New car ad slogans: Too good to be true
The adage, "If it sounds too good
to be true, it probably is," goes double for new car advertising.
The typical car dealer newspaper or radio
ad blares out in large headlines or in a loud pitch why you need to
rush down, right now, and buy at prices and incentives you'd be crazy
not to take advantage of.
Unfortunately, too few people read the
small print at the bottom of the ad or listen to the so-fast-it's-gobbledygook
at the end of the radio commercial.
If they did, they would better understand
some of the traditional advertising gimmicks dealers use -- and what
they can really mean. Here are some of our favorites:
To qualify for zero-percent financing, "You
must have a very high credit score, which means 700 or above,"
warns J.A. (Doc) Watson, an automotive sales consultant and author of
"Gotcha Sucker: The Confessions of a Car Salesman," noting
that few people have such a score. "The adroit dealer -- who probably
knows your credit score within minutes of your arrival -- will try to
interest you in a deal at some other interest rate, now that he's lured
That is what you read in large print. In tiny print, you'll find a
phrase such as: "With approved credit," or "All financing
subject to credit approval."
By the way, the experts advise, the ads often will give
you a choice between a cash rebate and zero-percent financing. Figure
out which works best for you. To help, try our calculator.
"With money as cheap as it is now, buyers should
shop around for financing before going to the dealer. You might
be able to get a 3 percent rate on your own and still take advantage
of the rebate," advises Charlie Vogelheim, executive editor
of "Kelley Blue Book."
"$4,000 for your trade no
matter what the condition"
This ad is infamously known as the "push-pull-or-tow-it-in"
concept which dates back to the 1950s. If you believe this ad, you
have to believe the dealer is so stupid and anxious to sell cars,
he is going to pay you far more than that old clunker is worth. Don't
you believe it. If he's paying you too much for your trade-in, experts
insist, he's adding that and more to the price of the new car and
taking away your negotiating power at the same time. The best defense
to this ploy is to become aware of the value of your car through such
Web sites as Bluebook.com
which can quickly tell you what your present car is really worth wholesale,
as a trade-in, or retail, if you want to sell it yourself.
The opposite of the inflated-trade price trick is
when the dealer tries to "steal the trade" by paying a
lot less than your car is worth. If you don't do your homework and
know the trade-in value of your present car, you could easily think
you are getting a good deal. You should also check Edmunds.com or
bluebook.com for any rebates and incentives being offered on that
particular car in your specific area. Marty Padgett, executive editor
and producer for Thecarconnection.com,
warns you might find that generous trade-in figure has been shaved
off a rebate you know nothing about.
"Buy it now for just $189
When you see or hear an ad like this, you can substitute just about
any figure you like, because no matter what the total price of the
car, you can make your payments come out to any figure -- depending
on the amount you put down and the terms of the loan.
Aside from that simple math, the monthly payment that
entices you could be a lease amount, which involves annual mileage
restrictions and money down at the beginning or end of the lease.
Or the really small print may specify a huge amount down. Even if
it's an offer with nothing down, it will be based on your credit.
If you don't have excellent credit, the payments will be higher.
It also can be a form of the "bait-and-switch"
tactic, with that price pertaining to only one car on the lot. Or
that particular model may be stripped without any of the standard
options that most people want.
"Never go shopping for a new car based on a monthly
payment," advises Lauren J. Fix, co-host of Talk 2 DIY-Automotive
on the Do-It-Yourself Network. "Compare auto models, with the
features you want, in the price range you want," she says.
"We'll pay off your old car
no matter how much you owe!"
Call this a kissing cousin to pull-it-in, push-it-in, or tow-it-in.
Let's say you owe $8,000 on your present car and it's only worth $3,000.
When the dealer boasts it will pay off your old car, they're just
going to add the payoff amount to the cost of your new car. The new
lender -- the manufacturer or another lending institution -- is fully
aware that the amount being financed exceeds the value of the new
car and therefore will treat it as an unsecured loan -- and will charge
a significantly higher interest rate.
"Huge end-of-year sale:
must make room for 2005s!"
Dealers like to say this is the biggest chance of the year to save
the most money on a "new" car. In some ways, they might
be close to telling the truth. It might be true if you keep it for
seven years or more -- long enough to drive it into the ground --
and don't figure on getting much for it when you sell it.
However, if you usually sell or trade in your car every
two or three years, it could cost you big time. "If you are buying
on a short cycle, you are going to get nailed by buying a car just
before the new models come out," says thecarconnection.com's
Padgett. "Unless there are going to be some major model changes,
you might as well wait to buy the next year." Buying a car just
before the model year expires means you're buying a year-old car and
the depreciation over the first month or so will be far more than
the normal depreciation on a new car. Even if there's a good rebate
offer, the car will be considered almost a year old when you buy it.
"Buy this car at below-invoice
It's easy to print up phony invoices off of computers these days,
so make sure you are getting the real invoice prices. How? Again,
both Bluebook.com and Edmunds.com are excellent resources. Don't
let the dealer convince you he's selling that car at no profit just
because it is at invoice or below. The invoice price does not necessarily
mean that's what the dealer paid for it. He may be getting a rebate
and he is definitely getting a dealer holdback fee from the manufacturer.
This is a percentage of the price held back by the manufacturer
when the dealer buys the car and paid to him when he sells it. Depending
on the car, it usually ranges between 2 and 3 percent of the Manufacturer's
Suggested Retail Price.
Rod Gibson is
a freelance writer based in Georgia.
-- Updated: Jan. 20, 2005