The three dealership online marketing schemes almost every car buyer falls for!
I will expose the top three online dealership marketing schemes used to get your hard-earned money. If you are aware of these schemes, you are better equipped to make sure you get the best overall deal.
Let’s get started.
Dealership Online Marketing Scheme 1:
They advertise a price they have no intention of delivering on.
I see this all the time. Just like you, I use car search sites like Car Gurus, Auto Trader, etc and search for the vehicles my clients are interested in.
Enter the make, model, trim, color, miles and any other feature needed.
Then the trouble comes. You sort it by price.
Herein lies the problem.
The dealership sets the price they SHOW you. They know how you are searching or sorting (by price).
The price they SHOW you is not the entire picture.
Then, the website even says the vehicle you’ve found (at the top of the list) is a great deal. Right?
Well… maybe, or maybe not.
Chances are, the great deal advertised (much lower than everyone else) may not be giving you the entire picture.
Now look at this.
This quote, from a large online lead generation tool for dealerships, shows that this is a great deal.
The offer is $405 dollars below the average list price.
Keyword in that sentence is list price.
What is the $2,985 in dealer fees and accessories?
That eats up the $405 dollars quick, right?
It wasn’t easy for me to find this breakdown of their hidden fees.
You have to know where to look to find it. You have to actually reach out to the dealership in a lot of cases. Some dealerships do not disclose these fees anywhere online. If they do, they make it almost impossible to find them.
The average consumer only sees the price of $14,840 for the car and thinks it is a great deal.
They spend their time visiting the dealership and fall in love with the car. When the numbers are presented, the focus is set on the payment to hide the true cost of the car.
After spending hours there, your head spins circles, until you just agree.
Before we get into the #2 Scheme which quite possibly could be worse than the first, let me introduce myself.
I am Mike Rumple. I own and operate Your Car Buying Advocate, Inc. We teach the consumer the tips and tricks we use to get exceptional deals for our clients without having to step foot inside the dealership. For those that don’t like to do it on their own, they trust and hire us to do it all for them. We locate and negotiate a car deal for them, then we sell their trade in. They hire us to save time and assure them they’ll never have to worry about getting ripped off.
Dealership Online Marketing Scheme 2:
MAP Pricing (Minimum Advertised Price)
MAP pricing is a tool companies use to control what their retailers can promote in terms of price.
When you find a vehicle online, dealerships are all promoting the same price.
The manufacturer does not allow the dealership to advertise the vehicle below their set MAP price.
That doesn’t mean you can’t get a far better price; it just means that the better price isn’t permitted to be advertised online. Again, sneaky, huh?
Let’s say you want a new BMW 230i X Drive. You go to Cars.com and you search for all of them within a 200-mile radius sorting by lowest price first.
Notice how the MSRP is the same as the selling price? That’s MAP pricing. They are advertising the price of the car with no discounts.
What’s that mean to you?
The only way you can tell what a good deal may be is to contact multiple dealerships to see what they are willing to actually sell the vehicle for.
You will see a tremendous difference in price from one dealership to the next.
The problem remains the same.
You go to the dealership and waste an entire day going back and forth only to end up with a purchase and still not knowing if you got a great deal or if you got ripped off. How could you know?
The problem lies in how you are going about the buying process. You are playing by the dealership rules. You are the one with the money so you CAN make the rules. I suggest never negotiating at the dealership. I think it’s a total waste of time.
You have to contact multiple dealerships to get the best deal. I know I say this a lot. But it’s TRUE!
This last scheme has been around for a long time. It is super tricky.
Dealership Online Marketing Scheme 3:
Offers for 0% financing are great!
I know what you’re thinking. Mike, how can you beat 0% financing? I am here to tell you I almost never recommend 0% financing to my customers. Here’s why.
When you choose 0% financing you almost always have to give something else up. It’s an EITHER/OR proposition.
In the fine print of these advertisements, are the details you MUST understand. Normally they read: We give you up to $4000 off OR 0%. Never $4000 off AND 0%.
To take the 0% financing you are losing the $4,000 in cash.
If you know enough to get it worked out both ways and the payment is lower by only a couple of dollars by taking the 0%, you are almost certainly better not to take the 0% financing.
Your balance on that loan will always be higher on the 0% option.
What happens when you trade in? The 0% option puts you farther upside down.
Just know that you have to run it both ways. Typically, what a dealership finance manager will do is quote you a higher rate than what you would qualify for on the $4000 cash rebate option to make the difference look more dramatic.
Therefore, you need to know what interest rate you can qualify for before you even get to this point. Now, if you have bad credit and you get 0% financing approved, then of course. I’d tell you to jump on it.
My advice is to never put money down on a 0% loan. You are defeating the purpose. If you have a trade-in, get the dealership to write you a check for the value of your trade in.
Putting money down on a 0% loan is foolish.
Financing is a really important part of the overall car deal. How you finance the vehicle matters. Don’t automatically assume you want to do 0% financing. Sometimes it makes sense, then other times it doesn’t.
As you can see, there’s no one size fits all to car buying, negotiating and financing. One thing you can count on is that you need to contact multiple dealerships for the complete deal and make them compete for your business.