“There’s a sucker born every minute.” This adage is often associated with the perspective of a car salesperson, whose job is to sell a car for as much as they can.
There are all types of tactics sales agents use when getting someone to sign on the dotted line for the price that they want them to sign for—usually, they won’t discuss the “out the door” cost of the vehicle, but rather a monthly payment. Once they get a person to agree on that monthly payment, they see how far that payment can be stretched, and then factor in other upfront costs they can use to get more cash in their pockets.
Many dealerships will also feature in-house financing options, which are usually just intermediaries between popular banks. This allows dealerships to tack on some extra points to the interest on a deal, also helping them earn additional cash on every car they sell.
Car Salesman Big Moosh (@raffimoosh) recently warned folks of a specific “illegal” sales tactic he says dealerships also partake in that consumers should keep an eye out for.
“Don’t fall for this at a dealership it’s an illegal sales tactic watch this,” he says as he sits down in his chair and then takes on the role of a salesperson, holding a piece of paper and a pen in his hand.
“All right, so I talked to the bank and they gave me two options. Either you can pay 15.99% for a payment for $820 a month, or if you buy gap insurance, warranty, and maintenance they’ll actually reduce your rate for you and get you a cheaper monthly price,” he says.
He points to the $771 per month payment and a person off-camera says, “So you’re telling me if I buy extra things it’ll lower my monthly payment.”
“Yeah, pretty much. So what the bank is looking at is like, ‘Hey we’ll give you a lower price cause you’re buying all this extra stuff,'” he tells the customer.
She responds, “That doesn’t seem to make sense.”
The “salesman” explains the “bank” will look at the loan as more secure with all the extra stuff, such as the warranty and gap insurance, allowing for a lower monthly payment.
“So for them, it’s a less risky loan so they lower the rate which brings your payment down,” he tells the customer.
“I feel like that’s illegal,” the customer replies.
“Well I mean a price that good with all that included should definitely be illegal but no it’s just a blessing in disguise,” he tells her.
After the customer says it feels like he’s forcing her to buy things, Moosh once again reiterates he’s not forcing her to do anything, but she can “pay $820 a month instead.”
“Oh, guess I’ll go with that one then,” the woman tells the salesman, pointing to the lower monthly rate on the car.
“There you go,” he says, winking to the camera, showing exactly how the con is done.
Other car buyers have warned against purchasing add-ons through dealerships, even if you are interested in them, as they’ve found identical coverage plans, like gap insurance, at more affordable rates through their different providers.
The Consumer Financial Protection Bureau also lists several cons and tricks that customers can look out for while shopping for cars and the protections they have, as buyers, when on the hunt for a new vehicle.
@raffimoosh Be careful of this illegal dealership tactic! #carsales #carbuying #dealership #carbuyingadvice #CapCut ♬ original sound – BigMoosh
Some viewers saw Moosh’s video and said they would either fall or, or already have fallen for, this particular scam.
“Tbh..the way he explained it does seem to make sense,” one person said.
Another wrote, “Me watching this after I already fell for it.”
Other folks said they do recommend buying gap insurance on a new car. According to Investopedia, Gap insurance “covers the difference between your vehicle’s value and the amount you owe on your car loan or lease.”
“Gap insurance is actually a good thing tho, if you total your vehicle your insurance will only cover a certain amount, the rest will be paid by gap, if not then out your pocket,” one wrote.
“YOU ALWAYS BUY GAP INSURANCE!! alwaysssssss!!!” another remarked, which is something this Tesla owner would agree with.
“Gap insurance save me. My car got totaled before I paid it off and the gap insurance paid the balance on what I owed,” another TikToker wrote. “Well worth it.”
As for financing a car, one commenter said going through financing at a dealership is probably not the best way to go.
“Best thing is to get PREQUALIFIED thru a CREDIT UNION,” they advised. “Almost always the rate will be lower, and warranties are usually much cheaper as well‼️‼️‼️”
When you’re pre-qualified through your own bank or credit union for a certain amount of money, you can simply walk into a dealership and then argue about one figure and one figure only: The out-the-door price. Being pre-qualified will also help you spend only a certain amount of money.
The Daily Dot has reached out to Raffi via Instagram direct message for further comment.
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