Tricks of the Trade: Buying a used car from a dealership.

So, you are looking to buy your next vehicle and you want to buy from the Dealership. But you are worried that they might swindle you. Don't worry, I am going to give you a few tips on buying your next vehicle.

The most common stereotype is that Auto dealerships are crooks who are out to swindle you. This is not entirely true. Now, I can't say that about all dealerships (especially the smaller ones) but, the major dealerships teach their salespeople some psychology tricks. This type of training is for one purpose, and one purpose only....They want to out think you. When the salesperson out thinks you, they get more money out of you.

The best way to have the upper advantage when it comes to psychology is to be knowledgeable about the car you are interested in. Do your research, know the ins and outs of your dream car from how many nuts and bolts are on the car to how much other dealerships are selling it for. Make a list of things that you want and need in your next vehicle. This will come in handy in the negotiation process. Play their little game until then.

You are going to want to take a test drive when you pick the right vehicle. If and when you are driving, say nothing about how much you love the car, even if its the perfect choice. The minute you say "I love this car", the game is over, and the salesperson has got you where they want you. You will end up paying near full price for that car if those words come out of your mouth.

During the test drive, pull the car over and go over it with a fine tooth comb. The salesperson expects you to do this. Make note of things that don't fit your criteria (i.e. paint color, interior, lacks certain features.) This will help you when negotiating price.

If you have been to a car dealership in the last 10 years, you have most likely heard this phrase. Even though it is a sales gimmick, it is somewhat true. "We want to earn your business" is a more polite and effective way of saying "we want to sell you a car and make money". I've seen a friend make the mistake of believing this gimmick and she damn near bought a pickup truck at full price.

However, this pitch will give you an advantage when negotiating. If they really want to earn your business, they will come to a quick agreement with you on what the price will be.

There are many reasons why I tell you to buy a preowned vehicle and not a new one. The main reason being that you will have more leeway when negotiating price. On Average, the markup on a preowned vehicle is $5,000 compared to only $1000 markup (at most) of a new car. For Example: If you find a used car that is $15,000..there is a good chance the dealership only put a $8,000-$10,000 investment into it.

You can easily negotiate $2500-$3000 off the price of a used car that has everything you want, still under warranty, and has low miles.

What about new vehicle incentives and discounts? Most of the time the discounts and incentives are given by the manufacturer, and it only affects the new car MSRP very little. At the end of the day, you will only get $500-$1000 off the vehicle because of dealership fees and taxes.

Hypothetically speaking, Lets say you got a mailer from the local dealership. On that mailer it says you have won one of Five prizes. These prizes could be a gift card, $100 cash, a new Flat screen TV, a $10,000 vacation package, or $25,000 cash. Also on the mailer is a key to a car, and if the key either opens the car door, or starts the car, you win it.

Do Not Fall for this gimmick! It is a trick to get you into the dealership. You fill out a small piece of paper with all your personal information to be entered to win, and you end up with the smallest prize on the mailer ( $5 gift card, $1 gold coins, etc.) What you are really filling out is a credit release form.

Trust me, No one has won $100 cash, a car, $10,000 vacations, Flat screen TV's, Or $25,000 Cash Prize. I had the unfortunate task of lying to people who have asked me if anyone has won the big prizes.