Category: Buying A Car

Why you should never take a newly-purchased car home if the financing isn't complete

5/22/2019

You wouldn't drive a car that's not fully insured, and you wouldn't operate a vehicle without a driver's license. So why do people take home new cars before the financing is finished when they don’t truly know how much that shiny new car will cost them in the long-run? The scary thing is, even if you prepare yourself, you can still get fooled because a car dealership can may tell you a car is financed – even if it’s really not.

After dropping thousands on a new car, you'll want to hop in and get on the road immediately, which makes sense. Few can resist the temptation of the new car smell. Car dealerships know that, and they can use it to charge you a lot more money than you thought you were going to pay for that car. This tactic is called yo-yo financing, and although it's not legal, 27% of people reported being victims of these scams. One Miami auto fraud lawyer even claims that 30% of his law practice deals with these cases.

What usually happens is a dealership and buyer agree to a sales price. The buyer leaves thinking the deal is final. Days or even weeks later, the dealership contacts the buyer to let them know the car has not been financed with the original loan options. They have, however, found another finance option with a new rate that's much less favorable. If a buyer refuses to cooperate, the dealership may threaten legal action. At that point, most buyers will start to feel the pressure and agree to the dealership's demands, which usually means a loan contract at a higher rate or a higher down payment than the one they initially discussed. Meanwhile, the dealership can might still sell the buyer's trade-in vehicle (or just say they did, since the buyer can’t be sure). They may even try to keep the down payment to get the buyer to agree to their terms.

This scam is also known as spot delivery. After agreeing to purchase the car, your dealership might tell you the financing is all set and that the car is yours. That may not be a problem for people with good credit scores, but someone with a lower credit score could get a call days after driving their new car off the lot letting them know the bank would not buy the contract from the Dealer. If the financing institution will not buy the contract, the sale may not close, and the buyer in this situation may have to return the car or pay the balance in full. The Dealer may even try to claim the buyer owes money for the mileage he put on the car.

Is it really worth it to pay thousands more down the road just to get your new car a few days early? Certainly not. Going into a deal, a buyer should know and understand what they're agreeing to – no matter how fine the print. You may even want to get pre-approved for a loan from a local credit union or your bank so you know what the terms of the loan are before you even set foot on a dealership's lot. And if you're desperate for a car, rent one until the paperwork is signed. A couple hundred dollars on a rental can save much more than you think down the road.

Why you should always test drive before you buy

3/11/2019

It might sound like a no-brainer to you: of course you should test drive a car before you buy it. You're likely spending thousands on one so you need to know what you're getting. But the shocking truth is that 11.4% of car buyers don't test drive their car before they drive off the lot. There are several reasons why that's not a good idea.

It might be tempting to skip the part of a car purchase that involves talking to salespeople at the dealership, but it's just not a practical or financially sound decision because you can actually negotiate the price down based on what you learn. When you test drive a car, you can determine whether it's a smooth and comfortable ride. If you have a long commute, you don't want to spend a month's pay on a car only to find out that the driver's seat is extremely uncomfortable, your head hits the roof, and the windows don't block out any traffic sounds.

More importantly, test driving a car gives you the opportunity to make sure it runs smoothly. Does it accelerate and brake easily? Is the steering wheel easy to turn, or do you have to spin it around ten times just to make a slight right, which might be impractical if you need to do a lot of parallel street parking or three point turns in your neighborhood.

Even beyond these basics, which may not feel important to every driver, it's important to make sure every component of the car works correctly. Test driving a vehicle gives you the opportunity to check out the headlights, windshield wipers, radio, seat warmers, and any other feature that might be prone to malfunction. Once you've checked all of these things, the knowledge you gain will give you the upper hand when it comes to negotiating with salespeople.

Are car dealership special events really special?

3/4/2019

Every few months your local dealership probably hits you with wall-to-wall advertising about their latest holiday sales promotion. These ads are all over the TV, radio, billboards, and newspapers and pressure you into a purchase decision by making it seem like the offer is too good to last. The reality is that these deals are no better than a dealership's typical prices on any other day for the most part.

In fact, a lot of dealerships use these holiday opportunities to hire marketing specialists who then help the dealer increase their profit. You might see advertising language that emphasizes financing options or add-ons like prepaid maintenance. Don't buy into the temptation because this is where dealerships make most of their money, and it's an easy way to get a consumer to pay more than they're willing to by making them feel like they're getting a great deal. For example, a dealership may offer something like "pre-delivery inspection," and they can make it seem like it's mandatory, but you can always opt out of paying these bogus charges.

So what should you keep in mind when buying a car?

Forget sales and financing offers. Always consider how much money is being added in interest and other fees when it comes to monthly payments.
Don't even look at monthly payments – always add up the long-term cost of the car and focus on that number as daunting as it may be. And if that number feels high, remember that monthly payments are designed to make a car seem cheaper than it really us.
And when you figure out what you can afford each month, do not forget to calculate your insurance and taxes you will have to pay, especially if your purchase is a newer model vehicle.

To get a good deal on a car, a consumer needs to create their own list without a dealership's input. They should focus on cars known to be reliable, safe, and strong in road tests. It also helps to shop specifically for cars that carry high owner satisfaction rates and ones that don't depreciate quickly.

Am I allowed to take the Retail Installment Sales Contract home with me before signing it, especially if I don't understand everything in it?

9/19/2018

Yes, you are allowed and, of course, you should never sign any contract you do not fully understand. The Truth-in-Lending Act and its regulations require a creditor to make the required disclosures “clearly and conspicuously in writing, in a form that the consumer may keep”.

Those disclosures include the Annual Percentage Rate, the amount financed (the amount of the credit being extended or money being loaned), the finance charge (how much interest you are paying back), the total of the payments, and the total amount paid (payments plus down payment).

Taking the contract home before you sign it is a great idea. This allows you step back, away from the pressure of the salesman and his boss, and examine whether the deal is good for you, such as whether you can afford the payments. Second, you can determine what other costs may be incurred like property taxes (not the same as sales tax) and higher insurance expenses. You may decide the monthly expense is too high. Third, you can shop the interest rate to see if you can get a better deal. Fourth, if there are any terms you don’t understand, you can find someone to explain them to you.

The Retail Installment Sales Contract is going to state there is no “cooling off” period so take your time. There really isn’t a rush to buy a car.

What happens to vehicles involved in floods and how to avoid buying one

9/8/2018

During hurricane season, it’s common to see news footage of cars getting washed away by storms. But few people understand what really happens to those flooded cars once the owners get them back.

While cars seem pretty strong and sturdy, they are basically just large electronics – especially if they’re newer models. And you know what happens if you throw a TV into a pool – there’s little that can be done to salvage it, and even if you can fix it, it’ll never run as well. A lot of cars that get damaged in floods will end up totaled, and about half of them will get re-sold on the market through salvage auctions, which means a lot of people have no idea they might be purchasing a used car that was previously in a flood.

So how can you avoid purchasing a vehicle that was involved in a flood? First, make sure to track down the car’s Vehicle Identification Number, which is on the dashboard and title. There are many databases such as National Motor Vehicle Title Information System and VINcheck that allow you to look up a vehicle’s VIN to see where it’s been. Some cars do slip through the cracks thanks to state-by-state inconsistencies in salvaged vehicle branding so it’s important to look for other telltale signs.

When looking at cars, buyers should first and foremost check for caked-on mud or any kind of peculiar odors in the carpets and other difficult-to-clean places. The headlights may also feature a visible water line on their lens, which is a major giveaway that the vehicle is flood-damaged. Another big clue is rust, especially in screws under the dashboard.

While states have certainly made moves to protect consumers from unsuspectingly purchasing flood-damaged vehicles, there’s always a risk when it comes to buying used cars and a smart buyer will know to keep an eye out for suspicious signs.

Is A Voice-Controlled Co-driver Right for You?

8/10/2018

Voice-controlled co-drivers are the latest innovation to hit the auto market in response to voice automated technology. An interactive voice-controlled co-driver can set GPS directions, locate the nearest coffee shop or other restaurant choice, pinpoint the next rest area, and much more.

Similar to Amazon's Alexa, these features give you the convenience of a smart phone without having to touch or look at a screen. Since the Insurance Institute for Highway Safety, Highway Loss Data Institute (IIHS) states 94 percent of car crashes are caused by distracted driving, a voice-controlled assistant sounds perfect. But there are a couple of instances where you might want to reconsider this feature, or, at the very least, be prepared to overcome some challenges.

If you're not technologically savvy, this may not be for you. You have to program the feature before you start, and there is a learning curve. If you have difficulty with Alexa or other voice-activated features around your house, you might want to reconsider utilizing the voice control feature.

If you have a thick accent, you may have to forego a voice-controlled co-driver. While the units are programmed to understand over a hundred languages, if you speak English as a second or third language, the system may not be able to recognize your accent. The same goes for rural or regional accents which would cause you to be misunderstood. The frustration might be more time-consuming than it’s worth.

But if you fall into one of these categories and love the idea of voice control, you don't have to discard the idea of a co-driver altogether. Improvements are being made every year, and you can take steps to embrace this new technology. In the meantime, if you’re determined to use this feature now, you can always ask your dealer or a friend to help you set up your system, and you can ask your car dealer to let you try a system to see if it understands your accent. This will enable you to make a better purchase.

It's estimated 67 million voice-assisted devices will be in use in the United States alone by 2019. So despite some obstacles, you can still let your voice be heard.

What should I do if I'm blocked in and feeling pressured to buy a car?

7/24/2018

When I started practicing, I heard about car dealers wanting to appraise someone’s trade in. When the dealer got the keys to the car, he would throw the keys on the roof [DC1] of the dealership. The idea was to make the customer feel helpless to the point he felt he had to buy a car.

In a yo-yo transaction, the dealer will require the return of the car if it cannot sell the retail installment sales contract. If a customer comes back to discuss the matter, the dealer may try to block in the car to keep the customer from leaving with it. In this situation, remember, the dealer may be the wrong doer.

Do not become the wrong doer. Don’t start yelling, throwing punches, or damaging cars. The first thing you could do is politely request that the dealership move the cars blocking you. If that does not work, move up the chain to a higher manager. If that does not work, keep moving up until you get to the general manager. I would expect all the managers to support their employees; however, you don’t know until you ask.

The next step might be to call the police. Understand that the police usually do not want to get involved in what they call “civil” matters; however, taking your property might be considered a theft. Hopefully, the introduction of the police will cause the dealer to do the right thing, but it is not guaranteed. If you still can’t get your car, you need to leave and contact a lawyer.

How do green cars work, and are they worth the price?

7/12/2018

It wasn’t so long ago that “green” cars were still a novelty. Now, you probably see several of them every day. It’s not really fair to lump environmentally-friendly cars into one category – there’s such a variety. You can purchase a battery-powered electric vehicle, a hybrid vehicle that uses both battery power and gasoline, compressed air vehicles, and even natural gas vehicles. While it may seem overwhelming to navigate through all the information that exists on these cars, it can be extremely worthwhile – eco-friendly cars can get a fuel-economy of up to 650 miles per gallon (or the equivalent for non-gas vehicles). Remember that old Ford sedan you drove ten years ago that got twelve miles per gallon if you were lucky? This isn’t that.

Less fuel means more money left over in your pocket, which is a good thing considering these cars don’t come cheap. In the lower- to mid-range, you can pick up something like a 2017 Hyundai Ioniq EV for about $29,500, and on the high-end, there are cars like the all-electric BMW i3 ($44,450) and Tesla Roadster ($200,000+). If you’re not a big spender looking for a luxury vehicle, you can expect to pay about $30,000. Because these cars are much better for the environment, many states offer generous tax credits to people who buy them – so you can expect to get about $2,500 to $7,500 back that way. In the long run, you’ll probably pay as much as you would for a gasoline-powered vehicle, but at least you’ll do less damage to the environment.

Do you drive a clean energy vehicle? How much did you pay, and did it save you money long term?

The Top 5 safest cars and why

6/4/2018

When ranking cars for safety, the advantage goes to those who enjoy a higher income because the safest cars are ranked as luxury vehicles. This conclusion was reached by US News and World Report when they combined the Insurance Institute for Highway Safety’s rankings for vehicles by size in their tests for and the test crashes from the National Highway Traffic Safety Administration (NHTSA). The following list is two parts: the safest cars in each category as well as the safest new cars on the road.

From IIHS Safety Ratings:

Small cars: 2018 Chevrolet Volt with optional front crash prevention
Midsize cars: 2018 Honda Accord with specific headlights
Large cars: 2018 Kia Cadenza with optional front crash prevention and specific headlights
Small SUVs: 2018 Honda CR-V with optional front crash prevention and specific headlights
Midsize SUVs: 2018 Honda Pilot with optional front crash prevention and specific headlights

From US News and World Report's combined IIHS and NHSTA Rankings:

2018 Genesis G80 Hyundai midsize sedan
2018 Genesis G90 Hyundai luxury sedan
2018 Lincoln Continental all-wheel-drive large sedan
2018 Mercedes-Benz E-Class luxury midsize car
2018 Santa Fe / Santa Fe Sport Hyundai SUV

How does this help you if you're in the market for a new car or SUV? It gives you some guidelines of what to look for in regards to vehicle safety. If you can afford a luxury vehicle, check the safety ratings before choosing a vehicle on looks and amenities alone. The same goes if you can't afford to pay over $40,000 for a new car. Don't buy just because of dealer incentives or gas economy. Investigate the overall safety features as well as the national test rankings when you're choosing your new vehicle to ensure you have the safest ride possible.

If A Car I Buy is defective, can i return it within 72 hours?

5/29/2018

In another post, I wrote that you do not have 72 hours to return a car. If nothing is wrong with the car, that is generally true; however, if the car is nonconforming, which means it is not operating as it should be, you may be able to return it. The legal concept is called revocation of acceptance. To return the car, the problem with the car must substantially impair the value of the car to you if 1) you accepted the car knowing about the problem but were assured by the dealer that the problem would be fixed, and it was not or 2) you accepted the car without knowing about the problem because it was too hard to discover the problem, or the seller assured you nothing was wrong with it.

If the car is nonconforming, you must tell the dealer about it within a reasonable time. A “reasonable time” is not defined. It will depend on your circumstances so don’t wait. Tell the dealer you want your money back as soon as you can because the Court does not stop the clock, “time”, until you tell the dealer there is a problem with the car. Putting it in writing is even better. Keep a copy for your records. You must also tell the dealer about the problem before there is a “substantial change” in the car. There are plenty of things that could be a “substantial change” in a car. Think of it this way. You may not be able to return the car if you wreck it so don’t wait.

Remember this is not legal advice. There are lots of scenarios that can change how to approach this situation. Sit down with an attorney to discuss your options and how your situation fits with the law.

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