8 tricks up your auto dealer’s sleeve

Auto dealers have lots of tricky ways to make the most off of every sale.

If you're not careful, you can wind up paying more to buy and finance a new car or truck than you really need to.

Look out for these 8 common tricks when you visit the showroom:

Dealer trick 1. Preying on your lack of information.

There's nothing a dealer loves more than an uninformed consumer who's going to negotiate a purchase based on nothing more than the car or truck's sticker price.

You need to work from the wholesale price the dealer paid and the average transaction price, which are usually thousands of dollars less than the sticker price.

You want to be the smart buyer who pays a little less than the average transaction price, not the one who pays a little more.

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Edmunds.com or Kelley Blue Book are the places to find the critical information you need.

Dealer trick 2. Imposing finance charge markups.

During negotiations, your salesperson may say he or she can offer you a lower price if you'll finance the purchase through the dealership.

That's a sign to be very careful. Your salesperson may be hoping to recoup any discount in price through a finance charge markup.

That's when the dealership adds 3 percentage points -- sometimes more -- to the interest rate one of its lenders is willing to charge you.

Here's how it works: You apply for a loan through the car dealership, which sends your information out to four or five finance companies it regularly works with.

The lenders check your credit history and come back with their best offers. One says you're eligible for a loan with a 7% annual interest rate. Only the car dealer tells you the rate is 10%.

On a $22,000, five-year loan, that extra 3% adds $1,908 to your payments. The lender collects the money and sends anywhere from half to all of it back to the dealer.

Dealer trick 3. Making the deal all about the monthly payment.

Salespeople often ask potential buyers what kind of monthly payment they can afford.

Don't tell them, because they'll use that number to sell you a more expensive car or truck than you may have wanted and maximize the dealership's profits on your sale.

The salesperson will figure out the most you can possibly spend by dragging out the payments for as long as possible and still hit that payment.

He or she will then show you cars and trucks in that price range, which is often higher than what you wanted to spend, while reassuring you that this fine vehicle is within your budget.

Let's say you came in to buy a compact sedan that cost about $20,000 but let slip that you could afford a payment of $450 a month.

The salesperson immediately recognizes that a 60- or 72-month loan would allow you to buy a $25,000 midsize sedan and your payment would still be about $450 a month -- and that is what he or she will try to sell you.

The bigger sticker price, and longer loan, both mean more money for the dealership.

Dealer trick 4. Deceptive payoff promises.

Let’s say you’re looking to buy a new car but still have a balance on your current car loan. To close the deal, a salesperson will often promise: “We’ll pay off your loan no matter how much you owe.”

In the past, dealers counted on making up the difference with your trade-in, which was usually worth far more than what you owed on it.

Nowadays, many owners are “upside down” on their loans, meaning they owe more than the car is worth.

That leads some unscrupulous dealers to pay off your old loan, just as they promised, then secretly add that payoff cost to your new loan.

By rolling the previous balance into you’re new loan, they’re counting on you focusing on the monthly payment and ignoring the total amount that you’re financing.

Here’s how it works: You’re told that you’ll need to borrow $20,000 over 48 months at 6% to buy the new car or truck you’ve picked out, which works out to a monthly payment of $470.

The dealer adds the $4,000 payoff on your old loan to the balance, and the papers you’re given to sign actually commit you to paying $24,000 over 60 months at 6%.

The finance manager directs your attention to the monthly payment, which turns out to be only $464.

You think you’ve actually gotten a better deal than you were promised and happily sign without looking at the details, which is exactly what the finance manager wants.

Dealer trick 5. Saying the deal is only good today.

Salespeople often tell buyers an offer is "only good today" to keep you from checking out the deals at another showroom or having second thoughts about the vehicle you're considering.

In either case, you're almost always likely to get the same deal the next day.

Dealer trick 6. Using the old bait-and-switch.

You see an ad that offers a great price on the model you've been considering.

But when you arrive at the showroom, you find that it's only good for a basic, no-frills version. And there's only one of those on the lot.

The salesperson quickly steers you toward one of the many better-equipped -- and more costly -- models.

Dealer trick 7. Letting you drive away before finalizing the loan.

"Spot delivery" or "yo-yo financing" is when you take delivery of a vehicle before finalizing the financing required to pay for it.

The salesperson promises to get you a loan, even if you have bad credit, for what sounds like a reasonable rate.

You sign some paperwork to get the financing approved, but when you return to close the deal, you find that you're being charged several percentage points higher than you were promised.

Dealer trick 8. Dangling dealer add-ons.

Dealers try to boost their profits on hot-selling models by charging thousands of dollars for extra accessories that cost them hundreds of dollars to provide.

The add-ons can be anything from mud flaps and pinstripes to leather seats installed in a base model that never comes from the factory with such an upscale interior.

Those extras -- and the new higher asking price -- are listed on a second window sticker right next to the factory sticker.

Although dealer add-ons are never worth the cost, they're a good indication that the salesperson will expect you to pay the full inflated price or something very close to it.