If You Aspire to Own a Car, Talk to Your Credit Union First
I don’t trust car dealers.
I’ve been reading car ads in the Sunday paper. My car is 9 years old, so it’s time to start looking for a replacement. I was amazed at the low advertised prices of some of these vehicles. The book values were significantly higher than the advertised prices. I wanted to understand how they could offer such low prices, so I picked out two cars from two different dealers for further investigation: A 2009 Mazda CX-7 that can be leased for just $99 per month and a Hyundai Elantra for purchase at $9,685 and 0% APR for ‘up to’ 36 months. These are incredible prices! The Mazda has a base price of $24,620 and the Hyundai’s manufacturer suggested retail price (MSRP) is $17,165. How can they advertise prices that are so much lower then the MSRP?
Let’s start with the Mazda (pay close attention): The ad says that you will pay $99 per month for a total of $2,376. A simple calculation tells me this is a 24 month lease. You will also have to pay $2,999 at lease signing with no security deposit, so that’s a down payment, bank fees and other charges. Further reading of the ad indicates that the $99 monthly payment is based on you qualifying for a bunch of rebates: There’s the ‘$1,500 customer cash’, the ‘$1,000 owner loyalty rebate’ and the ‘$2,000 [local dealer] Mazda loyalty rebate’. That’s a lot of rebates. So how do I qualify for all this cash back? At the bottom of the ad we get to the real story. The ‘$1,500 customer cash’ is not explained (see dealer for details!). The owner loyalty rebate requires that I be a current Mazda owner. So if I own a Mazda and want to buy another one, I can get this rebate. Not too bad, but I don’t know many people who own two of the same brand of car. The other ‘rebate’ is the best: To qualify for the ‘$2,000 [local dealer] Mazda rebate’ you must have purchased a new vehicle from [local dealer] Mazda within the past 4 months and be trading it in! Who buys a car and trades it in 4 months later? It’s fairly common knowledge that when you buy a new car and drive it off the lot it loses a significant part of its value. But have no fear! They will roll the ‘negative equity’, into the new lease. That means, unless you put down 15% to 20% of the purchase you made 3 or 4 months ago, you will owe them more than the car is worth (call your Credit Union for a better explanation). Finally, you will pay 15¢ per mile if you exceed 10,000 miles per year. Those 10,000 miles will barely get me to work and back. How much more will it actually cost me to drive this car the 12,000 to 15,000 miles that most people drive in a year? Maybe up to $1,500 more. I have some questions. Do you think you’re ever going to drive this car for $99 a month? Can anyone possibly qualify for these rebates? Are you confused yet? Do you feel like you are about to get…taken advantage of?
Let’s look at the qualifications for the rebates on the Hyundai. The ad says the price of $9,685 includes a ‘factory’ rebate, a ‘college grad’ rebate (graduated within past 6 months), a ‘loyalty’ rebate (bought a car within the past 6 months and trading it in) and a ‘military’ rebate (active, retired with 20+yrs or honorable discharge within the past 6 months). The FINE PRINT (really small print at the bottom of the page) also says ‘rebates ONE per household.’ So they advertise a car with a selling price that is reduced by four different rebates, but tell you later, in tiny print, that you can only have one of them. When you study the rebates you realize it would be extremely hard to qualify for all of them anyway.
The simple fact of the matter is, the way that dealers do this, the way they can offer such low prices is…they can’t. For all practical purposes no one can realistically qualify for the advertised prices under those terms. But if they get you to walk into the dealership carrying their ad, (the entire full page ad is a COUPON that you have to bring into the dealership) they figure that they’ll use all of their ‘sales skills’ to get you to drive out with one of their cars. (Just don’t plan on it being one of these cars in the ad/coupon at these prices).
Why can’t they just be HONEST and STRAIGHT with me? Why do they have to put so many conditions on the price and bury the details in fine print? Just tell me how much you want for the car. Then I’ll decide if I want to pay cash, lease it, or finance it (at Aspire FCU, of course!). But be fair to me, and the next guy. I shouldn’t have to walk into a car dealership feeling like I’m going to do battle and I shouldn’t walk out of the there feeling like I need to take a shower.
This is why people don’t trust car dealers. This is why, when you turn to Aspire for advice, we re-value your car and help you determine if you are, in fact, getting a fair deal. We have many resources available to compare the price you were quoted with other recent sales prices. We can also tell you if the add-ons, such as GAP, Mechanical Breakdown Insurance, and Debt Protection Insurance are fair prices and we explain your different options to you. We offer two car buying services, MVCP and CUDL, to help you research your options prior to making a purchase. Plus, we began offering Debt Protection service with Member’s Choice Borrower’s Program effective June 1, 2009 (see the article in this issue for more details).Take advantage of the resources Aspire FCU offers, because we are acting in your best interest, not the dealers’.

Thomas J. O'Shea
President/CEO