Last Chapter 7- What to do if you get ripped off by a new car dealer and misleading Ads In this Chapter:
This is it folks! At the end of this page you graduate! Let's examine some dealer ads that I've scanned in, plus one I created for my fictitious dealership to
illustrate how dealers can mislead you with newspaper ads. I'll also give you advice and warnings about your Customer Satisfaction Survey, and what to do if you get
ripped off by a dealer. Then summary and closing remarks and you're out of here!
Jeff's Car Buying Physics Rule #9: A satisfied customer will tell 3 of their friends, but an unsatisfied customer will tell 10 of their friends
Customer Satisfaction Surveys
Some dealers may pressure you to turn in the manufacturer's Customer Satisfaction Survey to them. Don't give it to them, mail it directly to the company. A few
Honda buyers emailed me to say dealers told them to lie on the CSS, right after scamming them! Many dealers offer you a free tank of gas to bring the survey to them
instead of mailing it in. Some dealers seem to care more about how you'll fill out the survey than actually satisfying you as this reader wrote to me:
"The dealer told me to lie on the customer satisfaction survey I'd get from Honda. "If you have any problems, just mark
100% on the CSS and call me and we'll work it out." I told him I was going to be honest, and he said "come on, all you'll be doing is ruining the commission for the
salesman, and hurting yourself". It's like they were real scared. Also, they offered me a free tank of gas if I return the CSS to them personally. It's setup to be
mailed right back to Honda. Why would they want to get their hands on it first?"
What to do when they bribe you for your Customer Satisfaction Survey
Make a photocopy of your completed survey and return the original to the dealership to get your free tank of gas. Send the photocopy to the manufacturer with a note
telling them the dealer bribed you to turn in the survey to them: "Since I was offered a free tank of gas from Crazy Jeff's Automall
NOT to send you my survey, I hope this photocopy will do." If you were irritated by a particular salesperson, as soon as they've paid for your
gas, innocently tell them what you did. It helps take the bite out of the irritation.
Dealerships get bonuses if their CS index is within a certain range, so never lie on a CSS. If you liked the dealer, indicate it and if there was anything you
disliked from attitude to service to scams, write it in. The car makers want to know. If no one lets them know there's a problem, they can't fix it. If they required
you to purchase extended warranties or credit life insurance as a condition for loan approval (which is illegal), indicate that on the survey and tell them you are
calling the Consumer Affairs Division to complain.
If You Got A Great Deal, Show Your Appreciation
If you got a great deal on your car after reading this article, you know the dealer gave up some profit when they did not have to. Thank them and reward them for it by
sending your friends to them when they go car shopping. Any dealer who negotiates down to the 5% profit terms of this article is thinking win-win and deserves our
repeat business. For any salespeople who made it this far in the article, keep in mind that your industry is constantly fighting an uphill battle in the customer
satisfaction arena.
If you were smart enough to get a good buy using sites like Cars.com,
Edmunds.com,
CarWoo,
MyRide.com
and CarsDirect, then you'll most likely be filling
out a favorable customer satisfaction survey for the dealer.
What to do if you get ripped off by a dealer
This does happen more than you think. I don't mean sneaky cash flow games, I'm talking about actual crimes by a salesman.
Examples Of Illegal Activities At A Dealer:
Forcing you to buy Credit Life Insurance or you won't get the loan.
Forcing you to buy the Extended Warranty, or anything else or you won't get the loan.
Running a credit check without your written permission while on a test drive.
Giving you $0 for your trade-in by playing with the numbers.
Stating a used car is new or lying about previous accidents.
Rolling back the odometer.
Failure to disclose Cap Cost, Trade-in, Deposits, and all fees on a lease. (Reg M Laws)
Telling you that you are buying a car when they are signing you up to a lease.
Writing a VIN# on the contract but selling you another. Same with Model Numbers.
Reporting your car stolen after you refuse to pay higher payments when they pull the "Spot Delivery" scam on you weeks after your purchase.
Anything they put in writing that they do not honor.
If you think you have been wronged, the easiest method to resolve it is to start with the dealer. Maybe they made a
mistake, and they'll correct it. If not, file a complaint with the Consumer Affairs Division for your state.
Where To Go For Help
Your state Attorney General web site, file a complaint online.
TV news consumer reporters are effective at getting situations resolved. No car dealer wants to be the subject of a 6:00 news broadcast
Complain to the Better Business Bureau, who can try to resolve issues and track and publish
complaints so future customers can be forewarned
If it's really complicated, you need an attorney. Do not ask me for legal advice
Before you file any complaints, make sure you can prove a crime took place.
Most states do not have a 3 day "Buyers Remorse" rule
Many people shop, thinking they can use it as a door stop. You should be certain you are ready for a deal before you sign, not 3 days after you sign. And
lastly, you could always consult an attorney. Don't forget, there is also a lemon law, which varies from state to state that protects you from being stuck with a car
that won't work properly. Your state attorney general web site is a great place to start. Most have an online complaint form for you to fill out. Make sure you read
their directions for submitting a claim, and what documentation you'll need.
Loan/Lease Calculators:
Read all about ALG Residual Values. You'll need this vital data to calculate your lease payments, and look up dealer cost for cars
and trucks. Every person who leases use the same type of leasing software that the dealers use. Without it you're sailing the ocean of confusion, and they'll swallow
you whole. I would not in a million years lease a car without using software first.
Advertising Pages From Hell
Nearly all dealer ads quote low monthly payments that are actually lease Payments. This is because you are not buying 100% of a car, you are depreciating about 50% of
it during a 36 month lease. They condition you with "low payment" ads, selling the car for MSRP and most people don't have a clue! The goal of dealer ads is to get you
into the store and not sell any of the deals in the ad. You can bet any price you see on a dealer ad will be unobtainable by you when you get there. Many ads are only
good the day they are published! Leases are too confusing for you to notice they are charging MSRP. Remember, when you lease, they sell it to the leasing company, who
rents it to you during the lease. You are actually paying them for depreciation on the car during the term. The leasing company profits and can sell the car at the end
of the lease. The dealer is happy because they get MSRP for the car. The trick to a lease is to not mention the lease until you have hammered down their price well
below MSRP. This will make your lease payments even lower, as depreciation is now lower. If you could talk them down $2000 below MSRP on a 36 month lease, your monthly
payments would be $55 less! Some ads say "Some cars subject to prior sale". The only useful information on any dealer ad is the address. So they could save lots of
money by just taking out a 2" ad with their address on it. Here's some dealer ads you may read while enjoying your Saturday morning coffee:
Consumer Alert!
Here's an ad for my fake dealership, Crazy Jeff's. You may find ads similar to this. See my claim about paying your first loan payment for you? It also says
"Up to", meaning I probably won't give you $400. Also, it says "See store for details". Come in to get details from me and find that I do make your first month's
payment, but it's financed into the loan. Your brain fooled you, thinking I would just give you $400. Why would I do that? You're "stealing food from my baby's
mouths"!
I'll pay off your current loan, no matter how much you still owe. Sounds like I'm doing you a big favor right? Read the fine print at the bottom of my ad: "*Payoff amount will be added to the amount we lend you".
What does this mean? It means I'm uprooting you out of your old loan, and into the loan for the car I sell you. Thus you might think your old loan is history and you'll
never see it again. You still owe the balance, but to me. What if your previous loan was at a lower APR? Now you're paying off 2 cars!!!! If you owed $2000 on
your car and bought a $15000 car from me, you just financed $17000. This type of ad misleads the uneducated into thinking their old loan is gone forever. This deal is
OK as long as the buyer is aware of what's happening with the loans. Why don't the ads just say "Come on down buy a new car, we'll payoff your current loan and finance
your current balance into the new car so you are effectively paying off 1 1/2 loans? Would you have come in to buy a car from me if my ad said that? With
my deal, you'll still have your old loan AND the new loan! You're now paying off 2 loans! Pray you're not upside down on your
current loan before you enter this deal. And don't bank on getting that 2.7% rate. The "as low as" in the fine print is their way of saying "expect to pay as much as".
Beware of phrases "as low as", "qualified buyers only", or "with approved credit".
Notice how they did not mention the selling price (cap cost) for the lease? How do you know what the cap
cost is for leasing? Assume it's full MSRP. Most dealers charge full MSRP on leases.
"New 1997" BMW's at low lease prices. But zoom in on the 328i ad: Tiny text under the rear wheel says "Stk. A19125". Sorry folks, that's the stock number of the
only car offered at this rate. And gosh darn it, folks, we just sold that car before you walked in here. If you're a payment person ignoring all else, consider this
from the fine print. The residual value at the end is $23094. Here's what's required at closing (inception):
Down Payment (Capital Reduction)
$3495
Security Deposit
$350
Bank Fees
$680
Dealer Service Fee
$489
First Month Payment
$275
TOTAL CASH DOWN:
$5289
Monthly payment does not include taxes! The sizable $3495 down payment effectively increases your monthly payments by $116! This is how they make it look like the
monthly payment is low. Now are you seeing RED? Dealer service fee is meaningless & pure profit.
Is it better to lease or to buy this BMW?
Suppose you can't decide whether to buy or lease the above BMW. If you buy the $28800 BMW with an 8.5% interest rate, and the same down payment:
Total Down Payment
$5289
Borrow $23511 @ 8.5%, thus 30 payments of $905.41
$27162
TOTAL SPENT ON Your BMW:
$32451
Buy the BMW instead and, save $4182!
Assume you lease the BMW and you bought the car at the end of the lease, here's the total you would pay:
Total Cash due at inception
$5289
30 monthly payments: $275
$8250
Residual Value at lease end
$23094
TOTAL SPENT ON BMW:
$36633!
For A BMW maybe worth $28800?
At least this dealer is congenial. In fine print beneath the $12960, there is only one "NEW 1997" car at this price (see stock #). Think the car will be there if you
go to buy it? Why bother listing a low ball $179 price with a large font if we can't take advantage of it? Also, this is what makes leasing such a pain. In their list
of variables in the fine print, they want $3497 at inception, with $2299 down. What's the remaining $1200? It's too confusing.
It's a moot point , because this was the only car available at that price. When you get there, you may be subject to a legalized bait and switch that puts you in a
pricier car, and an even more profitable lease for the dealer. By the way, this $179 is a low ball by default, as it DOES NOT INCLUDE TAXES. Study the ads thoroughly!
Is it better to lease or to buy this Toyota?
Now if you buy the above car instead of leasing it using the same $3497 down payment @ 8.5%:
Down Payment
$3497
Borrow $9463 @ 8.5%, thus 36 payments of $298.75
$ 10755
TOTAL SPENT ON CAR:
$14252!
They'll make nearly $5000 more from the lease. That's why they push leasing so hard.
Here's the cost if you lease, then buy the car:
Due at Inception
$3497
36 Monthly Payments @ $179
$6444
Residual Value at lease end
$9118
TOTAL SPENT ON CAR:
$19059!
Hmmm, they didn't mention bank/dealer fees.
Before we get all verklempt and say our good-bye's, let's review the steps to purchasing a new car one final time:
Your Proactive Steps To saving Money On A New CarTM
1) Create a budget, obtain your credit report, get your financing in order.
2) Use free internet sites to determine dealer cost and price your trade-in.
3) Visit dealers to check configuration and pricing of your car.
4) Take the info home, continue researching to determine the dealer's cost.
5) Go to the dealer to negotiate your offer.
6) Close the deal, avoid needless extras, use the internet to buy an extended warranty.
7) Wreck your new car on the way home, Go back to step 1.
Savings
Database
My Savings Database shows how well other readers of this article have done. When people email us to enter their savings into the $avOmeter, I also add the car to our
database showing MSRP, invoice price, final negotiated price, and buyer's savings off MSRP. This provides a glimpse of what the cars are selling for. When you email us about your savings, please tell us the make, model, options, along with the invoice, MSRP, and selling price that you
negotiated down to.
Congratulations, you have completed the CarBuyingTips.com Seven Chapter course on how to buy a new car, and you are ready to conduct business on a level playing
field. Please email me and let me know what YOU found out there too. If you saved money, PLEASE let us know how much so we can add you to our MSRP $avOmeter at the
top of our main page! Email the exact model and options, MSRP, Invoice price, and your negotiated price so we can anonymously add your vehicle to the savings
database page mentioned above for other readers to use as a guide. If you liked this article, please bookmark it share it with your friends, they'll thank you for
it. If you know any reporters, tell them to do a story on this site. Together we'll educate the world. Thanks for stopping by! -Jeff
Jump to any chapter. I suggest you read each chapter in order.
Chapter 1
Get your credit report, how to get a car loan, scams, online car loans, first time car loans, budget & loan excel spreadsheets, credit repair.
Chapter 2
Reviews of internet discount car buying sites, new car prices, find dealer's invoice cost. Get a new car quote.
Chapter 3
What to bring to a dealership, what to say, how to act, what not to do, what to look for at the dealership, and a glossary of all dealer fees.
Chapter 4
How to read dealer invoices, finding dealer's cost, how much to offer the dealer, buyers offer spreadsheet, examples, trade-ins.
Chapter 5
Negotiating tips, dealer scams & tricks to watch out for, dealing with aggressive salespeople, choosing between rebates or low APR loans.
Chapter 6
Close the deal, avoid needless extras, scams in the business office, extended warranty scams, options, buying warranties online.
Chapter 7
Actual misleading dealer ads, and what to do when you've been ripped off, customer satisfaction surveys, how I bought my Lexus.
Consumer Alert!
