Some new car owners are finding that they’ve paid thousands more than the sticker price for a new car. With the average price tag of a new vehicle being around $30,000, this is a mistake most of us definitely cannot afford.
How are dealers managing to rake in so much more for a new car? Daniel Blinn, consumer law attorney in Rocky Hill, Connecticut, says some are charging over the sticker price, which is the manufacturer’s suggested retail price, or MSRP. It’s located on the “Monroney sticker” located on the window of new vehicles. Many times, the practice is prohibited by law, but dealers find tricky loopholes to get around the rules. Blinn says that the uneducated or elderly customers are at the most risk for such fraud.
The Truth in Lending Act specifies that higher prices cannot be charged due to lower credit scores. Higher interest rates for a loan in such cases are legal, however.
In California, an additional sticker is required charges are added, including a statement that the selling price doesn’t equal MSRP. The sticker also must include a detailed list of the charges.
Blinn says that in Connecticut, however, dealers are being found guilty of unfair trade practices due to selling or leasing new cars for over MSRP without a supplemental sticker outlining the extra costs. Leasing is especially tricky for consumers to understand, and Blinn has found some lease agreements with payments that are based on prices as much as $10,000 over MSRP.
He warns that any dealer claims that high prices are due to high demand for a popular vehicle should be a warning sign if you’re shopping for a new car.
Other common extra charges that new car buyers are often persuaded to agree to are added on at the end of the buying process. These are often unnecessary extras such as rust-proofing, undercoating, fabric protection, extended service contracts and credit life insurance. Dealers are even caught padding purchase agreements with such items without the buyers consent.
The lesson? Take your time and review details carefully, including everything from the window stickers to the fine points on your lease or purchase agreement. Accompany the elderly and less experienced when they shop for a new vehicle. If you’re the shopper with less experience, take a knowledgeable friend or family member so that you have someone to discuss the pros and cons with.