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Things to Do Before Visiting the Showroom

Low auto loan rates mean good deals for most consumers today. Unfortunately, a lower interest rate does not necessarily mean you will be able to save money from the deal. These days, real savings require cracking dealership secrets, decoding prices and fees, and reading beyond the obvious ad messages.

A few months back, we’ve seen consumer advocates, regulators and government agencies work together to protect consumers from abusive practices in the auto lending industry. To avoid getting taken for a ride this 2014, remind yourself of the following tips before walking into any dealership.

1. Do it yourself.

The Consumer Financial Protection Bureau is scrutinizing lenders and has called on them to make sure dealers in their network do not practice discriminatory lending against minority borrowers. In December last year, Ally Financial and Ally Bank paid a total of $98 million to compensate over 235,000 minority borrowers who were allegedly charged unfair auto loan interest rates. According to the CFPB, the results of their examination on the lender show that they had not done enough to curb discriminatory lending practices among its dealership partners. Ally denied the allegations, but the bureau was able to teach consumers a lesson.


Consumers should shop for auto loans and arrange one themselves before walking into any dealership. Getting preapproved allows them to see what kind of interest they will most likely get with their credit. It will also help them avoid undisclosed dealer markups which are tacked onto the interest rate and serve as compensation for the dealer’s service of arranging loans for buyers. So instead of letting the dealership do it for you at a fee, do it yourself.

2. Crack the ad.

Not literally, though. But be able to determine whether what the ad is saying is true or deceptive. The Federal Trade Commission last month came up with “Operation Steer Clear” which curbs deceptive dealership advertising.

There is a Michigan dealership reported recently which sent out mailers that led customers to believe they have won a sweepstakes prize. Two customers who received a mailer filed complaints after approaching the dealership to claim the prize only to find out they did not really win.

If the car ad seems too good to be true, investigate before jumping into the deal. But in any case, always read the fine print or give the dealership a call for more details.

3. Break down the total cost.

The price in the window sticker is not the whole story. Ask for a detailed breakdown of all the fees included in the deal. Aside from just knowing the specific items you are paying for, another important purpose of asking about the fees is to negotiate any item you think is unnecessary or unreasonably priced. You have every right to ask the dealership for explanations and insist on deleting some items you don’t really need to pay for.

Examples of the fees are delivery charge, preparation fee, documentation fee, advertising fee and sales tax. Some dealerships automatically charge their buyers for extra services like paint protection and VIN window etching, which are actually optional. Some dealers do not disclose these charges right away.

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