Friday, September 01, 2006

Translating Misleading Car Ads

In previous columns I have recommended that you avoid reading most cars ads in the newspaper and in direct mail. Most TV and radio car ads are similarly misleading. My suggestion is that you carefully choose the precise year, make, and model you want with the precise accessories and get at least 3 legitimate bids from car dealers on the Internet or, next best, at the dealerships. However, if you do find yourself perusing the large number of car ads in the local paper, here are some translations of common misleading ads. I took these straight from a local paper.

20% to 40% OFF MSRP. Never buy a car based on how big a discount you are quoted. Always calculate the price you are willing to pay based on an accurate understanding of the cost of that vehicle. Different makes and models have different markups and factory incentives can cause the true markup to vary widely. What sounds like a big discount may also pay the dealer too big a profit.

LIQUIDATION SALE. Most of the time you pay just as much for a car during a “sale” as you do without a sale. The only exceptions are factory incentives which do have an expiration date. A “sale” is what advertisers refer to as a “call to action”. They are looking for something that will motivate you to come in today, rather than procrastinate. It doesn’t seem to matter if the motivation is untrue.

UP TO $15,000 OFF. Many dealers have an additional markup on top of the manufacturer’s suggested retail price, MSRP. They commonly label this a “Market Adjustment Addendum”. This can be thousands of dollars. Discounting a car thousands of dollars means nothing if the dealer just added a “Market Adjustment Addendum” for an amount equaling or exceeding the discount.

STK#62029A. When you see a number like this next to the price of a new car, it means that that is the only car you can buy for that price. The number is the stock number for that specific car which is supposed to tell you that this is the only car at this price. Many of these ad cars are of undesirable colors and accessories. They are advertised below cost and the loss is charged to advertising if they have to sell one. You chances of buying one of these are slim and none.

CREDIT PROLEMS ARE NO PROBLEM. This type of ad is particularly insensitive and distasteful. It is meant to attract people who have such bad credit that they think they cannot obtain financing. Unfortunately, there are people whose credit is so bad that no lender will offer them financing. These people are disappointed and embarrassed when they learn the truth that “credit problems can be, in fact, big problems”.

MINIMUM $10,000 TRADE-IN ALLOWANCE. This is just like the huge discounts. A trade in allowance means nothing if the car has been marked up high enough to offset the extra trade-in allowance.

WITH ACCEPTABLE CREDIT. This allows dealers to add a fine print disqualifier which is an extremely high Beacon score that disqualifies 99% of the car buying population. It is used in conjunction with very low lease payments or purchase payments. It is a “bait and switch” which affords the dealer the opportunity to raise your payments (and his profits) because your credit is “not acceptable”…to him.

PRICE GOOD ON DATE OF PUBLICATION ONLY. You will find this only in the fine print at the bottom of the page. This is added protection to the dealer, in addition to the stock # mentioned above, that he won’t have to sell you the car at the advertised price.

AS LOW AS or FROM. You will see this in smaller print next to a very big price and a big, pretty picture of the car. This is a further “C.Y.A.” for the dealer so that he doesn’t have to sell that car at that price.

WE’LL BEAT ANY OTHER DEALER’S PRICE OR THE CAR IS FREE. Some claims are so outlandish that I hesitate to bother warning you about them. Applying the old saying “if it sounds too good to be true, it probably isn’t” should protect most people from this kind of ad.

I could go on and on, but I hope I have already made my point. Car dealers’ ads are the absolutely worst way to decide which car you should buy and what price you should pay. When you respond to most car dealers’ ads, they are in control. You must take control and let the dealer respond to your carefully thought out and researched choice of year, make, model, accessories, and what price you offer to pay him.


  1. Earl,

    Your blog is always very informative. Thanks for taking the time to do this.


  2. Dear Earl,
    I found an advertisement in the newspaper, The Miami Herald, which depicted a Jeep Commander for $179 lease per month for 27 months with "fourteenhundred ninety five down plus tax and tags provided for excellent credit.

    When I arrived at the dealership, the manager said that the ad is specifically for previous chrysler cuustomers and that an extra 2000 dollars would be added to the price bringing it up to around 340 per month.

    The Salesmen below the manager could not find the wording which described this. When the salesman consulted with the manager about the whereabouts of the propper wording, the dealer pointed to words which said "Includes all rebates". The ad did not have any words such as "previous" "Lessor" or even two thousand dollars. Would this be a case of false advertising?


  3. David, I'm sorry you had to go through that "bait and switch" experience. You were astute enough to catch the, what I'm assuming was fine print, showing a large down payment and shorter lease term. This is typical in car dealer newspaper ads on leasing. By increasing the down payment and shortening the length of the lease, the dealer can advertise a lower lease payment.

    The $2,000 rebate you don't qualify for that the dealer surprised you with is probably a rebate often called an "owner loyalty" rebate. The manufacturers offer those only to owners of their make car. It is unethical and should be illegal for dealers to advertise prices, reduced by a rebate that most people do not qualify for.

    Unfortunately this is common practice, but most dealers do disclose in the fine print that the price includes the "owner loyalty" rebate. Even though this is not adequte because most people don't know what that means, it's better that what this dealer did in not mentioning this specific rebate at all.

    I saw a dealer ad in last Saturday's PB Post which said "includes MILITARY rebate" in the fine print. This meant that unless you were on active duty in the military, you did not qualifty for the price advertised.


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