Imagine sitting in a car dealership: the scent of new cars and free popcorn mixes with the hustle and bustle for a sensory overload. Excitement is in the air. You're giddy and you're also anxious. You've picked out the model you want—and they just happen to have it in stock. You think you've agreed to a price, and you think that only a stack of papers to satisfy your bank and your state's department of motor vehicles stands between you and a happy drive home in a shiny new ride.
But wait! The dealer still has plenty of opportunities to take a few more bucks from your already thin-feeling wallet. And while there are certainly some great car dealers out there, consumer confidence remains low.
A recent survey by industry auditing firm Total Dealer Compliance (TDC) found that 65 percent of adults surveyed said that they believe new car dealers are unethical. TDC's ultimate goal is to have dealers display a code of ethics in their showrooms, but the firm admits such a move would be a mere step toward improving the overall experience.
To help you navigate your way through the car buying process, we've put together a list of unethical tricks we've seen dealers try to pull, some of which may really surprise you. No automaker is immune to these tricks since dealers operate independently—and they're likely to stay that way as any effort to create showrooms run by automakers has be squashed by dealer lobbying groups in many states.
1. You're handling what? Dealer handling fees
Profit margins—the difference between what the dealer paid the automaker for the car and what they're charging you—are lower than ever on new cars. On some models, especially less expensive cars or those that have sat around in a showroom for a long time, the dealer may truly be making just a few hundred dollars. That could translate into a very slim profit for the dealer once the sales person's commission has been paid out.
To make up for this, many dealers now charge their own, flat rate fee. It's sometimes called a handling fee or a processing fee, and in some markets it can be upwards of $800. Ostensibly, this fee is there to help the dealer recoup a few bucks for filing registration paperwork on behalf of you.
If you live in a metro area where dealer handling charges are the norm, it may be hard to avoid paying this hefty fee. One suggestion is to make a few calls to dealers elsewhere to see if they charge. At the very least, you can try to use this information to try to leverage your way out of paying the fee—or, worst case, you can buy a car in a different city. Hey, who's up for a road trip?
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2. Sound the alarm! Dealer-installed alarm systems
Your new car may very well have an alarm system installed at the factory by the automaker. That alarm is probably pretty decent—but, if you find yourself parking in unsavory areas, you may consider adding an aftermarket alarm. And even if you don't mention this to the dealer, their finance department could offer one at a cut rate price.
As The Truth About Cars pointed out, an entire cottage industry exists that creates alarms that are, at best, simply ineffective. Depending on how they're installed, they could actually be a massive hinderance since dealers may not properly tap into a car's electrical wiring. If you're presented with an "offer" to buy one of these alarms, do your research.
And run, don't walk, from a dealer that automatically installs alarms on every car in its inventory. Even if you talk your way out of paying for the alarm, you're still saddled with a car that has been questionably modified in a way that very well could violate its factory warranty.