Reading between the lines in car ads

| Mar 8, 2021 | Consumer Fraud |

Car ads are a common part of commercial television as well as online and print media. In fact, it would seem almost odd if we did see a Ford F-150 or Chevy Silverado ad during a televised game. The national ads seem to be more focused on building a brand, while local ads may try to get buyers in the doors. We all hear and read various phrases repeatedly with these ads, so it seems like a good idea to explain what the manufacturer and sellers are talking about. Below is a brief list from a longer glossary of terms used in automotive financing.

  • Zero percent financing: Zero percent financing is generally only available to those with an exceptional credit rating (and who could probably afford to pay cash for the car). Like credit cards, there may be a window of zero percent financing, which likely gets very high after that window closes.
  • Zero money down: Less money down means more money owed, so the buyer pays interest on the full amount. Weigh the capitalized amount (total after all payments and interest) against other finance plans offered by banks or credit unions.
  • Bad credit or no credit accepted: This generally indicates that the buyer will pay higher interest than working with standard financing agreements. Also, look for penalties or fees for repaying the loan early.
  • Overpaying on a trade-in: Giving above the blue book value for a trade is sometimes the price for dealers to close a deal, but the amount of the overpayment may get added to the loan or price. So, they raise the price of a $40,000 car to $44,000 if they overpaid the blue book by $4,000.
  • Below invoice price: This implies that the car is marked down, perhaps to “make way for new cars.” There may be a deal with the manufacturer if they sell the car, but again check to see the vehicle’s value.

Determining the value

Kelly Blue Book is the most popular guide to pricing used cars, but there is also Edmunds, National Auto Dealers buyers guide and others. Check the value of the vehicle before signing on the dotted line. It may also be a good idea to check the value of add-ons like extended warranties.