5 Tricks Car Dealers Use to Take Your Money

Dealer Trick #2: "Oh, that will cost you extra."

A dealer might "leave out" options on the list price and make you think the price includes a fully equipped car. Then, when you think you've got a deal and you've made it clear that this is the car of your dreams, surprise! Some of these items are extras. Nice, huh?

Dealer Trick #3: The invoice price overstates the true dealer's cost.

If you've done some research and found the dealer invoice price, you may think you know what the dealer paid for the car you want to buy. It's not that simple and we don't want you to be fooled.

The invoice doesn't account for what are called "hold-backs." These are payments from the car manufacturer to the dealer to cover the costs of selling. They're usually equal to 2% to 3% of the cost of the car and are refunded after the sale. The word in any other business would be "kickbacks."

The good news is most of this information makes its way to the public, thanks to Consumer Reports and the many Web sites that are constantly attempting to expose the car industry's backroom dealings. But even if you tell a car salesperson you know the dealership is getting a profit above and beyond the invoice price, the dealer will just deny it.

There generally isn't much you can do about it. Dealers will not shave the hold-backs from your price. But you can at least let them know you're wise to this practice. They'll know they're not dealing with a dummy so be sure to stand firm when they try to make you pay additional fees.

Dealer Trick #4: Advertisements can be not just misleading, but downright illegal.

A frequent guest on our radio show, Kurt Allen Weiss, was in the automotive sales industry for 20 years. To quote him, he "got tired of taking advantage of consumers."

Kurt has discussed with us the come-ons you see in 30-second spots on local TV stations throughout the country. Basically, if the deals sound too good to be true, they are, as you would know if you could read the fine print at the bottom of the screen. That's where you find out the special discount applies only if you just finished college or if you're a loyal customer or renewing a lease – or some other restriction.

(That's a common trick. The dealer might be offering customer rebates for certain people and on certain models. But most incentive programs are designed for maximum inconsistency and confusion, intended to attract potential customers while still ensuring that manufacturers can get full retail price on many of the cars.)