FTC To Examine Auto Dealer Practices

Edward Niedermeyer
by Edward Niedermeyer

The Federal Trade Commission has announced that it will be holding a series of round table discussions aimed at investigating misleading dealer practices in the areas of sales, financing and leasing. According to the Commission’s release, the round tables will

gather information on consumers’ experiences when buying or leasing motor vehicles. The roundtables will explore consumer protection issues related to the sale, financing, and leasing of the consumer vehicles consumers most often use – cars, SUVs, and light trucks.

For many consumers, buying or leasing a car is their most expensive financial transaction aside from owning a home. With prices averaging more than $28,000 for a new vehicle and $14,000 for a used vehicle from a dealer, most consumers seek to lease or finance the purchase of a new or used car. Financing obtained at a dealership may provide benefits for many consumers, such as convenience, special manufacturer-sponsored programs, access to a variety of banks and financial entities, or access to credit otherwise unavailable to a buyer. Dealer-arranged financing, however, can be a complicated, opaque process and could potentially involve unfair or deceptive practices.

The National Auto Dealer’s Association says [via Automotive News [sub]] it will attend the round tables and represent dealers’ efforts to “increase financial literacy” and “promote regulatory compliance.” Auto dealer finance was one of the only finance sectors exempted from the Consumer Financial Protection Act, despite protests from the Pentagon.


Edward Niedermeyer
Edward Niedermeyer

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  • Mikenem Mikenem on Mar 11, 2011

    It's about time. Had no idea how the "Buy Here Pay Here" places operate until recentlly. Apparently it's a rent to own agreement (no bank involved) where the seller counts on the buyer to be late with a payment so they can quickly reposess the vehicle without any kind refund of course. Then offer it to the next sucker who walks in the door. Rinse, dry, repeat...

  • JMII JMII on Mar 11, 2011

    I too wish the entire process was no haggle and truly transparent (no "fees" tacked on). Why is so hard to give me the final out-the-door price right up front? Actually I know why... the F&I (finance and insurance) is the area (along with service) where most car dealers get their largest profits by tacking on all sorts of bogus numbers. I always knew this, but worked at a place that produced "marketing materials" for various companies whose services were built with ONE purpose in mind: get more $$$ out of the auto sales process, in particular the F&I department. Their material was very clear that profits were easy by padding deals and upselling all sorts of stuff. Its not illegal (buyer beware) but its clearly designed to confuse consumer and give the dealer a few hundreds more per sale. The reason is simple: you've bought the car and paperwork has started so now your pretty committed and excited to have a shiny new ride, so a few hundred dollars shouldn't worry you - the dealership fully capitalizes on this situation. Those old jokes about rust-proofing and paint-sealing are completely true, these companies use FUD (fear uncertainty and doubt) to make you believe you need to pay for various extras. I always found this to be completely ridiculous... after the sales guy told me how the great the car was (can't kill these things, never rusts, super safe, etc) the F&I pencil pusher tells you need an extended warranty because your new metal & leather object could explode killing your wife and kids, or that it could be stolen at any second so you need glass etching, alarms and extra insurance. The word scam doesn't even being to describe the whole process.

  • Straightsix Straightsix on Mar 11, 2011

    "Nice avatar." Thanks. It's my '73 TR6.

  • Nrd515 Nrd515 on Mar 13, 2011

    I've been buying cars since 1974, and I've bailed twice during the time the F&I guy is putting everything together, and almost walked one other time due to the games they play. The last few times I've gone in there with the loan all set up ahead of time, and I tell them if they can beat the rate, I will go with them, if not, it's going to be a cash deal. It seems to keep their bad behavior to a minimum. A friend recently bought an Acadia, and the same slimy finance guy who nearly made me walk started his nonsense, and he almost walked. I've complained about the guy twice to management, and I've been there when he's had people threaten to leave more than once. I don't know why they keep him on, he's got to be hurting their bottom line. He "assumes" all kind of things, like you're going to lease, get the gap insurance, extended warranty, etc. We told our salesman last time, that we were going to walk if we didn't get someone else, as his "assuming" and generally smart ass attitude was annoying the hell out of us. His replacement was a nice kid, and we had no further issues. A friend of mine has no credit, he's a young guy who was supporting his mother until recently, and he never really had any chance to make a major purchase on credit before, so he went to one of the big chains, the one with a made up guy's name, and got reamed. He had to have a car right away for work, and he ended up with a decent enough looking Taurus, and so far it's been fine, but the interest is like 15%, and between that and his insurance, he's really getting hammered. His millionaire lawyer father wouldn't dream of helping him out, of course, just like he never helped support the ex wife he bled dry in the divorce either.

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