Dealer Packing and Add-on Fees

Take a close look at the fees in the deal. In a “packing” case the customer is quoted an inflated monthly payment. If the consumer accepts this amount, the dealership often adds accessories (alarms, service contracts, GAP insurance, rust protection, paint/fabric protection, VIN etching, etc.) to the purchase contract to reach the inflated quoted price. You might not even realize that the accessories are optional. You also may not know that through the purchase contract you are actually paying extra for the accessories and services, which are often represented as “included” with the vehicle. Be careful about paying for these things and inquire about them if you are being charged for them The truth is that all modern cars already have rust protection from the factory. VIN etching can be done yourself with a kit, but it is hardly the theft deterrent it’s claimed to be. Fabric protection can also be done yourself with a spray can, and paint sealant is just a liquid wax you can buy at an auto parts store for $10. Don’t be convinced that you don’t need any of it.  Also be aware of extra warranties or service contracts, if you vehicle comes with a warranty already compare that warranty to the add-on warranty the dealer is selling as for the service contract you should really investigate as to what your are really getting. We have found most dealers in Florida impose a “Dealer Fee” or “Pre-Delivery fee”, which is intended to either increase their profit or offset costs they have incurred in preparing the vehicle and associated documents for the customer. The Florida statutes recognize this industry practice and require the following statement be included on all documents that include a line item for the fee: “This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” If the disclosure is not there and you are charged for this fee you should call the office for a free consultation. Be cautioned on the add-on Dealer services and extras.

Bait and Switch.

Some dealers will advertise a vehicle with a great price, but when you show-up and the dealership ready to buy…they tell you unfortunately that advertised car sold …but  not to worry they have a another “great deal” on a different vehicle  that often  is much more expensive.

 

Negative Equity

Dealer tells you that they can “pay off your trade-in and it does not matter how much you owe”. Just know that THERE IS NO FREE LUNCH. If you are upside-down on your trade-in (meaning you owe more on the loan than the vehicle is worth) the dealer will take the vehicle in trade, payoff the difference (hopefully), and then roll the negative equity into your new vehicle loan.  You are still going to pay off that old loan through the new loan and with the new purchase you probably now have even more negative equity in your new vehicle.  

 

The Monthly Fee Distraction.

Dealer tells you if I could get your payments to be $325.00 per month do we have a deal?  Be careful as this is a common trap.  Set the price of the Vehicle first!  Car buyers have a very bad habit of focusing on low down payments or monthly payments. Dealers are trained to extract the most profit out of every transaction.  By getting you to “fall in love” with the vehicle the dealer will also try to have you focus on the “low monthly payments.” Dealers do this to distract you while they inflate other variables in the sale and financing transaction like the interest rate and finance charges, dealer fees and charges, dealer add-ons, extra warranties, and even increasing the price of the vehicle.  This tactic will increase the dealer’s profit and cost you thousands over the life of the vehicle loan. Think of another large purchase like buying a home.   You set and negotiate the price first before locking in payments.   You have to know your budget and what you can comfortably afford to pay, but don’t let the dealer use that against you. Know that it is very easy for the dealer to make the monthly payments to practically be whatever you want

 

The 4-Square Dealer shell game.

A confused buyer is a profitable buyer. Some dealers pull out what’s called a four-square chart that operates like a shell game played out on a piece of paper, involving a flurry of numbers associated with the price of the car, the down payment, the monthly payment, and the interest rate which is designed to be very confusing to the vehicle buyer to understand what is going on. And what is going on is more dollars are coming out of your pocket although it may look like the dealer is knocking down either the monthly payments, the vehicle selling price, and/or increasing your trade-in value. By the time this dealer’s rip-off tactic concludes, you’re so confused by the tricky math that you’re not sure what just happened. A former car salesman unveils on The Consumerist how that shell game is played.

 

Forgery

Dealerships sometimes forge the signature of customers on subsequent contracts that change the terms of the original signed contract (especially if the customer refuses to sign the new contract). Other commonly forged documents include: credit applications (with fraudulent representations about income, etc.), as well as buyer’s guides and disclosure forms (to prevent buyers from reading their buyers’ rights and/or information that may cause them to reconsider their purchase decisions).

 

Certified Used Vehicles

Many manufacturers and dealerships advertise used vehicles as “certified pre-owned,” supposedly guaranteeing to the customer that the vehicle is in good working order and free from major structural damage, including previous accidents. Often times, however, dealerships misrepresent used vehicles that have suffered previous accidents, structural damage (or other conditions that would preclude certification under the dealership’s advertised standards) as “certified” vehicles — misleading customers into paying a premium price for a damaged product.

 

Dealer tells you “You have bad credit”

If you don’t know your credit score the dealer can use that against you.  Know your credit score before you negotiate financing.  Don’t let the dealer tell you that you have bad credit and cannot either qualify for a loan or a lower rate.  You can get a free credit report from the three main credit reporting agencies – TransUnion, Experian, and Equifax.  What typically happens, the dealer’s salesman may quote you a price and payment that is acceptable, go to get the deal approved by the manager, and return claiming that due to a low credit score they need more money down, or to finance you at a higher interest rate, in an effort to add profit to the deal. Better thing to do is privately arrange your own financing with a person or place other than the dealer.

 

Low Ball offer on your Trade-in

When trading in your vehicle the dealer will quote you a price that they are willing to credit you for the vehicle’s value.  Everyone knows the dealers retail vehicles and buy wholesale so it is often not a surprise that dealers will offer you less money for your trade in than you potentially receive in a private sale.  However, don’t get taken advantage of.  Know the value of your trade.  Dealers often will quote you a very low value for your trade at first to see how knowledgeable you are about your trade-ins value and to see if you will accept such a low number.  If you don’t accept the dealer’s first offer on you trade in, the dealer is hoping their offer will cause you to question your trade-in’s value, so that when they increase their offer on the trade-in, it will seem like a victory to you, but since they started out so low, you still end up on the short end.

 

Confusing Window Stickers

In 1958 congress passed the Automobile Information Disclosure Act which regulated sticker prices on new vehicles. Prior to the enactment of this law, there was often a large discrepancy between the showroom price and the actual price of a new vehicle. The sticker prices were not telling the full story. Most customer-quoted prices were for “stripped-down” models and did not include additions for preparation charges, freight charges, federal, state, and local taxes or optional factory-installed equipment requested by the purchaser. These hidden charges were used by some dealers to increase the selling price while giving the new vehicle buyer an inflated idea of their trade-in allowance. The Law congress passed was designed to prevent the abuse of the new vehicle list prices, but would not prevent dealers and buyers from bargaining over vehicle prices.  The law mandates that window stickers on the vehicle must include:

• The manufacturer’s suggested retail price (MSRP)
• Engine and transmission specifications
• Standard equipment and warranty details
• Optional equipment and pricing
• City and highway fuel economy ratings, as determined by the Environmental Protection Agency (EPA)
• As of September 2007, crash test ratings as determined by the National Highway Traffic Safety Administration

However as you might expect dealers have figured out a way to evade this law. An alarmingly large number of Florida dealers display a “dealer sticker” next to the official required window sticker. It will look official and it typically has the same coloring and fonts, type sized and layout, but the only purpose is to fool buyers into paying more for the vehicle. The dealer sticker will include options that were installed after the car arrived from the manufacturer. They’re usually worthless and some aren’t even options at all, but simply made-up charges. For example, you might see things like “Special Value Package” which includes fabric protection, or charges labeled ADP or ADM. Those stand for “Additional Dealer Profit” and “Additional Dealer Markup”. They are completely worthless and pure profit for the dealer! This practice can adversely affect a good buying decision in a number of ways. Some buyers focus mainly on how big a trade-in allowance they can get for their old car. If one dealer has the same car marked up $2,500 more than another dealer, he can offer you $2,500 more for your trade and still make the same profit as the other dealer. Some car buyers focus on how big a discount they get from “sticker” and it’s easy to give a higher discount if you have artificially inflated the sticker price the thousands of dollars from the start.

 

Title Washing

Title washing refers to the process of registering and re-registering a used vehicle with a questionable history in multiple states to rid the car’s title of its branded, rebuilt, or salvage status.  Florida requires brands be placed on the vehicle’s certificate of title if the vehicle was totaled in a car crash, flood, fire or other insurance claim and was rebuilt with salvage or junk parts. Florid also requires brands of the vehicle’s certificate of title if the vehicle has been licensed, registered, or used as a taxicab, police vehicle, or short-term-lease vehicle, or a vehicle that has been repurchased as a lemon law buy back.   The purpose of the brands on the titles is to give the prospective vehicle buyer notice of issues concerning the used vehicle’s prior history.  It also puts the buyer on notice to have the vehicles’ safety features checked out.  These brands are important to consumers and they affect the branded vehicle’s value (you wouldn’t pay the same price for a vehicle that has been rebuilt then one without any previous accidents).  Thus, some dealers try to “hide the ball” and “wash” the vehicle’s titles. Bad dealers are pretty well aware that some states` laws are more lax as what constitutes a salvage title or don`t prohibit vehicles to be marketed from one state to another without vehicle`s past history being considered. They take the cars to a different state to have it registered without any branding, then bring back to Florida and sell to unsuspecting consumers. This is known as title washing also known as ”white washing” titles.   The result of title washing is that buyers pay far more for a totaled or salvaged vehicle supposing that they`re are purchasing a used car in good shape. Often car owners know about car`s actual condition when they have completed the deal, taken the car home and started to experience different problems stemming from hidden defects. Moreover salvaged vehicles having serious damage (involving vehicle`s brakes, wiring, engine, etc.) can cause serious car crashes resulting in injuries and deaths.  See Non-Disclosed Damage / Rebuilt Vehicles page.