Top 5 Auto Advertising Lies
Top 5 Auto Advertising Lies
When we purchase a new car, trust is important since cars are so expensive. A Gallup poll recently discovered that while 85% of Americans trust nurses, only 8% trust car dealers. Just how bad is that figure? Put it this way, car dealers are last on the list…after Congress. That’s right, Americans trust car dealers less than Congress. Why? One of the big reasons is auto advertising and just how misleading it is. Jim Dykstra of vinadvisor, Philip Reed of Nerdwallet and Jaclyn Trop tackle some of the lies to watch out for in auto advertising.
Hidden Car Shopping Fees
Hi, welcome to the top five ways that automotive ads mislead us. Let’s start with a lease ad. You see them all the time online, 199 a month for 36 months. Sounds great, right? Three things that you need to understand before you jump into the car and race down to the dealership, and the details should be included in the ad if you look at the fine print. First of all, what’s the mileage per year? Because the difference between a lease calculated at 10,000 miles per year and 15,000 miles per year can be $25 to $50 a month depending upon what car it’s related to.
Next up, what are the total taxes and fees that will be associated with that ad? Are they included in that lease price? Most likely not. And do you need to pay them on a monthly basis or shed a lump sum basis? And then number three: What’s the cash down or cap cost reduction on a lease? These three things can dramatically change the monthly payment and/or require a lot of cash out of pocket to get to that monthly payment.
Car Shopping Drive Off Fees
Thanks Jim, and here’s lie number two which is drive off fees. Yes you can lease that brand new Audi A4 for only $199 a month if, and this is a big if, you put down $4,500 up front. If you do that, you’ve just obliterated one of leasing’s great advantages which is preserving your cash flow, so it’s not a good idea to do that. You can redesign your lease and put down $1,000 or even zero if you want to.
Car Shopping Base Price
A classic game that car ads like to play is showing the most decked out, fully loaded, top trim, but advertising it for the price of the base model. In reality, the prices can differ by thousands of dollars and in some cases even tens of thousands, and we know, as Phil and Jim pointed out, that the price advertised usually doesn’t include taxes or drive-off fees.
Alright, next up on our list of misleading automotive advertising is the ad car. If you see a price point on a car, it might be a monthly payment on a purchase or a lease or a specific sales price. In many cases, a manufacturer’s equipped a particular car to reach that ad price point. In other words, to entice the consumer to come in on that particular car. The challenge is normally this: Most dealers only order a few ad cars whatever is the minimum requirement to fulfill their legal obligation if you will. So a lot of times even if you wanted to buy the ad car that you saw online or on TV, there’s not a choice there, which means, just remember when you get to the dealership you’re more likely to see a more expensive model and more equipment and to pay more for the car simply because those ad cars are few and far between. One more time, where it’s buyer beware when you walk into the dealership.
Here’s lie number four and this is a new one I’ve seen cropping up a lot lately particularly in newspaper ads, and that’s where they factor in a lot of incentives that you probably won’t qualify for. A typical one is the loyalty cash bonus which means that you’re buying the same make of car that you did the last time around, so if you do that you get $500 off, but not all that many people do that, so don’t be misled by these customer cash rebates and make sure you do in fact qualify for them.
Alright, so the five things we’ve discussed that every consumer should be thoughtful about as you’re in the process of buying a car. Number one: On a lease, make sure you check your mileage. That’s the first place where you can have a big delta between what you think you can drive and how you actually drive versus what’s being offered. Number two: What are the total drive-off fees in any offer you’re looking at: License plates, taxes, sales tax, and cash down expectations? Number three: Are we looking at the picture of the most loaded model possible and yet looking at the numbers for a base model car? It can happen. So just make sure that you’re comparing apples to apples. Number four: The ad car. A lot of times, manufacturer will have a specific vehicle packaged in a certain way so that they can get to the price point that entices you to come to the dealership, but in many cases the dealers don’t have many of those cars, so again you’re gonna look at a more expensive car when you get there.
And lastly, what I call the incentive of all incentives, a list of four or five incentives that might get you to a $5,000 or $10,000 off offer of some kind, but it’s highly unlikely most consumers would ever be able to qualify or be eligible for all those incentives. So keep that in mind as you’re shopping. Good luck. Hope this helps.