Avoiding dealer discrimination: be a smart consumer - don't get taken for a ride

Black Enterprise, Nov, 1995 by Jay Koblenz

A 1991 study by the American Bar Foundation found that African Americans, particularly women, paid significantly higher prices for new cars than did whites. Now, four years later, a follow-up study has yielded similar results: Blacks still pay more for their cars than whites. The twist, however, is that black men paid, on average, $1,100 more than white men, while black women paid $410 more.

To combat price discrimination, be a smart consumer. Take advantage of pricing services or purchase publications such as Consumer Review or Consumers Digest, which list dealer invoice and retail pricing for new cars and trucks.

After buying pricing information, Ian Ayres, author of both the 1991 and 1995 studies, suggests you "wave it around at the dealership" to let them know you won't settle for a too-high price. "Reveal to the dealer that you are extremely knowledgeable," advises Ayres, a professor at Yale Law School in New Haven, Conn.

Here are a few other consumer buying tips to heed before you buy that new set of wheels:

* Negotiate up from the dealer's cost, not down from the list price. Also note that beyond the manufacturer's sticker, some dealers add their own Sticker, which has additional markups. Always refuse to pay these extra markups, which represent amazing dealer profits.

* Shop around. Visit multiple dealerships and compare prices. Let each dealer know that you're a firm buyer, but you're shopping. You'll receive more competitive bids.

* Go to a "no-haggle" dealership. They have set prices and no negotiating. Everyone gets the same price--black, white, male or female.

* Beware of marked-up prices on financing. Try your own bank or credit union to learn the going rate before you shop; this way you'll know if you're getting a good deal.

* Beware of trade-in prices. You'll do better selling your car on your own, if you don't mind the hassle. Otherwise, don't bring your old car into the negotiations until after you've finished negotiating the price of the new car.

* Shop from home. Says Ayres: "There is something empowering about doing this on the phone rather than being browbeaten in person." Once you've decided on the exact model you want, you can call dealers and tell them what you're willing to pay. If a dealer agrees to a price, explain that you'll write a check out for the final amount and not bring any other funds, checks or credit cards with you when you go to pick up the car. If you've got cash or financing in hand, this can be very useful. If the deal on the phone sounds real, get the salesperson's permission first and record the conversation.