Dealing with car dealerships, especially when buying a new vehicle, can be intimidating if you’re not familiar with the process.
That’s why a car-buying expert on TikTok is sharing insider tips to help buyers level the playing field.
In a video that has gained over 821,000 views, an expert affiliated with the site Caredge.com, which offers tools and tips for car buying, shared three phrases that car dealers “don’t want you to say.”
Posted on TikTok under the official handle for the site, @caredge, the expert explains why these phrases are so impactful.
Three tips to save you money at the dealership
“The first thing is when you’re talking to the finance manager and you tell them you have a pre-approval for financing,” the expert begins.
“Yeah, they hate that,” he continues. “Because when you have a pre-approval, it means they have to match or beat that with whatever financing they get for you through the dealership.”
U.S. News echoed the same advice, stating now having pre-approval could hurt buyers. “Without an offer in place, the dealership will have no incentive to work hard to earn your new car financing business,” the article states.
Bring up the term ‘buy rate‘
Another crucial tip, according to the expert, is to bring up the term “buy rate” during financing discussions.
“When you get financing through a car dealership, it’s indirect lending, and the car dealer can actually mark up the interest rate on your auto loan,” the expert explains.
“‘Buy rate’ is the industry term for what the bank actually approved you for, and the sell rate is what the dealer marks it up to and then presents to you,” he continues.
Breaking it down further, the expert shares an example.
“You might get approved for a 5% interest rate, and the dealer will tell you you’re actually approved for a 7% interest rate,” he explains. “They mark it up and make money there. When you drop the words buy rate, they know you’re serious.”
NerdWallet explained this process extensively in a blog post. It recommends securing pre-approved financing to get the best rate.
Don’t reveal payment details
The final piece of advice focuses on revealing details about payment.
“Never tell the dealer how you plan on paying for the vehicle until the very end, after you’ve negotiated the out-the-door price,” he says, stressing the importance of finalizing pricing first.
According to a blog post by RealCarTips, dealerships often profit from financing arrangements and may be less inclined to offer discounts if they know upfront that you’re paying cash.
They suggest buyers focus solely on the vehicle’s price first, so they can avoid adjustments to the deal based on their payment method.
Viewers react
In the comments, viewers criticized some of the practices employed by dealerships. Dealership and finance workers also shared their thoughts.
“Marking up the interest rate sounds like something that should be illegal,” stated one user.
“What we hate is doing all the work and then we find out you’re pre-approved for $27k yet we are on a $37k car,” said one user. “Customers just need to be upfront.”
“35-year experienced finance manager here,” started a third. “We don’t mark up the ‘buy rate’ with the credit unions and often times we can get better rates for customers.”
@caredge Impress the #cardealer and get a better deal when you know these three things! #cardealers #buyacar #newcars #newcar #caredge #cardealershiptiktok #cartok #carbuyingtips #buyingacar #cardealership #carbuyingadvice #carbuying #carbuyingsecrets #buyingacartip #carbuyinghelp ♬ original sound – caredge
The Daily Dot reached out to CarEdge via TikTok and Instagram direct message.
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