5 Biggest Reasons You Can't Trust The Dealership

Added: 2026-05-23

[00:00:00]Can you trust a car dealership? No, no, this is not meant to be a loaded question. I generally want to know, can you trust a car dealership? Because this is a question that I ask all the time, and I'm going to give you an answer in just a minute. But there is this battle between the dealership and the consumer.

[00:00:15]And dealerships believe that you should trust them. I get into so many arguments talking about things with rate, financing, and how things should be run.

[00:00:23]And dealerships believe that you should generally trust them. So, the question I'm asking you right now, should you trust a car dealership? The answer is actually simple.

[00:00:30]>> It's no.

[00:00:30]>> And it's not because a dealership is a lying, stealing, conving, evil person that is just trying to get you. It's actually a lot simpler than that. In this video, what I want to do is I want to talk about five reasons why you can't trust a car dealership. And again, none of them are because they're evil. This answer is actually simpler than what you think. Now, if you guys don't know, my name's Tommy. I negotiate car deals for a living. I negotiate over 300 car deals on a monthly basis. My goal is to save you time, energy, and anxiety. One of the reasons why I think I have a good topic point on this is I talk to a lot of dealerships and I talk to a lot of consumers. And I want to give my general process on this and talk about not you shouldn't trust a dealership because they're evil because I think that's so surface level. I want to give reasons why we can't trust a dealership so we can hopefully fix the problem. So the people we can trust right now CPA had an 80% yes. I'm going to go through these here. Can you trust a dealership? 89% of people said no. Can you trust a realtor?

[00:01:15]61% of people said no. Then we get to yeses. Can you trust your lawyer? 65% of people said yes. Can you trust your doctor? 59% yes. And can you trust your waiter was the closest? 5248. Do you trust your financial adviser? So, they're 62% yes. That's crazy to me.

[00:01:32]That was a no. I don't didn't trust my financial adviser. That's interesting.

[00:01:35]Do you trust your mechanic? Yes or no?

[00:01:37]53% no. 47% yes. That one's interesting.

[00:01:40]If some if a car salesman tells you they're a non-commission salesperson, do you trust them? Yes or no. 76% still said no, even if you didn't know they were commission. Okay. Do you trust AI?

[00:01:53]77% of people don't trust AI. What do you guys think AI is lying to you? Do you trust delivered? Like, do you trust me? I'm not going to look. I'm not going to look, so I can't hold names, but do you trust me? Yes or no? We're not looking. La.

[00:02:07]Jokes on you. Moderators, ban everybody that said no. Ban, ban, ban. I'm just kidding. That was a joke. 86% yes. Okay.

[00:02:14]I think one of the major reasons, I'm going to go in five specific reasons, but I think the overarching reason why people can't trust car dealerships in my opinion is that for a dealership to be successful, they have to rely on a consumer being less educated. And I think when that is the premise of your business model, you're doomed to fail.

[00:02:32]And I know there's a lot of car salesmen like this isn't true. I love educated.

[00:02:35]It's but it but it is true. If two people walk in with the same educa or with two different education levels. So say somebody's watched Tommy's content up the wazoo. They've watched it nonstop everything gone rock and roll. They know everything to ask for compared to somebody that doesn't know anything and just says yes to everybody. Who will spend more money? Now somebody might say, well the person over here is happier because they spent more money.

[00:02:57]But that isn't the question. The question is did the experience change?

[00:03:01]Did you offer this person that spent thousands of dollars more a different experience? Did they get something special or unique or something that's worthwhile to make it so they spend thousands of dollar more for trusting the dealership? Answer is no. And this isn't meant to be an attack on dealerships. This is the business model dealerships have created. If I go to a dealership and I just go in and say yes to everything, I will overspend by thousands. But if I go in as an educated consumer and negotiate through the deal, which I'm allowed to and dealerships will say yes, I will save thousands. So that is one of the big biggest reasons the dealership model relies on people not being educated in order to profit.

[00:03:39]That's the overarching out. I'm going to go into five specific examples. Option number one, a dealership's pay structure at some level or at all levels requires rewards extraction not service. If I'm a car salesman that is a commission salesperson, I get paid to convince you to spend more on the same product. Now, I want to talk about that because that is a very unique scenario in the car industry. Now, if I was like, "Hey, I'm going to sell you a car, but if I can convince you to buy the book with the car, this napkin, this fake money, and this drink, and I can do more, now you're adding products on, and somebody can get paid for selling the additional products." But what you are saying is, "Hey, this is a towel or a car, and if I get you to spend $10, I make more money.

[00:04:23]If I get you to spend $5, I make less money." The general rule of thumb is that if I extract more money out of you for the same product, I make more money, which does make it so trust is hard to do. And that isn't just the salesperson.

[00:04:34]That works its way up. The sales manager is almost always paid on a dealership level based on the profitability of the dealership. How profitable are they? Or how much money do they make per deal?

[00:04:44]The finance manager, which I was in finance, and we can have a whole conversation about what I did or didn't.

[00:04:49]But what I will say is this. First off, our dealership didn't mark up rate. But even if we did mark up right, even if I did everything bad, that doesn't mean that it gets a free pass. Right? But if I go rob a bank and I go to jail, do my time, and come out, I'm allowed to say you shouldn't rob a bank. It's not right. Right? This idea that because I was in finance, I can't talk about the bad things that happen in finance.

[00:05:09]Finance managers are paid. Talk about this for a moment. To convince you to spend more on a rate. If you for the same bank, the same product, the same credits tier, if I can convince you to do an 8% rate versus a 6% rate, I get commission. that's not working for the best of the consumer. If I convince you to spend more on a warranty, more on a product, more on anything, I make more money. The general manager is the same way. And and even if you're not a commission salesperson, normally there's somebody in the path that is getting a commission or a sale on the amount of money you spend. Again, I don't I wouldn't mind and I don't think most consumers would mind is if hey, I'm selling you the book and if you add these 10 items, they're all extra that you can buy, but the same the book costs 10 bucks no matter what. Everybody can buy the book for 10 bucks. But I am going to try to sell you an Alani with the book because I can make extra money cuz I make a little profit on both. But if I'm trying to sell the book to 10 bucks to you and the next person walks through and I'm trying to sell it for 20 hard to trust you, right? Like why why why in the world did that price change on the same day the same item? With all of this being said, that means your priorities don't align. Dealerships want to convince you to spend the most amount of money when you're trying to save the most amount of money. It's hard to trust somebody that you don't have that same alignment with. Number two, the number two reason is information is asymmetric by design. When you walk into a dealership, people say all the time, you shouldn't tell the dealership all the information. The reason being is information. I always say negotiation is a game of chess. One side knows how to play. You give somebody all of your cards. You never have all of their cards back. You walk into a dealership, you know what your budget is, right? You know what payment you want, you know what your tradein is, and you understand what your credit score is roughly. The dealer is going to extract all of that information from you, but then also know what rate you were actually approved at.

[00:06:47]They're going to know what kind of incentives, hold back, stairstep plan they have to and what money they can make on the product. They're going to understand the cost of every single add-on that you're going to buy. So, they know what can they can negotiate and where. They understand the exact profit margin on every single product in the back office, finance, warranty, and they can compare the deals that they've done over the last 100 deals for the same car on the same month from the same type of consumer or dealerships out there or even connections with other people in their dealership group. the information in invoice and manu MSRP.

[00:07:16]All of the information is asymmetric.

[00:07:18]You don't have all of that information.

[00:07:19]And no, you can't Google this. Chat GPT cannot pull up what the invoice is on a car. I can estimate it. But dealerships have all of the information to make an educated decision decision. Consumers don't. When that happens, when there's this battle of information, it is hard to trust the person that holds all the keys. Right? If I'm going through and I'm a commission salesperson, I said the invoice is $58,000 and I have it because it's in my hands. I would not lie to you. I'm an honest Steve. Even if you're being honest, it's hard to trust you because you're the only one that has the information. I can't go verify that. Is that true? Is that not true? Is that a lie? I don't know. If I say, "Hey, the cost the cost of the buy rate on your financing is 5.8%." Can't verify that. I don't know. Now, I could call the bank myself, right? And have that conversation, right? But that is a whole different part. Third reason, at dealerships, the price isn't just the price. It is often times a moving target. If you go through and you have a employer plan, you pay this price. If you move this plan, it's this price.

[00:08:16]What the price you advertised and came in didn't include the add-ons that are mandatory. Oh, we do also have a $1,200 dock fee. So, sorry, we forgot to mention that one. That does change the price, but another dealership down the road had an $85 dock fee. There's so many things where the price is a very much a moving target. You can't go through and genuinely just say, "Hey, the price of the car is $40,000. Take it or leave it." Right? Everybody pays $40,000. That's the price. If you don't want the product, go find a different product. Instead, it is a moving target.

[00:08:41]And on top of that, that moving part product, we could be the same situation, the same person the same day, and pay two different prices. I can walk into the dealership, pay $40,000 for that Rav 4 that you just paid $44,000 for. Same day, same car, same trim, same options.

[00:08:53]We can pay two completely different prices. Just depends cuz the prices are moving. Let's just say it's the last day of the month and the dealership needs their 100th car in order to make $250,000 in stairstep programs. I could pay 36 34 $32,000 for that car. Well, somebody else just paid 44. And then on top of this, we have my tradein. What is my tradein actually worth? But that that that number is a moving target. The number moves at all times. And if you don't believe me, if you're like, "Hey, Tommy, that's not true." Well, there's a reason why the FTC just sent a letter to 97 dealership groups, not dealers. 97 dealership groups, that's potentially thousands of heads that went through and said, "Hey, you can't do this anymore.

[00:09:28]You you are suspected of doing this behavior of charging fees and not honoring the price you have on your website. Fix that." Number four is dealerships have multiple revenue streams, which they have multiple ways to win against you for a consumer. A lot of people like to compare a lot of different business models, right? They say when you go to a Best Buy, you're not mad about what they're making on the TV. Yeah, correct. Cuz if I am buying a TV, I see the cost of the TV is $100. I give you $100. The revenue you made on this transaction was on the TV. That's it. It's done. If you hire me to negotiate a car deal, it's more than 50 bucks. It's a,000 bucks. You pay me a,000 bucks. I do a deal for you. That's the end of the revenue stream. It's very easy to see who to trust and who not because you know where my revenue stream ends. you know where Best Buy's revenue stream ends. If I'm making $100 here from you and I'm making $500 from this secret source back here to do this, you now don't know where my things align.

[00:10:24]Dealerships make money on multiple different sources. The front end of a deal, they can make money on rate. They can make money on finance. They can do hold back from the manufacturer. They have stairstep and volume bonuses. They have trade-in spread. They make money on the amount of money that you're trading in if you take it under value. Add-ons, markup, and dock fees are all just a few reasons on how they make money and are able to move that money around and spread it. you don't know where all the money is coming from and you don't understand where the profit is coming from. And when you're trying to profit on 19 different things, guess what? It does develop somebody harder to trust.

[00:10:52]And number five, in my opinion, this is the most important one hands down, and this is caused by dealerships themselves. The industry has spent decades and millions of dollars fighting the fix. In what, 2013, they specifically carve themselves out of the Consumer Lending Act, which made it so dealerships could or nobody could mark up rate. It was Dodd-Frank. They couldn't bark up rate anymore.

[00:11:14]Dealerships lobbied so they weren't included in that mess. 3 years ago, the cars act came through, which is really simple. The price online is the price you pay. This is too hard for business.

[00:11:24]We couldn't survive that. What do you What do you mean the price of the car, the price you pay? We couldn't do that.

[00:11:29]So, they fought it and they won. Yet, now you have the 97 dealership groups that got regulated again. You still see many dealerships not doing this and they're fighting this again. For decades, dealers have been fighting the fix. be more transparent and that's all consumers want, right? It it is crazy to me. It is a crazy world to be in where I don't know as a consumer and most consumers don't know that when I go to buy a car and I give you and I say, "Hey, I'm ready to buy the car." And I have to go do the paperwork on the car.

[00:11:56]when I'm going to end the checkout line to sign the paperwork and do this. I'm actually in a second secret negotiation with the secret boss that is trying to sell me a whole bunch of different things that the last person just convinced me a I had to use. But secondly, it is on my side. They're the best in the business. They've been doing this for 10 years. They know all the great banks and all the great rates.

[00:12:15]That's a conflict of interest, right?

[00:12:17]The decades of protect that department that is in this world that is only trying to make it'd be different if every dealership went the same way with finance office and said, "You know what?

[00:12:25]with the finance office. Hey, we got 50 years of backup. They're going to test multiple different banks. They're going to have banks that really support all the backend product. Banks that are going to give you a good rate. You you you do pay a premium for the rate here, but I'm telling you, it's going to be faster, more convenient, and rock and roll. You're going to like it. Like, it's really hard for me to justify. It's really hard for me to justify any rate, but if you find a way to sell it, by all means, go do it. But if you believe you're offering a service to somebody, just be honest and negotiate or tell them you're charging a service. Hey, for you to use my finance office, it cost you $100 or one point of markup. If you want to go get your own financing, you certainly can. The reason why dealerships won't do this is that it would nobody would pay it, right? If if I knew that it was going to cost me one point of markup or just say 500 bucks for me to do my own financing versus going to the bank, I just go to the bank, right? Right. I just go to the bank. But this is the problem with the dealership level. Dealerships don't want to be transparent. They don't. And the reason being is it's more profitable. If dealerships wanted to fix this whole problem, they could fix all these problems tomorrow. They could start they could start, for example, letting people know with a simple disclosure that I'm marking up your rate in finance. Again, when somebody goes in there for the first time, I'm telling you, 95% of people do not understand that that is a negotiation and a negotiation. I lived it. I was in the industry. I understand the people that are saying yes. When people we say a certain percentage of people just say yes, they did not realize that that was a negotiation.

[00:13:41]They thought they were at the checkout line for the product they bought. So, what does this mean for you? Does this mean all car dealerships and sales people are slimy, evil, horrible?

[00:13:48]>> No, not at all. Your interests don't align, and that's okay. That's how the dealership has built the model. Now, they could they could reinvent this model. I really think they should and they could. The reason that inspired this video was on Facebook, I said that I believe rate markup should be illegal.

[00:14:01]I probably have close to a thousand comments on all platforms at this point for dealers. 90% of them are dealers saying that I believe dealers should work for free. By no means do I think dealers should work for free. I just think you should be transparent about the money you're making. It's really that simple. I believe that if you are going to charge for a service and you believe it's a service, people will happily pay. That is as simple as that.

[00:14:21]I want to go through this full logic, right? Because there's your boy saying you don't want to have this, right?

[00:14:25]Dealerships make more money if you don't know what's going on in the finance office. Statistically, that's true. If you just say yes to the rate and they allow it full markup, you're going to make more money. The answer to that is consumers can educate themselves, right?

[00:14:36]So then I go and I educate consumers and then it goes dealership. You don't want dealerships to make a money and make a profit. You want people out of your job.

[00:14:44]It's like you can't have it both ways, right? If your business model relies on people being uneducated to markup rate to make money, you have to understand a business model will then come to compete with that. Welcome to America. Well, guess what? My business model is the anti-U. I'm going to say, "Hey, this guy is trying to screw you over. I will give you all the tips you need for free. Here you go. Here's everything you need to know so you don't get screwed over by him." Like, I charge $1,000. I'm very transparent about I I say I save you time, energy, anxiety. This isn't a money-saving service. If you don't see value, no big deal. I don't chase people down for sales. I don't do this. I do this. We have a good business. It's rocking and rolling. I'm confused on why this is a controversial take. You can go get your own financing if you want, but most of our clients agree that it is easier just to do everything in one spot. And then you go through it, right?

[00:15:28]If you are a good saleserson, like I really want you to say like right now your sales model is I hope people don't know because if they don't know, they'll buy a product. And instead, I'm like, hey, you know what? Why don't you just sell them? Use your sales ability. Do what I have to do every single day, which is, hey, you don't need me to do this. You can do this completely on your own, but you should still hire me because I'm awesome at what I do and I'm going to save you time, energy, and anxiety. The only dealers that you can make an argument are are Carvana and CarMax that aren't paid on any commissions, that aren't paid on gross profit, that aren't paid on anything.

[00:15:57]That is a onepric model. Most dealerships don't have that model. And if you don't believe me, look at the hundreds of clients a month that pay me to not deal with you. And that number is going up, not down. People pay me money to not talk to you. That should be I'm going to look at myself in the mirror and say, "Oh god, we've really fudged up here, haven't we?" So, does this mean you can't trust your car salesman? No, you shouldn't trust that. But that's not because they're evil, conniving, horrible people. I say negotiation is a game of chess, and I mean it. One side currently knows how to play. You shouldn't trust the person that you're playing a game of chesses that they're going to guide you to win the game. They want to win the game. So, educate yourself and understand that every move that a dealership does, everything they are doing, they are normally doing with a at the very best situation, a mixed interest. Your interest and their interest. The only person that got your back is you. So, educate yourself. Do that. And if dealerships want to change this entire business model, they certainly can. I can make an entire video on what I believe would be ways for the dealership model to fix themselves. That's for another day, another hour, another moment. Thank you guys so much for watching. Let me know if you guys want to see more.