The Biggest Lie Car Manufacturers and Dealerships Tell You About Selling You a Car
Dealerships and car manufacturers are already less than honest (if we’re being generous), and wading through misinformation only makes things worse exponentially. But we can help. Here are some of the most misleading, dishonest, or downright false things you’ll hear when buying a car, and the truth behind them.
This “time-limited deal” is likely to come back later.
“This deal won’t last forever!” Dealerships love to declare that any promotion they run will end soon, so you just have to run today if you want to save big! This is especially true at the end of the model year, which does not coincide with the calendar year, when dealers like to say something like: “All 2015 models must go to make room for our new 2016!”
While these statements may be technically correct, they are also functionally meaningless. Except that car dealerships have to move cars with the same urgency all year round. Dealer inventory is a large and complex process, but generally most dealerships do not want to keep more than two months worth of inventory on their sites . So when the dealership tells you that they should get rid of last year’s model, that’s not entirely a lie – they really should get rid of those cars, but that’s not special. Four months ago, they also sought to get rid of last month’s cars to make room for next month’s cars. Each car that remains in their parking lot increases storage fees and interest for the dealership.
Because of this, you can almost always find some kind of promotion or discount in the store. Even if the dealership you were looking at doesn’t work, it’s probably in a nearby or another city center. Contrary to popular belief, shopping times are rarely specific times. In fact, as we highlighted earlier, the best month to buy can vary greatly depending on what type of vehicle you plan to buy .
To convince you of this, at the top of this section, you’ll see an August announcement from the Nissan Auto Show that insists on clearing all of its 2015 stocks to make room for the 2016s. Here is anad for another dealership with a New Year’s event (referring to the calendar, not the model year), which also states that a batch of 2015 Nissan vehicles needs to be cleaned up. Obviously, different dealerships have different inventory needs, but not all deals are closed in one particular month.
You don’t need to finance through a dealership
If you only learned about financing from car commercials, it would be excusable to think that the only way to buy a car is through financing through a dealership. Maybe, at best, someone told you that you get a better deal by paying in cash (and we’ll get back to that). However, you have a third option: you can simply finance the car yourself.
Banks exist outside of car dealerships, and they love to lend you money. Especially if you have a long history of working at a bank (or better yet, a credit union ), you can negotiate a car loan even before you walk in the park. Based on your credit history, the bank may write you a check for a certain amount. You can then walk around a lot and pay with this check like cash. You will then make payments directly to the bank.
This is where things get complicated. You may have been told that paying in cash might get you a better deal, but this is not always the case. Dealerships offering financing often raise interest on loans . This means that if the bank can approve you an interest rate of 5%, then the dealership will charge you 7%. An additional 2% goes directly to the dealer. Since they make money from a loan, they will be more motivated to withdraw money from the set price, especially if you are not paying attention to how much you pay as interest. For this reason, some of those promotions run by dealerships may also require dealership funding.
Without discussing the details of the deal directly with the dealership, it’s hard to know what will actually save you money in the long run (and in many cases this is done on purpose). However, by drafting a loan agreement through your bank or credit union before going out on the site, you can know exactly what interest rates you are eligible for (although you don’t need to spend that much and you obviously need to budget. depending on what you can afford, not just what the bank is willing to lend to you).
You should also check your own credit first . Keep in mind that car dealerships and banks may use other methods to determine your creditworthiness than credit reports that you prepare yourself, but knowing at least what rough level you are at will immediately put you in a better position. negotiations.
Advertised financial offers are often misleading
So, I just told you that you can finance through a bank to get a lower interest rate, but that does not qualify you to participate in some of the dealership promotions. Some kind of bummer, right? Well, don’t worry, because most of them are not as good as they seem anyway. At least that’s what the FTC says .
Dealers love to add pretty numbers to their ads to make you feel like you’re closing a deal. $ 5,000 Discount! Only $ 199 per month! Zero percent! Of course, there are a lot of other factors you need to know to find out how much these offers really help, most of which are not factored into your ads.
As the FTC points out, when a dealership focuses on one number, they often distract attention from another detail. You can get a couple thousand dollars off, but you need to buy the Super Deluxe XL package to get that rebate. A low monthly price can hide the fact that your monthly payments will increase in the future. Zero percent funding can only be applied to a portion of your car loan. Or, all of these advertised deals may only refer to one specific model per lot. As with most things, the devil is in the details.
Unfortunately, you cannot focus on the singular and hope that you will be okay. Before you get excited about any funding deal, you need to ask yourself a few key questions:
- What is the price outside the home? A $ 0 drop doesn’t mean you don’t have to lose a ton of money today. Taxes and fees can be discouraging at the last minute if you’re not careful. The first thing you need to know is how much you have to pay before you leave the parking lot.
- How much do you pay, including interest, for the entire life of the vehicle? Interest is tricky , but if you look at the total amount you’ll pay over the life of the loan, it’s hard for you to screw it up. You can use this calculator to find out how much interest you will end up paying by the time you pay for your car. By paying attention to this number, you can save money in the long run.
- How many monthly payments do you have during the entire loan term? You absolutely cannot judge your ability to buy a car based solely on monthly payments, but you should pay attention to how much you are going to pay. For some promotions, your monthly payment will increase over time. Dealers may even focus on increasing your monthly payment to get you into a more expensive vehicle .
There are many factors to consider, so don’t assume this is an exhaustive list, but these are some of the most important takeaways to look at. Your external costs, total long-term payments and monthly payments will have the greatest impact on your budget, both now and throughout the life of the loan. If the dealership claims it can reduce one of these numbers, keep a close eye on the rest.
These awards from JD Power, Motor Trend and others are not as important as they seem
You’ve probably seen an ad for a car that mentions some kind of award the car has received. Ever wonder where they come from? There are several organizations, including Motor Trend , JD Power and Associates , Consumers Digest, and Consumer Reports, that award vehicle awards based on a variety of criteria. However, these are not always altruistic reviews done in a vacuum.
As the Wall Street Journal points out , when a car company uses an award in their advertisements, they usually have to pay a hefty sum to get the right to do so. For example, Consumers Digest charges $ 35,000 for the first award and $ 25,000 for each successive award just to be admitted. JD Power runs awards, but also (separately) sells high-value survey services to car manufacturers to provide user feedback. Consumer Reports has almost no connection with manufacturers, as they buy all the cars they test themselves, and generally do not allow their awards to be used in advertising.
All of this doesn’t necessarily mean that rewards are corrupt or bad, but they don’t exist in a vacuum either. For example, Consumers Digest tells the WSJ that its fees do not affect its decision, but only manufacturers who pay the license fee get their full review on the Consumer Digest website . The information you receive about why the vehicle won the award may be delayed if the company does not pay the license fee.
It is also not immediately clear which awards are actually rating. Many car ads love to advertise the JD Power Initial Quality award. If you are not familiar with the process, it may sound like JD Power has discovered that the winner of this award is Car of the Year. It actually measures the issues reported by the owner during the first 90 days of ownership. Obviously, a car breakdown or a serious problem in the first 90 days is not a good thing, but perhaps most car problems do not occur for a long time. Other JD Powers awards include the consumer satisfaction award after 90 days (no issues reported after 90 days) and the reliability award, which measures problems over the past 12 months for owners of a three-year-old vehicle .
It’s easy to think that car awards imply an independent body vouching for its quality, but this is not always the case. As with most things, finding a good car comes down to research. It’s okay to consider rewards, but find out what rewards actually mean and measure. Then read a few reviews and most importantly, try it yourself . You can also check out the Jalopnik Buyer’s Guide on our partner site for tons of information on how to buy cars.
EPA gas mileage estimates can be misleading without even wanting to
You are probably already paying attention to the fuel consumption of a car. Apart from interest, taxes, fees, insurance, repairs and basic maintenance (you know, just those little things), the gas you fill in your car will eat up a decent chunk of your money over the life of your car. MPG is important to keep this number low, but you may not know where it came from.
In the United States, the Environmental Protection Agency (EPA) has been responsible for regulating fuel economy since the 1970s. However, as shown by Car and Driver in 2009 , about 85% of MPG ratings come directly from manufacturer tests and are not directly verified by the EPA unless a problem is found ( which sometimes happens ).
Now manufacturers have a clear interest in making their cars look as fuel efficient as possible. The easiest way to do this is to highlight the prettiest number. Cars are rated for city driving, highway driving, and a combined score that takes into account both. A car manufacturer can highlight the highway number in their advertisements . Or they may simply decide not to highlight it at all.
For example, the above Ford Fusion calls out the word “MPG” twice, while the car leaves a trail of the word “MPG” over and over again, but the announcer never actually mentions the mileage the car gets. Instead, they claim the car is “the most economical midsize sedan.” If you squint at the bottom of the screen (assuming you’ve seen this ad on a TV that’s close enough to see the fine print), you can see that the actual mileage is 23 mpg city / 34 highway with a total mileage of 27 miles per gallon. But only with the purchase of the Fusion S, I-4 automatic. Whatever it is.
Of course, counterfeiting mileage numbers is nothing new, so we have laws that require mileage to be written in big bold letters on the price tag of a car when you go to buy it. However, even when the manufacturer is not trying to subtly manipulate the way mileage is presented, the very nature of the mileage measurement can also be confusing.
Whether the tests are conducted by manufacturers or directly by the EPA, NBC notes, they aim to meet EPA requirements, which, as a side note, caused Volkswagen to get into hot water when it programmed their cars to change air emissions. testing environment . However, the EPA does not always consider all factors. For example, Ford was reluctant to add a start-stop feature that would shut off the engine at a stoplight to save fuel because EPA tests don’t take this into account. This does not necessarily mean that the tests are completely unreliable, or that you are definitely getting better results than you think (in fact, more often than not, manufacturers overestimate the mileage requirements because it is in their best interest), but it is rarely as clean as we would like. …
There are many factors involved in buying a car , and it is impractical to expect you to make the absolutely perfect, optimized choice. However, the flood of numbers, information, and different points of view can make it difficult to determine which path is at the top. Not every dealer or manufacturer tries to lie to get a big paycheck, but it never hurts to do your own research.