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 Knowledge is Key in Car Purchases
When it comes to shopping for cars, the less you know the more you will end up paying. A good place to start before setting foot on any dealership lot is to set a budget. Salespeople are less likely to talk you into spending more if you are certain of the amount you can afford. If you know what model of car you want, do some research into the price of the vehicle ahead of time. If you are looking at a new car, invoice prices can be found in consumer guides or on the Internet. If you are looking to buy a used car, market prices can be found in the Kelley Blue Book at www.kbb.org. You should also try to look up reliability reports for your particular model. In addition to knowledge, patience will also help you save money in the long run. Take time to shop around. Learn what competing dealerships are selling vehicles for and use that knowledge to your advantage. There is no cost saving in buying a car as quickly as possible.
What to Look Out for at the Dealership
When looking at the sticker cost of the vehicle, you need to differentiate MSRP (manufacturer's suggested retail price) and the Dealer Sticker Price. The MSRP is required by federal law to be placed on the vehicle and includes standard equipment, warranties, and manufacturer-installed options. Under federal law, only the purchaser can remove this label, so be wary if the car does not display the MSRP. Alongside the MSRP you will usually see the Dealer Sticker price. The Dealer Sticker will include dealer-installed options, additional dealer markup or profit, dealership prep work, undercoating, fabric protection, paint sealant, etc. Anything displayed over the MSRP represents dealer profit and should be considered when you are negotiating a sale.
Most of the hidden costs to the consumer occur when it is time to negotiate price. In addition to the price of the vehicle, pay attention to any additional costs or fees added to the total cost of the vehicle. These fees or costs may come in the form of extras such as insurance packages, security or etching services, exterior preparation, warranties, or even options that are already standard. Study these fees carefully, otherwise you may be paying extra. If a fee looks suspicious or you aren't sure of what the fee entails, ask about it. If your salesperson won't properly explain it to you, this may be a good time to walk away.
Extra caution should be taken with the documents you actually sign. Under no circumstances should you ever sign a document in which essential terms such as loan, payment, or interest rate are left blank. This will allow unscrupulous dealers to fill in the blanks and leave you with a much higher interest rate. Also, avoid signing a Mandatory Arbitration Agreement. If you do sign it, you will be prevented from litigating any issues through the court. Plus, your ability to receive any compensation in the event of fraud will be severely limited.
After Leaving the Dealership
Driving a newly purchased car off of a dealership lot is usually a very gratifying experience. Unfortunately, for many car buyers, this can be the beginning of a different sort of problem. Auto-purchase agreements all hinge on obtaining financing. If the dealership does not obtain financing at the agreed upon terms, the contract you signed at the dealership is void. This allows some room for possible deception. One common sales trick is to show the buyer of a car a lower than expected interest rate as an inducement to purchase the vehicle. The dealer knows that financing will not be obtained, but lets the buyer sign and drive off anyway. The buyer leaves thinking they have a great deal and new car.
The headaches usually start a few days later when the call comes from the dealer. Usually, there is a request to return to the dealership to sign additional paperwork. When the buyer gets to the dealership they will explain that a new contract or additional paperwork have to be signed because financing has not been obtained. This usually happens after the buyer has already spent significant time with the car. What has actually taken place is a long-term test drive in which time the buyer has ample time to "fall in love" with the vehicle. At this point, the buyer is more likely to agree to a higher interest rate or any other non-favorable terms in order to keep the car.
In this situation a consumer needs to be aware that if the original terms of the contract cannot be met, there is no obligation to sign a new contract with new terms. If the terms of the original contract cannot be met, the contract is considered to be rescinded. Both parties are relieved of their obligations. Unless a new contract is signed, the dealer is entitled to have their car returned, while the buyer is entitled to the return of any down payment or trade-in.
To avoid this situation try to obtain pre-approved financing with your credit union or bank. At the very least, if an interest rate promised at the dealership turns out "too good to be true," you have a pre-approved loan to fall back upon.
For additional consumer tips on buying a vehicle, examples of scams, and legal information, go to www.autodealerscam.org
-David Cohn
GROUP LAW SERVICE
Over 35 years ago, Chain-Younger pioneered Group Law Service to provide quality legal help for working people. Members of Group Law Service, and their immediate family, are entitled to free initial consultations, free notarized signatures (limit 3 per day) and reduced legal fees on most cases. We represent approximately 180,000 group members. If you would like to become a member of Group Law Service, click here.
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