"States Sue Car Dealers for Sneaking In Extra Fees" - Wall Street Journal today (long)...
06-20-2002, 06:27 AM
#1
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"States Sue Car Dealers for Sneaking In Extra Fees" - Wall Street Journal today (long)...
<img src="http://www.cpoy.org/54/photos/1/45.jpg">
Okay, I guess there isn't THAT much news here ("What?!?!? Car dealers are trying to rip me off?!?"), but the article has some interesting tidbits:
- State regulators are making claims against some big car-dealer operators--Gunderson Chevrolet (CA), Walser (MN), Sonic (FL)--that they've been sneaking hidden fees into auto loans and charging customers for add-ons they either didn't know they were buying or had specifically said they didn't want.
- Typical scenario: Salesperson asks the buyer how big a monthly payment they can afford. If the buyer says $350, for example, the salesperson will "pack" the monthly payment with products and services until it reaches that price--never telling the customer that they have qualified for a loan with monthly payments of, say, $270.
- Some settlements w/dealers have required dealers to videotape their sales w/customers to ensure "products are presented in a way that they're supposed to be."
- Final advice: If you'd rather borrow through the dealership, it's best, experts say, never to base your negotiations on the size of the monthly payment. Instead, tell them the total you want to pay for the car and haggle over that figure. Similarly with add-ons, talk totals, not monthly installments.
Table included in the article...
Below are some of the most common add-ons by dealerships (w/questions for customers to ask):
Extended warranty: What does the additional coverage offer beyond the included new car warranty? If you miss an oil change, is the next repair covered?
Maintenance plan: How many oil changes are you paying for and what is the total cost?
Theft etch: Not considered much of a deterrent to theft. Essentially added theft insurance that many consumer experts don't think is worthwhile.
Total loss protection or GAP: Often recommended for leases, though not necessarily if buying, especially if you make a big down payment.
Chemical protections (sealants, sound-proofing, etc.): Manufacturers do much of this anyway on new cars; manufacturers often do not recommend sound-proofing.
<img src="http://popularmechanics.com/popmech/cbg/0004AUUCBGGB.jpg">
Dealer guy (in suit...well, almost): "Yessir! Absolutely!! The special paint protectant only us BMW dealers can get is applied to BOTH sides of the hood. That way, the engine itself is ALSO protected, so you can probably expect an additional 8-10 miles-per-gallon, easy. Maybe 50 extra horsepower, too."
.
Okay, I guess there isn't THAT much news here ("What?!?!? Car dealers are trying to rip me off?!?"), but the article has some interesting tidbits:
- State regulators are making claims against some big car-dealer operators--Gunderson Chevrolet (CA), Walser (MN), Sonic (FL)--that they've been sneaking hidden fees into auto loans and charging customers for add-ons they either didn't know they were buying or had specifically said they didn't want.
- Typical scenario: Salesperson asks the buyer how big a monthly payment they can afford. If the buyer says $350, for example, the salesperson will "pack" the monthly payment with products and services until it reaches that price--never telling the customer that they have qualified for a loan with monthly payments of, say, $270.
- Some settlements w/dealers have required dealers to videotape their sales w/customers to ensure "products are presented in a way that they're supposed to be."
- Final advice: If you'd rather borrow through the dealership, it's best, experts say, never to base your negotiations on the size of the monthly payment. Instead, tell them the total you want to pay for the car and haggle over that figure. Similarly with add-ons, talk totals, not monthly installments.
Table included in the article...
Below are some of the most common add-ons by dealerships (w/questions for customers to ask):
Extended warranty: What does the additional coverage offer beyond the included new car warranty? If you miss an oil change, is the next repair covered?
Maintenance plan: How many oil changes are you paying for and what is the total cost?
Theft etch: Not considered much of a deterrent to theft. Essentially added theft insurance that many consumer experts don't think is worthwhile.
Total loss protection or GAP: Often recommended for leases, though not necessarily if buying, especially if you make a big down payment.
Chemical protections (sealants, sound-proofing, etc.): Manufacturers do much of this anyway on new cars; manufacturers often do not recommend sound-proofing.
<img src="http://popularmechanics.com/popmech/cbg/0004AUUCBGGB.jpg">
Dealer guy (in suit...well, almost): "Yessir! Absolutely!! The special paint protectant only us BMW dealers can get is applied to BOTH sides of the hood. That way, the engine itself is ALSO protected, so you can probably expect an additional 8-10 miles-per-gallon, easy. Maybe 50 extra horsepower, too."
.
06-20-2002, 07:46 AM
#3
Well, payment buying is a two edged sword. You can often negotiate a price on the car,
( lease or purchase ), only to have the monthly payments be more than the buyer expected. It has everything to do with age, experience, and homework.
The greatest problems were with people moving from domestics or low level imports into VW, and young folks buying the A4. The A6 2.8 would also see some of these folks, but things would thin out considerably by the time the 2.7t, 4.2 and A8 came into the picture.
It needs to be a two pronged attack if buying. If someone looks at buying, they need to figure payments INCLUDING tax/lic and interest - not just the car itself.
In leasing, you can choose two ways to work the deal. Payment is all that matters in that case, since you won't be getting a car in the end. Some folks just want a certain cap cost, and let the payments fall where they may, while others have a certain monthly budget they can't exceed.
The greatest problems were with people moving from domestics or low level imports into VW, and young folks buying the A4. The A6 2.8 would also see some of these folks, but things would thin out considerably by the time the 2.7t, 4.2 and A8 came into the picture.
It needs to be a two pronged attack if buying. If someone looks at buying, they need to figure payments INCLUDING tax/lic and interest - not just the car itself.
In leasing, you can choose two ways to work the deal. Payment is all that matters in that case, since you won't be getting a car in the end. Some folks just want a certain cap cost, and let the payments fall where they may, while others have a certain monthly budget they can't exceed.
06-20-2002, 01:12 PM
#7
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I made a dealer lose last year :)
Learning it the hard way five years ago, the dealers' trick of correcting the math by stuffing in unnecessary and overpriced accessories, last year, I begged a new immigrant friend to take me with him to buy his car.
It was easy to make the sales guy understand that the down payment plus the monthly payments were totalling about twice the price of the car
Believing they would screw us in the sales office anyway, he agreed to sell the car at $100 over the invoice price, less than the TMV of edmunds.com!
In the sales office, we said "no" to all of the items they tried to sell. The guy started to feel uncomfortable at that point.
Then he started giving the papers one by one to my friend to sign. One of the papers were the extended warranty that we didn't want to buy He played confused and said "oh man, I will need to print these all over again"
He printed the papers again. No warranty or anything this time, but the "Car accessories" field has about $800 in there! He was so desparate to match the montly payments!
I asked him what that figure was and he said "bank fees." I asked again "did you put bank fees accross car accessories?" He said "yes"! (I think we had a case at this point.) My Turkish genes couldn't stand this anymore. I grabbed the sales guy's monthly payment paper, you know, the one that gets folded a number of times to give us better deals at each step... I put a huge X on the paper and yelled at him "stop trying to make these wrong figures, they just don't add up. Here is the price of the car, here is the down payment, here is the APR. The monthly payments on this paper just don't make sense." Behind his red face, he said "you are right sir, my mistake", corrected the papers and we got the car for $100 over invoice!
It was such a satisfaction See, it even made me write about it after a year
On the other hand, my two Audi purchases were extremely smooth and pleasant. One of the sales guys even gave me a classical music cassette for the way back (I bought my TT from three hours away
Ali
It was easy to make the sales guy understand that the down payment plus the monthly payments were totalling about twice the price of the car
Believing they would screw us in the sales office anyway, he agreed to sell the car at $100 over the invoice price, less than the TMV of edmunds.com! In the sales office, we said "no" to all of the items they tried to sell. The guy started to feel uncomfortable at that point.
Then he started giving the papers one by one to my friend to sign. One of the papers were the extended warranty that we didn't want to buy
He played confused and said "oh man, I will need to print these all over again" He printed the papers again. No warranty or anything this time, but the "Car accessories" field has about $800 in there! He was so desparate to match the montly payments!
I asked him what that figure was and he said "bank fees." I asked again "did you put bank fees accross car accessories?" He said "yes"! (I think we had a case at this point.) My Turkish genes couldn't stand this anymore. I grabbed the sales guy's monthly payment paper, you know, the one that gets folded a number of times to give us better deals at each step... I put a huge X on the paper and yelled at him "stop trying to make these wrong figures, they just don't add up. Here is the price of the car, here is the down payment, here is the APR. The monthly payments on this paper just don't make sense." Behind his red face, he said "you are right sir, my mistake", corrected the papers and we got the car for $100 over invoice!
It was such a satisfaction
See, it even made me write about it after a year On the other hand, my two Audi purchases were extremely smooth and pleasant. One of the sales guys even gave me a classical music cassette for the way back
(I bought my TT from three hours away Ali
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06-20-2002, 04:31 PM
#10
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There's definitely a reason you want to negotiate all lease terms
In general I agree with April, though there are a few valid reasons to look at all of the other figures in a lease, IMHO.
Two dealers could have the same exact lease payment on a car, but dealer #1 has a higher residual than dealer #2 (which means that dealer #1 also has a higher money facter/interest rate than dealer #2). In most cases this isn't a big deal. However if you decide to purchase the vehicle at the end of the lease, you would obviously want the car with the lower payoff (though some dealers/leasing companies will negotiate anyway). Also, if you want to get out of your lease early, which I've done a couple of times, the lower the residual the better. If you have to sell it to the dealer when trading for your new car or even just advertising it in the paper, you'll lose less money.
April's right though, most people probably don't keep the car they've leased.
I guess my point is just that if you have two similar deals, make sure you look at the monthly finance charge and residual on a lease.
Two dealers could have the same exact lease payment on a car, but dealer #1 has a higher residual than dealer #2 (which means that dealer #1 also has a higher money facter/interest rate than dealer #2). In most cases this isn't a big deal. However if you decide to purchase the vehicle at the end of the lease, you would obviously want the car with the lower payoff (though some dealers/leasing companies will negotiate anyway). Also, if you want to get out of your lease early, which I've done a couple of times, the lower the residual the better. If you have to sell it to the dealer when trading for your new car or even just advertising it in the paper, you'll lose less money.
April's right though, most people probably don't keep the car they've leased.
I guess my point is just that if you have two similar deals, make sure you look at the monthly finance charge and residual on a lease.