These incentives are not the ones that you hear about, those are the "factory to consumer" rebates that the dealer is obliged to pass on to you. But if you know that a dealer has a $1,000 incentive, you can press them to lower the price by an equivalent amount since his profit will stay the same. We've worked this angle before and got a car $900 below invoice because the dealer had a secret $1,000 factory to dealer incentive. So before you set foot in a dealership, do a little research on the Internet to find out about all the available 'factory to dealer' and 'factory to consumer' incentives
2) The Auto Finance Guy is Really a Salesperson:
The dealer has two opportunities to make a profit on every car he sells. The first opportunity is on the price he negotiates with the customer and the second is when the finance person steps in to sell you on extended warranties, rustproofing, expensive financing, etc. It's often the case that he makes most of his profits on the second step - all the more reason to shorten this conversation by arranging your financing with your credit union before you enter the dealership. The one exception is when the manufacturer is offering financing incentives.
Just be aware that the finance guy is really just another sales guy -- a modern day wolf in sheep's clothing. Don't be fooled, he is likely to generate more profit than the guy that ran up to you the moment you set foot on to the car lot. The difference is that he or she is far more experienced and skilled. You stand to lose a ton if you don't make quick work of "finalizing" the paperwork.
If, for whatever reason, you do decide to go for the rust proofing or a warranty - be aware that everything is negotiable.