Deceptive New-Car Ads, Unfair Practices Get Lots of Mileage at Year’s End : Fraud: Women, minorities and the elderly are the most common victims. However, dishonest car advertising can trick even the veteran auto buyer.
Year-end car sales may offer the best deals for buying or leasing a new car--but it is also a time to beware of false advertising, odometer fraud and higher prices for women.
Most car dealers are honest, but here’s how to spot the ones who are not:
* Beware of false advertising. Some ads are deceptive, warned David Medine, associate director for credit practices at the Federal Trade Commission. Deceptive practices include running ads for unavailable cars; refusing to sell cars at advertised prices; failing to reveal full financing terms; failing to include mandatory add-on costs in advertised prices; and failing to disclose that advertised prices are for used or damaged cars.
* Other unscrupulous car dealers compute discounts based on inflated prices and/or fail to display the window price sticker as required.
* Some car dealers practice odometer fraud, selling used cars as new by tampering with the odometer. If you suspect this, jot down the car’s make, model and vehicle identification number, then ask the manufacturer to give you a complete shipping history of the car. Check with the dealers.
* Women car-buyers have special problems. Studies indicate they are likely to pay up to a 40% higher markup for new cars than men. Minorities and the elderly often fare worse.
To avoid unfair markup, ask to see the factory invoice, which lists the dealer’s cost. On most cars, the markup should be 5%-20%.
Everyone should beware high-pressure sales staff that try to sell you a car you cannot afford, said John Sheldon, staff attorney for National Consumer Law Services. Know your credit capacity before you shop and-or check with a financial adviser.
* Leasing has its own pitfalls. A common headache occurs when people decide to terminate a car lease agreement early. Consumers usually have to pay an “early termination penalty,” which can add up to thousands of dollars.
Before you lease, make sure you understand under what circumstances and at what cost you can terminate the lease early. Be sure the terms are spelled out in the lease.
Other dishonest leasing practices:
* Leading consumers to believe they are buying a car when they are only leasing it.
* Telling consumers they can purchase the car at the end of the lease when the option is not in the lease agreement.
* Failing to fully credit the consumer for the agreed-upon value of a trade-in car.
* Overcharging consumers at the end of a lease for mileage, wear on the car, etc.