When in the market for a new car – know your rights

  • Published
  • By Maj. Jim Annexstad
  • Staff Judge Advocate
VANCE AIR FORCE BASE, Okla. --  By now you have heard about the government's new cash for clunkers program. It is a program meant to encourage consumers to trade in older less fuel-efficient vehicles by providing a credit of up to $4,500. 

If you are in the market to purchase a new vehicle, know your choices, know your resources and know your rights. Here are five pointers that could save you thousands of dollars and a lot of frustration. 

This is not a kidney transplant. You probably do not really need a car -- you want a car. You have $5,000 to $25,000 to spend and will temporarily employ a salesperson to assist you with this purchase. 

As an employer, you expect and should receive knowledge, honesty, integrity and respect. You are entitled to time to review contracts and seek the advice of friends, advisors or an attorney to review the contract. 

Any dealership whose people do not treat you with respect and do not show product knowledge, honesty and integrity should not be hired. 

Shop around before you make a purchase. You are about to spend a large amount of money. Don't settle on a car you didn't really want and don't pay more than you have to. 

Go to sites on the Internet that provide vehicle pricing and get the fair market value for the vehicle you want. Go to at least three dealerships and look at cars, talk the deal and get the numbers - but don't sign anything. 

If dealership A offers the car for $15,000, tell dealerships B and C and see if they can beat that price. If they can't beat the price, see if they can beat the financing terms offered by dealership A. Either way, you save money. 

Don't participate in down payment fraud. Some dealerships will indicate on the buyer's order or contract that you made a down payment of $500 or $1,000 and tell you that it's just to get you approved for the loan, or that it's a gift. 

Why would a dealership give you a down payment? Unless it's a rebate check that you sign, the dealership probably didn't give you anything. 

The problem with the fictitious down payment is that it is fraud. You will pay sales tax on the amount, but it was never a part of the purchase. Frequently, the dealership will just add the amount into the cost of the vehicle. A $15,999 vehicle becomes $16,999, with no loss to the dealership. 

Even worse, some dealerships have demanded the actual payment of the fictitious down payment after the sale. Don't be a party to fraud. 

Check your credit before you shop for a loan. Don't be surprised or lied to by a dealership about your credit history. Check with your bank for a loan amount, rate and duration. You can use this information to bargain with the dealership. 

If they want to provide financing, they will have to beat the deal you can get from your bank. Be aware that the dealership can profit on the credit they offer by increasing the rate of interest charged to you. The dealership's bank will offer credit at 1.9 percent and the dealership will increase that rate to 2.9 percent. 

Ask the salesperson if his offer is the best rate you can get and get it in writing. 

When the dealership tells you that you are approved for financing, get that in writing as well. Some dealers will tell you that you are approved only to later change the story and tell you the loan fell through so they can negotiate a higher interest rate or different terms. It is called a "yoyo sale" because the dealership will make you come back again and again till they get what they want. 

Be careful if you are trading in a vehicle. Under most buyers' orders, if you back out of the purchase, the dealership can keep your trade-in. The dealership will frequently sell your trade-in, or say they sold it, and then inform you that the financing you agreed to was not approved - the yoyo sale again. 

Why would a dealership tell you that you are financed, sell -- or make you think they sold -- your trade-in knowing that the new purchase was not final? It's a power play.
They know you want a car. If your trade-in was sold, you probably need a car. If you think you are stranded at the dealership, odds are you will purchase a vehicle from them. 

Not all car dealerships are out to take advantage of their customers. There are honest, respectful dealerships that have chosen to make a good reputation for themselves by being honest and selling good cars at a fair price. 

If you are in the market for a car, new or used, ask around and visit several dealerships until you find one who will value your business and treat you fairly.