To win in any auto transaction, you first have to understand what the other side is trying to do to you, and why. Since “the other side” always includes a physical automobile dealership – even if you're buying or leasing from an online service – I'm going to take you inside a typical dealership right now. What's really going on down there?

The pressure game starts before you go near a dealership, either on-line or in person. Just look at the dealer ads. They promise low payments, sales, big money for your trade, and respect for your intellect. But, as with most selling, these promises come with some crossed fingers. Did you know that many dealers make more during sales than they do at non-sale time? That's because we consumers automatically equate the word “sale” with “save.” That's dangerous math. Dealer advertising really has another purpose – to get you to rush down in a fit of excitement (“Really? Just $99 a month?”) without stopping to think.

Then The “Track” Systems Take Over – A “track” system is a automobile sales program designed to put every customer through the exact same sales steps with the sole intent of selling that customer instantly for the maximum profit. The key words here are “instantly” and “maximum profit.” When you arrive at a dealership (or log-on to most auto web sites) the dealership begins to “work” you: put you through the track system.

The objective is always the same – get you to pay more for every item and service than you were planning to pay. Want to spend $450 a month? A savvy dealership will get you to pay $550. Or they will happily sell you a car for $450 per month – but it will be a car you could have bought for $350 per month. Nice of them.

The people at virtually any dealership and most web sites and buying services, friendly though they may be, have a little different objective in the car transaction than you do. Their goal is always to maximize profit. And that might mean leaving out an important fact or two.

To take one example, what would you do if you owned a dealership that sold cars ranked lowest on the government crash safety reports? Would you tell all your customers, “Oh, don't forget – our cars are the most dangerous on the road.” See the problem? To survive, the dealership must either lie about the dangerous test results, or simply forget to talk about the results.

What's the upshot of this? The sellers of automobiles generally can't give you good advice about what you should spend, number one. No salesperson in the auto industry ever prospered by constantly volunteering to cut the price on every sale.

Number two, the sellers of a particular automobile – whether in person or on-line – generally can't give you the answers you need to questions about such matters as a car's safety, reliability or resale value.

But these questions are important, aren't they? And you'll need the answers before you even look in the direction of the dealership or click on that “Click here to buy” banner. Why? Because once you're engaged with these folks, the “track system” will take over and speed you along recklessly whether you like it or not.

Even though you have no intention of buying, the smiling salesperson requests your driver's license, your Social Security number, or simply your address. Or maybe they want to register you for a fabulous free trip to Paris.

Even though you haven't given permission, using a modest amount of information about you, many dealerships will now search their databases and quickly open a file on you. And since most dealerships are now owned by conglomerates, with databases compiled from many companies, the dealership has an informal “read” on your credit without even pulling a credit report. With that informal “read,” the dealership then begins to plan the maximum profit they can make on you, based upon your credit worthiness.

T. O. stands for “turn over.” You're sitting in a salesperson's office, thinking about how much more fun it would be to replace your hard drive in the dark than go through this, when your salesperson returns with reinforcements. The new smiling face asks for more money. And then the salesperson asks for more. And then the dealership chaplain comes in.

The T. O. system operates on the principle of “fresh faces can work miracles.” A miracle, in this instance, is defined as more profit. And as long as you give, they'll keep asking.

Rather than the T.O. system, some dealerships use the note system. In this technique, the salesperson steps out, returning with a nice note from the sales manager asking for more money. And then another note, then another. Usually, they come back with five, and usually the last two ask for raises of odd amounts of money for instance, $113.29 or, finally, $23.19. The note system has one basic problem. It makes you think the dealership is negotiating when it's really only play acting. Consider the “odd” raises. These are simply designed to make it look like you're really a hard bargainer. You know, you think you've got them “down to the pennies.” A tip: many web sellers use versions of the note system.

The salesperson divides a piece of paper into four squares and then asks for your “wish list.” What do you want to pay a month? What do you want for your trade? What do you want to pay for the new car? However ridiculous the sums, each is written in a square. Then they ask for a large deposit and your signature in the fourth square.

Then they begin to “work” you on each square separately, starting with a figure far from yours and very slowly negotiating down, constantly scratching through figures. By the time they finish, the paper is illegible, you're frazzled, but the salesperson is smiling. You've agreed to pay an additional $1,200 to $1,500 profit.

The four square system is probably the worst system in use today because it was designed to produce some very nice profits by confusing you. Don't deal with dealerships who use this system.

“You can drive it off today!” That is the most expensive statement any car dealer or web seller can make. Spot delivery means emotion is ruling you rather than good sense. It also means you (very conveniently for the seller) won't have the opportunity to compare costs and terms. Never buy or take delivery of a car on your first visit to a dealership or a web site. Be patient and the price will tumble.

Spot Delivery is called “Yo-Yo” selling by unscrupulous dealers who do this little trick: they deliver you a car on any terms you want. Then a week after you've taken delivery, they call you up and say “Oops, your contract wasn't approved at the figures you wanted. We need an extra thousand in cash, and your payment has gone up $300 per month!” What can you do if that happens? Usually nothing. They've already sold your trade-in, and you unknowingly signed an agreement to let the dealer raise the price! Yo-Yo selling is endemic in the auto business, and is the subject of hundreds of lawsuits at this very moment.

Never, ever take delivery on a car unless you're perfectly sure the contract cannot be changed. A tip: by financing with DCU, you are totally protected from Yo-Yo selling.

Many dealerships will try to switch you to leasing on the spot. Don't fall for it! Read this excerpt from our on-line Leasing guide, and you'll see why dealerships try to switch you:

Leasing or a lease-type finance product might be good for you. But you need to decide that based on sound information. If you're even thinking about leasing, read our on-line StreetWise Leasing Guide.

Even if you have the cash in your pocket to pay for a vehicle, you'll be forced to talk with a dealership's finance sales staff. Or, as they are quaintly called at some dealerships, “Business Advisors” or “Financial Counselors.” Why do these high-pressure finance salespersons insist on talking with you? Because dealerships make much more money on financing these days than they normally make on the sale of an actual vehicle. Many dealerships will do virtually anything to convert you to their financing – including shade the truth a bit.

If the dealership can convert you to their financing, they'll sell you credit life and disability insurance that's almost always more expensive than a credit union's or a bank's but sounds downright cheap on a “pennies per month” basis. Then they'll sell you “protection” packages (rustproofing, undercoating, fabric conditioning) for “just $19 per month. Why, you can afford that!” But over 60 months, you will pay over $1140 for products that cost the dealer a $100. The same approach works for extended warranties or mechanical breakdown insurance, too.

Daily the methods used by many dealerships and on-line selling organizations grow more sophisticated and subtle. For instance, many dealerships now track customers' movements by computer, rate their moods on scales entered in computers, and flash their progress in the buying process on computer screens so managers and other salespeople can monitor the dealerships' careful plan to sell. How can you avoid the traps? Read on.

© 2009. Digital Federal Credit Union