Advertisement
Living

Bait and switch

And other car ad catches that could cost money
In an effort to stand out from a sea of similar car ads, some dealers occasionally resort to marketing sleight of hand that can be difficult to detect. These ads create an illusion of value, but critical details that boost the total cost may be hidden or missing. Here's a quick primer on how to spot some sneaky ad tactics:
Low-rate lowdown
Think you can't get a better deal than zero per cent financing? Think again. Buyers who opt for plum financing deals are typically quoted a higher overall price than cash buyers, who may be eligible for attractive rebates. A person who opts for zero per cent financing, for example, could pay $18,488 for a vehicle. A cash buyer (including someone who shows up with a certified cheque) might get a $2,000 cash rebate and pay only $16,488. So, the buyer who chose zero per cent financing actually pays the equivalent of $2,000 in interest charges. With the prime rate falling to as low as 3.75 per cent in the past year, it may cost less, depending on the term, to finance the purchase with a line of credit. Shop around for financing. Make sure that the large-print price that jumps out of an ad offering zero per cent financing isn't just a cash-only figure.
Bogus add-ons
Dealers sometimes advertise a low price for a vehicle, then tack on an extra charge for air conditioning, even though it's standard equipment on the vehicle. Mandatory window etching and costly administrative fees (as high as $550) can also be cash cows. Make sure you know what equipment comes with the vehicle and compare add-on costs at other dealers.
Misleading leases
Auto leases are trickier than purchases because there are more numbers to juggle: vehicle cost (capital cost) including options; term of the lease; monthly payment; lease rate; security deposit; down payment; excess mileage fee; end value (residual); and whether the lease is open or closed. If some of the information is missing, the low monthly rate may be hiding a huge down payment or added costs at the end of the lease.
Open-ended gamble
With lease ads, it's crucial to determine whether the offer is for a closed-end or open-end lease. "Open-end leasing has made a comeback and most people don't understand it," warns Michael Turk, a lawyer for the Automobile Protection Association. With an open-end lease, the driver is responsible for what the leasing company estimates the vehicle's value to be at the end of the agreement. If the end value in the contract was overestimated at $12,000 and the vehicle ends up being worth only $9,000 on the open market, the customer is on the hook for the $3,000 difference. Closed-end leases (also known as walkaway leases) don't carry this risk. By hitting customers with additional charges at the end of an open-end lease, companies can afford to lure customers with low monthly payments.
Old news
Ads may fail to specify that the "new" car up for sale at a great price is, in fact, a demonstrator that's seen dozens of test drives rather than a brand new car. During end-of-season change-overs, be clear whether the "new" car being advertised is last year's clear-out model or the latest one.
Trade-in hijinks
Be wary of dealers offering a guaranteed price even if you "push, pull or drag in" your trade-in. If a dealer overpays you for your trade-in, he'll be less likely to negotiate a good price on your purchase.
Bait and switch
You see your dream vehicle advertised and rush out to the dealership, only to find it's been sold; however, the salesperson is happy to try to sell you a more expensive model. It could be a coincidence, but be suspicious. If a vehicle is in limited supply, that should be stated clearly in the ad.
Leaky liquidations
One dealer's liquidation price may be another dealer's everyday price. Visit www.carcostcanada.com to buy true invoice quotes.

Maryanna Lewyckyj is a consumer advocate for the Toronto Sun. She conducts car care seminars for women through her company, Autophobics Anonymous.

GET CHATELAINE IN YOUR INBOX!

Subscribe to our newsletters for our very best stories, recipes, style and shopping tips, horoscopes and special offers.

By signing up, you agree to our terms of use and privacy policy. You may unsubscribe at any time.

Advertisement
Advertisement