Do you feel like you are going to be taken advantage of the moment you set foot on a car lot?  In many cases, this is a misconception.  Remember - a car dealership is a business, and even the most honest dealership has interests that are very different from yours.  The goal of a car dealership (and any business) is to sell its products in such a way that maximizes its profits.  You, on the other hand, want to get the best car at the best possible price.  Due to the “haggling” nature of the car buying process, you will eventually have to negotiate those conflicting interests. 

Buying a car is a lot like playing poker, and you need to play your cards close to the vest if you want to “win”.  Here are six “tells” that you should never let slip when you are shopping for a car:

1. “I LOVE this car!” - No matter how beautiful, fast, shiny or perfect the car is, keep your emotions in check.  It’s just like holding a pair of pocket aces - never let on how excited you are.  If you admit that you are smitten, you have essentially told the sales person that you are not likely to walk away from the table.  The sales person, in turn, will tell you that the car is really hot in the market, someone else was seriously looking it that very morning and the manager just won’t take less than sticker price.  Instead, remain calm and pretend you’re looking at a 2-7 off suit, which is the poker equivalent of a Yugo.  The less emotion you show, the cheaper the car will be.  There is no room at the negotiating table for emotions, so keep a poker face!

2. “I need a car today” — There is nothing worse than being in desperate need of a car.  Except letting on that you are in desperate need of a car.  This says to the salesman, “I won’t be applying any brain cells whatsoever to this purchase.”  He knows you won’t be scrutinizing the numbers and doing the math, and you aren’t likely to drive across town to try to get a better price. It also means you are likely to take whatever he happens to have in his inventory, even if it doesn’t fit your needs or is a piece of junk.  If you really do need a car quickly, BLUFF!  Act like you have several weeks to decide and shop for the best deal.  Tell the sales person you would consider buying today, but only if you found the right car at the right price.

3. “I need a monthly payment of $X”– Most car shoppers are “payment shoppers” because most of us have no clue how much car we can afford except by looking at how the payment fits into our monthly budget.  The catch is, there are many different ways to get to a certain monthly payment, and most of them are not to your financial benefit.  For example, you can get a $35,000 car for under $500 a month, but you have to finance it for 7 years!  With the loan terms that are available today, you can get to almost any monthly payment if you drag it out long enough.  So, do the math before you get to the dealership, and understand exactly how much car you can afford based on a realistic interest rate and loan term.

4. “I have my trade with me” - A savvy salesperson will usually want to know up front if you have a vehicle to trade. If you tell him, “Why, yes I do, and it’s parked right outside!”, he’ll ask you for the keys so the used car manager can assess its value while you’re shopping. Sounds good, right?  After all, it will save time!  The problem is, you have just handed the keys to your only means of escape to a person who wants to keep you there until you agree to buy a car.  You have just lost the ability to throw in your cards and leave the table. 

5. “I’m thinking about leasing, but I don’t know much about it” — Leasing is a whole ‘nother game compared to traditional car financing.  Like a friendly game of 5 card draw vs. a Texas Holdem tournament.  If you are considering leasing a vehicle, you must learn the special rules of that game and make sure it’s really the right decision for you.  The monthly payment calculations are very complicated, and the laws governing leasing vary by state.  You need to understand the unique terminology as well as the extra costs and fees involved.  You also need to know how many miles are included in the lease and the penalties for exceeding the mileage limits. 

6. “My credit isn’t very good” - Most people don’t know their exact credit score, much less what interest rate it qualifies them for.  Those are the people who are big moneymakers for car dealers (and anyone else who sells financing).  The dealership makes money on the “yield spread” - the difference between the wholesale interest rate offered by the lending institution and the interest rate the dealer charges you.   If you tell the salesman that your credit is less than perfect, he may be pleased to confirm your belief that you don’t qualify for a low interest rate. To make sure you get the best interest rate, shop for your own financing before you start shopping for the car.  Having a loan secured outside of the dealership gives you added negotiating power.  If the dealership can beat the interest rate - great!  If not, you have an ace in the hole.

The truth is that most car dealers do not “take advantage” of people — they are simply better at playing the sales game.  After all, they get more practice at it than you do.  To win the game, you must educate yourself, play smart and keep your emotions in check or risk losing all your chips.