Getting Ripped at the Dealership

They put $1000 of crap on the car including nitrogen, paint sealer, fabric guard, theft guard, etc.

The Air you breath is 78% nitrogen so putting nitrogen in tires is like charging for air. Nitrogen is used in race car and airplane tires to reduce the chance of a fire. You won't be landing your car so this is a waste of money. Not only that, the nitrogen leaks out at the same rate as air, and unless you have a tank of nitrogen at home, it really does no good. And in many cases, they probably didn't bother to drain all four tires and put in nitrogen so you don't even get it to begin with.

The sealers they don't even put on the car. They just provide a warranty which will likely be difficult to make a claim on. When I object to the add-ons I usually get a multiple choice answer:

A: We have to charge for it, we've already put it on the car
B: We will only charge you our cost on it
C: We won't charge you for it

The problem with all three of these answers is it is still calculated in the MSRP and you'll have more resistance getting a discount. You'd be better off if you had them call you before they put the crap on the next car that comes in.

When I got to finance I found a bunch of fees on the sales agreement

These are the only fees that must be collected in Texas:

NameAmount
License fee$57.75
Title fee $33
Inspection $23.75
Road & bridge (depends on county)$10
Sales tax6.25% of sales price

These fees are bogus:

  • Doc fee
  • Vehicle Inventory Tax

    The doc fee was invented by a Datsun dealer back in the 1970s and then every dealership figured they would just rip people with this fee. The state used to limit this fee to $50 but the limit was removed and the doc fee can now be whatever they want to charge. I have seen it as high as $300 and I would not be suprised to see it hit $1000 in the future.

    Vehicle Inventory Tax, also known as Ann Richards tax, after the governor that signed it into law, is a tax collected by the state but it was never intended to be paid by the consumer. This fee is the equivalent of having a corporate earnings tax or a federal income tax charged to you. The Dealer Manual talks about this on page 1-5.

    I have also seen theft guard and other fees sneaked into the sales agreement so make sure you read it! It's always the last form they give you to sign for a reason. They're trying to trap you after you've started signing documents. Don't sign anything until you see the sales agreement.

    If you don't want to pay the doc fee, VIT, and whatever else they put in there, I suggest you keep this to yourself until you get to finance. These fees can't be touched by the sales person anyway so you'll need to take this up with finance. If you want to play hard ball you need to be adament about it and be ready to walk. They may say the fees are non negotiable, meaning you would need to walk. They may also tell you that they will lower them if you buy a maintenance contract so it could be used as a bargaining chip. They may also call the sales person and have your trade evaluation raised to match the fees.

    I've walked out of dealerships many times and they don't automatically run after you when that happens. Sometimes when they say they can't go any lower, they really can't. You can always go back on the last day of the month to see if they have changed their mind.

    Speaking of maintenance or extended warranties, I don't recommend them. If you really want one, you can always buy one for less online. You can negotiate at finance on these but you can shop around online much easier and you can get the same plans the dealership sells.

    I'm paying in cash and they told me my social security number was required for the title

    This is not true. This used to be law but the law was repealed under House Bill 3517. You can download the title form here.

    I'm paying in cash and they told me my social security number was required for OFAC

    This is not true. OFAC is the Office of Foreign Assets, a government office that keeps a list of terrorists to prevent them from purchasing assets. Dealerships are required to check this list, however, the list is public and the dealership does not need your social security number to check it (terrorists do not have social security numbers). However, the dealership may be using a software application that uses your social security number so you may run into some resistance here. My suggestion is to call in advance and tell them you are paying in cash and ask if a social security number or OFAC check is required. I have found some dealerships require it and some do not. Most that require it are too dumb or lazy to manually check it.

    They told me they couldn't discount because the car is a dealer trade

    A dealer trade is when a dealership doesn't have your car so they trade one of their cars with a dealership that does have your car. There are two problems with this. First, depending on how far away they have to get your car from, your new car may have several hundred miles on it. Secondly, when a dealer trades cars, they lose the hold back on the car. The hold back is an incentive paid by the auto maker to hold the car on the lot. It is usually several hundred dollars that helps in your negotiation. You should never buy a dealer trade. Just wait until they get one in stock or go to the dealer that has your car. You can tell if a car is a dealer trade or not just by looking at the sticker. The sticker has the delivery address on it.

    They told me that if I sell my vehicle privately, I lose a tax benefit

    This is actually true. You only pay tax on the difference between your trade amount and the sales amount. You should take this into consideration before deciding to sell the car on your own, after you have calculated the tax. However, if you have the time and don't mind 16 year old kids kicking your tires, worrying about fake money orders, checks bouncing, form filing, etc., you may very well do better paying the tax and selling your old car yourself.

    What should I bring to the dealership?

    You should always bring a laptop that has all of the documents and fees I've mentioned. You should also put together a quick spreadsheet that has your out the door price calculations so you don't need to ask them about it. While you are negotiating, you can quickly enter your trade valuation, sales price, etc. and see what your drive home price will be. If you are considering leasing, you should have a spreadsheet that calculates the APR based on the money factor, capitalized cost, residual, etc. This is the only way to know if you are getting ripped on a lease because the APR will not be on the contract. Money factor times 2400 = APR but they don't advertise money factor and they may change it at finance so be ready with your laptop.

    Finally, no matter how much they try to charge you, you should remain calm. The sales and finance people may have had people yelling at them all day and they don't want to hear it from you. You can very calmly tell them that you are aware of state mandated fees, you have reviewed the dealer manual, and you even have it on your laptop.

    Good luck.

    2409 people have wished for a better experience at the dealership.