The next time you’re shopping for a car, beware of “the box.” That, according to an anonymous salesperson who spoke with The Wall Street Journal, is the term sometimes used for the finance office located inside car dealerships. The box is where salespeople try to sell you on all kinds of add on services that can dramatically increase the cost of the car.
Here’s the deal: Car dealerships, it seams, are reacting to decreasing automotive sales by increasing the unnecessary services and finance charges they sell to consumers. Tacked on items can be anything from extended warranties to paint-protection plans. Unfortunately, consumers are taking the bait. According to a report from JD Power, in 2018, dealerships made an average of $908 per new vehicle sold on finance and insurance services. Meanwhile, dealerships made an average of just $420 per new car sold on the actual vehicle. The key for salespeople is the box. Consumers, once inside the finance office of the dealership, can sometimes feel intimidated and pressured into purchasing add-on services. The consumer can at times leave the finance office of a dealership having signed on to pay hundreds to thousands more on a car.
The best way to avoid paying for these add-ons is to do plenty of research before ever entering a dealership. Use sources like Consumer Reports or Edmunds to find out exactly what vehicle you want and how much it should cost. Also, don’t be afraid to find financing for the vehicle outside of the dealership. The dealership makes deals with banks or car manufacturers for the financing, then gets a percentage of the interest rate or a flat rate. Therefore it benefits the dealership to offer you a loan with a higher interest rate than you might get at a credit union or bank. Protect yourself, and your wallet, by knowing as much as possible. That way you’ll leave the box as happy as you entered the box.