Mar 17, 2025
Many Americans don't trust car dealers. A survey commissioned by KPA, a compliance software company, found that 76% of all Americans don't believe dealers are honest about pricing. Around one-third reported experiencing issues like deceptive selling, hidden fees or dishonest salespeople.
Before buying a car, it's a good idea to double-check the paperwork. Punch the numbers into a car loan calculator. If the math doesn't add up after you negotiate a price and work out the terms of a loan, it's a sign something isn't right.
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Committing to a larger loan payment or buying a car that costs more than you agree to can affect your finances for as long as you make payments on the vehicle. Make sure you're paying a fair amount by taking these steps.
Research the car's value before you buy
One of the first and most important things you'll want to do before walking into a dealership is to research what the car you're interested in buying should cost you.
Services like Edmunds, Kelley Blue Book and NADA can all give you an idea of exactly how much a specific make, model and vehicle year should cost. If you're interested in a used vehicle, take a deep dive into every factor that affects a car's value, including mileage and repair history.
By researching in advance what your vehicle's price should be, you can avoid paying more than the car is worth.
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Set a budget and stick to it
Car dealers typically work by commission, which means they will try to get you to pay as much as possible for a vehicle — and they've got a number of ways to convince you to pay extra. According to the KPA survey above, 28% felt like a salesperson had tried to "trick" them into a deal.
You don't want to get sucked into a trap and spend any more on a car than you intended. Instead, decide ahead of time exactly how much you are comfortable spending and do not go over that amount.
Ask for a Truth-in-Lending disclosure
A dealer might try to hide hidden costs in the fine print of a sales agreement. The KPA survey found 30% of Americans spotted hidden fees in the paperwork after agreeing to a price. To make sure this doesn't happen, you can ask for a Truth-in-Lending disclosure.
This disclosure should include details on:
- The vehicle's Annual Percentage Rate (APR), which is the total cost of credit including fees. It can be quite a bit higher than the interest rate
- Finance charges, which are the total amount of interest and other fees you will pay over the life of the loan if you pay off the debt on time. This can help you understand the total costs you're committing to.
- Amount financed, which is the amount you plan to borrow. This should equal the cost of the vehicle, plus any fees, minus your down payment.
- Total payments, which is the total amount you'll have paid by the end of your loan
Compare the information on this sheet with a car loan calculator (make sure all the figures are what you negotiated). If something is off, or if the dealer won't provide a Truth-in-Lending disclosure — consider walking away.
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Compare dealer financing with outside financing
You don't have to get financing from a dealer, and may not want to since doing so gives them the opportunity to tack on hidden costs.
Get quotes from several banks or credit unions before you go to the dealer to see what APR you can get, how much you can borrow and how much your total loan will cost you.
If the outside financing is cheaper than the offer the dealer makes for a loan, borrow from the lender you found yourself.
Leverage competing offers
Car dealers want your business. If you can show you have a better offer elsewhere, either in terms of the vehicle cost or the loan terms, they may be willing to work with you to match it.
Don't be pressured into doing anything you don't want to do. Be prepared to walk away if you're presented with a bad deal.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
