10 CAR DEALER "Favors" that ARE NOT Favors (RED FLAGS) by Kevin Hunter the Homework Guy

10 favors car dealers do that aren't really favors. Have you ever been sitting in a dealership where the salesperson or finance manager suddenly does something that seems like a huge favor to you? The manager approved another $1,000 for your trade. The finance manager called in a personal favor and magically found you a lower interest rate. They waived your down payment, threw in a warranty, or somehow got your payment under the number you asked for. Wow, what incredible people, right? Except there's a question I want every car buyer to ask. Did the dealer really give you something? Or did they just move your own money from one part of the deal to another and present it to you like it was a gift? Because car dealerships have something I call favor theater, that is when an ordinary change to the numbers is presented like someone went to war for you, called in a personal favor, or convinced a very reluctant manager to make an exception for you. Now, let me be fair. Sometimes a salesperson or finance manager really does help a customer. Sometimes a lender changes an approval. Sometimes the manager does authorize a genuine concession. But a favor is only a favor if your total deal actually improves. And did it? If one number gets better while another number gets worse, they did not do you a favor. They gave you a distraction. I'm Kevin Hunter, the Homework Guy, and today we are covering 10 favors car dealers do that aren't actually favors at all. And now we're going to do some homework. Number one, my manager approved another $1,000 for your trade. This is one of the oldest moves in the business. You tell the salesperson their trade offer is too low. The salesperson disappears into the manager's office. After a few minutes, they return with great news. Kevin, I fought for you. My manager didn't want to do it, but I got you another $1,000 for your trade. That sounds great, doesn't it? But where did the $1,000 come from? Did they actually increase the real value of your trade? Or did they remove a discount from the vehicle that you're buying? Did they leave a dealer add-on in the purchase price? Did they plan to recover the money through financing or products? A dealership can show you more money for your trade while charging you more for the next vehicle. That is called an over-allowance. It can make the trade number look impressive without improving the difference you actually have to pay. Never judge a trade offer by a trade allowance alone. Watch the selling price, trade value, payoff, taxes, fees, and complete out-the-door price difference. Number two, we found an extra rebate for you. The salesperson comes back and says, good news. We found another $1,500 rebate. You're probably gathering right now when they say great news or good news. It almost never is. Before you start celebrating, ask for the name of the rebate and its qualifications. Is it available to every buyer? Is it a loyalty rebate requiring you to own a certain brand? Is it a conquest rebate requiring a competing vehicle? Is it military, first responder, college graduate, or finance company cash? Does taking it require you to give up a special interest rate? Sometimes the rebate is legitimate and the dealer really did identify money you qualify for. That is good work if and when it happens, but sometimes the rebate was available from the beginning and was held back so it could be revealed later as a concession. Even worse, some advertised prices stack together conditional rebates that almost nobody can qualify for all at the same time. A rebate provided by the manufacturer is not necessarily money the dealership took out of its own pocket. Now we're at number three. We're selling it to you at invoice, they say. This one sounds almost sacrificial. We're not making any money. We're selling it to you at invoice. Here's the problem. Invoice is a documented number, but it does not always tell you the dealership's final effective cost. There may be manufactured to dealer incentives, hold back, floor plan assistance, advertising support, volume bonuses, or other programs that are not explained to you at all. And even if the dealership really has very little front end profit in the vehicle, it may still earn money from financing your trade, warranties, protection products, accessories, or a volume target. I am not saying an invoice deal is automatically bad. It may be very competitive. I am saying that the phrase at invoice does not end your homework. Compare the actual out-the-door price with other written offers. Let's pause right here a moment because this is the entire game in one sentence. Do not ask how generous the deal sounds. Ask what the complete deal costs. A great trade number can hide a bad purchase price. A great payment can hide a terrible term. A great rate can hide expensive products. And a free product can be paid for three times over somewhere else in the deal. Now let's keep going. Number four, we waived your down payment. You told them you did not have $3,000 to put down. After another trip to the manager, they said, we got that waived. You can buy it with nothing down. The dealership did not necessarily give you $3,000. The down payment may simply have been removed from the structure of the loan. That means you borrow more money, pay more interest, and may begin the loan with even more negative equity. You don't necessarily want that. Or they may have extended the term used equity from your trade, switched vehicles, or changed the price. Gotta watch for all of that. Zero down can be a financing option. It is not automatically a dealership favor. Ask for the new amount financed, APR, term monthly payment, finance charge, and total of the payments. Then you will see what nothing down actually costs you. At number five, we've got your payment under $700. This may be the most dangerous favor of all because it gives the buyer exactly what they requested. You said, I need to be under $700 a month. The salesperson returns like they just won the Super Bowl. Great news, we got you to $697. But how? Did they lower the price? Did they increase your trade value? Did they lower the APR? Or did they stretch the loan from 60 months to 72 or even 84 months? Did they require more money down? Did they use a balloon payment? Did they remove a product you actually wanted or add one you never requested? Your monthly payment is only the result of several other numbers. If you negotiate only the result, the dealer controls all the numbers used to create it. Never celebrate a lower payment until you know the selling price, amount financed, APR, term, products, finance charge, and total of payments. At number six, we'll throw in the warranty, they say. This is where the finance manager says, I want you to have protection, so I'm going to include the warranty. Always comes with a price tag. But include is a beautiful word, isn't it? It does not necessarily mean free. The warranty may be included in your monthly payment because it was added to the amount financed. A $3,000 service contract can sound like only $40 or $50 a month when it is stretched across a long loan. Or the price of the warranty may have been discounted while another product remains profitably high. Here is the test. Ask to see the buyer's order and retail installment contract with and without the product. Then compare the difference in the bottom line. What is the cash price of the warranty? What is the new amount financed? How much does it add to the total payments? If it is really free, adding it should not increase any of those numbers. At number seven, we'll pay off your trade. This line has confused car buyers for decades. Let's say you owe $30,000 on your trade but the vehicle is only worth 24,000. The dealer says, don't worry, we'll pay off your trade. Yes, the dealership will send money to your lender and satisfy the old loan, but that does not mean the dealership absorbed your $6,000 shortage. That negative equity is often rolled into the next loan. You're still paying for it, only now it is attached to another vehicle and you may be paying interest on it for many years. The correct question is not, will you pay off my trade? The correct questions are, what is my exact payoff? What is the actual cash value of my trade? And how much negative equity is being added to this new transaction? Paying the lender is a step in the transaction and forgiving your debt would be a favor. Those are not the same thing, so don't confuse them. At number eight, we'll make your first payment. This sounds like the dealership is reaching into its own bank account to help you get started. Maybe it is, but trace the money. Is the payment funded by the manufacturer program? Is it coming from a rebate that could have reduced your purchase price? Was the vehicle price increased? Did you give up a lower APR or another incentive? Is the so-called first payment actually deferred by the lender rather than paid for by the dealer? You need to know whether the payment is truly additional value or whether your own money was packaged, wrapped, and handed right back to you. Here's a quick test you can use anytime a dealership announces a favor. Look them in the eye and say, that sounds good. Please show me in writing exactly which number changed, which numbers did not change, and what my new out-the-door price and total loan costs will be. Notice that you did not accuse anyone of lying. You did not start an argument. You simply asked them to document that favor they're talking about. A real concession can survive being put on paper. At number nine, we'll absorb the dealer fee. Maybe you object to a $900 document or dealer fee the salesperson says. We can't remove it, but my manager agreed to absorb it, meaning taking it out of the sale price of the car. That can be fine if the vehicle price is discounted by the same amount and nothing else changes, but do not watch only the fee line. A fee can remain on the paperwork while the selling price is reduced to offset it. That produces a real change in the out-the-door total, or the dealer can claim to offset the fee while removing a discount, adding an accessory, or changing another number. That produces the appearance of a concession, but it actually isn't one. This is why I do not spend all day arguing about what a dealership calls a fee. I want a complete itemized, written out-the-door price. Call it a document fee, processing fee, electronic filing fee, or a donation to the manager's vacation fund, or as one manager always said, my yacht fund. I am comparing the bottom line. Number 10, I called in a favor and got you a lower interest rate. This is the favor that inspired this entire conversation, and we just did a video on it. The finance manager first presents 9.9%. You object because you have good credit. The finance manager leans back and says, you know what, I know this banker. Let me make a call. After a little phone call theater, they returned with a 7.9% rate. Sometimes a lender really did reconsider the deal. Maybe the term down payment vehicle or application changed. Maybe the finance manager found another lender, but it is also possible the lower rate was available before that phone call was made. The lender may have approved the contract at a lower buy rate, while the dealer initially presented a higher sell rate and expected to earn compensation for arranging the financing. When you objected, the dealer may have simply given up some of its financing profit. The bank did not necessarily give you a favor. The dealer may have reduced a markup that you never knew was there. This is why you get pre-approved before you shop, and we tell you to do that all the time. If your credit union has already approved you at 6.9%, you do not need to debate whether the finance manager called the bank, the president of the bank, or Aunt Betty. You simply say, I already have 6.9. If you can beat it without changing the other terms, you can have my financing. That turns financing into a competition, and that is exactly where you want it to be. Now, if you are listening to these examples and thinking, Kevin, I do not wanna spend hours trying to track down every moving number in a car deal, that is exactly why we created the Homework Guys Hassle-Free Car Buying Service. Viewers just like you asked us to step in and put our expertise to work on your behalf. We help car buyers across the United States identify the right vehicle, check the numbers, contact dealers, work toward a written out-the-door price, value the trade, review the financing, and coach you through the deal from beginning to end. Our job is to separate the selling price, trade, financing, fees, and products so money cannot quietly move from one column to another without being noticed. If you want professional help with your next car deal, visit thehomeworkguy.com, click on the big red button on the homepage, and then check out our Hassle-Free Car Buying Service. Start with the introductory call, that's with me, and then let's see whether our team is the right fit for your purchase. The link is also in the description box down below. Here is the bottom line. I do not care whether the salesman says they fought with the manager. I do not care whether a finance manager says they called in a favor. I do not care whether somebody says, we never do this for anyone. I care about the numbers before the favor and the numbers after the favor. Did the selling price go down? Did the trade value actually go up without the discount disappearing? Did the APR fall without the term, amount, finance, or products changing? Did the out-the-door price improve? Did the total cost of the loan improve? If the answer is yes, thank them. They may have made a real concession on your behalf. If the answer is no, you did not receive a favor, you just watched favor theater. And remember this, you do not need to accuse people, watch them, catch them in a lie, or win an argument. You need to slow the deal down, separate the numbers, get everything in writing, and compare the complete cost. In the coming shows, I'm gonna take these favors one at a time, and show you exactly how each one works, take a deeper dive on them, and how the numbers can be moved, and what you should say when it happens. So tell me in the comments, which one of these dealership favors have you heard before? And if a dealership ever announced that it did something special for you, only for you to discover that you paid for it somewhere else, I want to hear that story too. If this video helped you, give it a big thumbs up, share it with somebody getting ready to buy a car, and subscribe to the Homework Guy channel. I'm Kevin Hunter, the Homework Guy. You have more power than you think, friends. You just need to do your homework. Thank you for watching. I'll see you next time. Bye.