Why buying a car alarm from a dealership is a bad idea

August 9, 2016

Growing up, you probably received plenty of advice about the car-buying process from your parents, siblings, friends, and neighbors. Today, few of you would consider shopping for a new ride without getting pre-approved for an auto loan or carving time out of your day to take a test drive.

But what about car alarms? Did mom and dad warn you about them? As our colleagues at The Truth About Cars explain, shelling out for a car alarm at a dealership is a big mistake that can cost you big bucks.

We're not talking about the base alarm, of course--the one that comes pre-installed on many new models. We're talking about the alleged "upgrade" that's typically offered during the long, painful slog of signing on dotted lines in a dealership's back offices.

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These "upgrades" are installed on many new vehicles before they roll out onto showroom floors, and they're handy tools for dealers. Not only do they generate extra cash during sales, but they also provide a way for dealerships to manage large inventories of vehicles and prevent theft. In a nutshell, the devices bypass cars' factory-installed security systems and allow salespeople to open all vehicles on a lot using a master fob.

Unfortunately, installing these devices requires a bit of wire-splicing, which can leave the factory-installed car alarm in a patchy state. Worse, they don't actually enhance security, and they can, in fact, lead to problems if the splice-work was shoddily done.

And then there's the cost.

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The add-on systems cost dealers around $50, which is a small price to pay for the convenience of giving salespeople access to every car on a lot. Activation costs another $150, so a dealer's break-even point is right at $200. 

However, dealers charge consumers far more than that for these "upgrades"--often, over $1,000. At the upper-end, dealers can make significantly more profit on the alarm add-on than on the vehicle itself, which usually has a profit margin of two or three percent on the sticker price.

To be clear, car alarms are important security devices. You just don't need to pay a dealer for a useless alarm "upgrade". In fact, you'd do better to find a brand-new vehicle that hasn't had a key management device installed yet. That way, you know that the wiring hasn't been tampered with. 

Got any other advice about dealership add-ons shoppers ought to avoid? Maybe something that you've paid for and later regretted? Share your thoughts and sob stories in the comments below.

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