As the spring selling season arrives, so does a proliferation of car advertising, with seemingly the same resilience and growth as the dandelions that survive each winter and take over your lawn.
In the ads, dealers promise low interest rates, high trade-in allowances and free or low-cost options, among other enticements. If only the promises were true at face value and without their many qualifications.
Right now the U.S. Senate is wrestling with the details of a contentious financial-regulation bill (S 3217), which would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.
There are also rules governing other questionable practices, such as the failure to pay off liens on trade-in vehicles, or so-called conditional loan agreements where terms can change. These are all reasonable propositions in the view of consumer advocates.
The National Automobile Dealer Association is lobbying to have car dealers exempt from some of the proposed reforms, claiming not to do so would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.” (See NADA Fighting Wall Street Financial Reform)
The debate has become so contentious that President Obama issued a statement directly taking on the dealers.
“Claims by opponents of reform that this legislation unfairly targets auto dealers are simply mistaken.,” Obama said. “The fact is, auto dealer-lenders make nearly 80% of the automobile loans in our country, and these lenders should be subject to the same standards as any local or community bank that provides loans. Auto dealer-lenders offering transparent and fair financing products to their customers should welcome these reforms, which will make their competitors who don’t play by the rules compete on a level playing field.”
“We simply cannot let lobbyist-inspired loopholes and special carve-outs weaken real reform that will empower American families. I urge the Senate to continue to defeat the efforts of special interests to weaken protections for all American consumers,” said Obama.
You don’t have to wait for the debate in Washington to sort itself out. A quick phone call will go a long way toward saving you the time of a disappointing and time-consuming dealership visit where you will find that there is the fine print restricting the offers. You should also check with the local Better Business Bureau about the firm’s reputation.