10 BUSTED MYTHS of Car Buying - Kevin Hunter, The Homework Guy

Lies and deceit are a big part of the car dealership business model when you're trying to buy a new car or used car. Stick with us as we bust 10 of the most common myths about car dealerships that could be costing you big time. And make sure you watch until the end, because we're also going to share 3 largely unknown truths about how dealerships really operate behind the scenes. These little-known facts that could change the way you look at car buying forever.

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Many people think dealer financing is the best option, but banks or credit unions often have better rates. Always shop around before accepting dealer financing. What you may not have known is that dealerships may have a LIMITED pool of lenders they work with, and theory are most often choosing lenders that provide the best incentives for the dealership, not necessarily the best rates for you. A dealer's favorite lenders are bankers who permit the MOST amount of fees and product packing in your car deal. Any “normal;” banker Not in bed with a car dealer would NEVER want you to have all that junk in your loan. When you shop for financing on your own, you can compare rates from a wider range of lenders and potentially find better deals. Shopping for your own financing also lets you know what you qualify for well ahead of car shopping.
The MSRP (sticker price) is rarely the final price you need to pay. It's often a starting point for negotiations, and you can often negotiate a lower price. Historically, Car dealerships always set the sticker price much higher than the actual price they are willing to accept. They anticipate negotiations as part of the car-buying process, leaving room for bargaining. In fact, dealerships often have various margins, rebates, and incentives built into the price, allowing for your negotiation. Also never forget, Car prices are affected by supply and demand. If a particular model is in high demand and low supply, you may see less flexibility in the price. However, for models that are overstocked or slower to sell, dealerships are often willing to negotiate the price down to make a sale, especially if competing dealerships have better offers. In summary, NEVER forget to negotiate the price!
They key word here is ALWAYS. This one has been generally true MOST of the time, but there are times that it’s NOT true as well. You see, while end-of-month sales quotas can sometimes lead to better deals, dealerships often have various incentives throughout the year, not just at month's end. Dealers do indeed have Sales Targets and Incentives, but they vary with timing. While many dealerships do have monthly sales targets, they also operate on quarterly, annual, or even promotional cycles. The best deals might coincide with these larger milestones, like end of quarter and end of year, rather than just the end of the month. Also, if a dealership has hit their monthly sales quota early, and it’s already in the bag, they may not have the same kind of urgency as another dealer to discount cars heavily at the month's end. This is just something you’ll have to hope you have good timing on!
Some dealerships prefer financing because they make money off the loan. Subsequently, paying in cash might limit your leverage in negotiating the car price. We’ve been saying for a long time that dealerships often make a significant profit by arranging financing for car buyers through in-house lenders, earning a commission or markup on the interest rate. When you pay in cash, they miss out on this extra revenue stream. Because of this, they may be less inclined to lower the car’s price for a cash buyer since financing is a lucrative part of their business model. This was a major contributing reason why we published “Don’t say I’m Paying Cash!” a free years ago. It got millions of views because a lot of confused cash buyers thought Cash was King!

[LGB-FJB]

Nappleton told me I couldn't use outside financing for new cars. I reported them to the state.

[davidpickens]

Liz, I’m a prime example of paying more than what the car is worth. My Bad.
I’ve learned A LOT FROM YOUR VIDEOS SINCE THEN.
YOU AND KEVIN ARE TOTALLY AWESOME. 👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍.

[lot]

I always joked about bringing an air compressor with me. If they try to upcharge for nitrogen inflated tires, tell them to take it out, I've brought my own 78% nitrogen air with me. I haven't done this, someone please try it and tell us how it went.(not in the market lately)

[greggpurviance]

Good, but your trade in, or no trade in, doesn't effect the real car price.

[drsysop]

I had that issue long time ago when my vehicle worth less than what I owe. Best thing when this happens is to eat it or crash the vehicle & let the insurance pay it off. Always put GAP on your loan as it pays off what your insurance will not pay. -Cheers!

[jaycasteel]

What am I doing wrong, I ask for out the door price and they say what ever the sticker price is??

[jbs]

So what the best way to negotiate off dealer installed items like LoJack and security systems? (Castle Subaru) internet price looks good but says doesn’t include those ad ons

[Thisishard]

Dealer charges 100+ for an oil change.I buy Mobile 1 and do it for 36$.Just save the receipt

[LGB-FJB]

Nappleton told me I couldn't use outside financing for new cars. I reported them to the state.