John Gear Law Office & Salem Consumer Law    503-569-7777
  • Welcome
  • Services Offered
  • Finding My Office
  • Law for Real People blog
  • Useful links

Very Good Article on the truth about "Certified Used Cars"

6/14/2022

0 Comments

 
Picture
Consumers' Checkbook, a consumer-oriented site, has a very good article on "certified" used cars -- if you are considering one, you will want to read the whole article carefully before you go shopping. Short excerpt below ...

https://www.checkbook.org/puget-sound-area/used-car-certifications-often-not-meaningful/


Used-Car Certifications Often Not Meaningful
by Anthony Giorgianni
Last updated May 2022

Dealers promise rigorously inspected rides and peace-of-mind warranties, but we found some consumers get rebuilt wrecks and even a former crash-test vehicle.

Most used-car shoppers find the process a stressful ordeal filled with possible perils. They worry they’ll end up with an unreliable vehicle, and they don’t feel comfortable dealing with car salespeople: A 2022 Gallup poll found them to be the second-most-hated profession in the U.S.; only lobbyists fared worse. Worst of all, supply-chain problems for new-car factories have created a surge in demand for used ones—during the first quarter of 2022, average prices for secondhand rides were up 35 percent compared to the previous 12 months. Competition is so stiff that many used cars are purchased sight unseen by desperate buyers.

To reassure used-car buyers worried about getting stuck with a lemon, manufacturers in the 1990s began offering “certified” used cars. They’re marketed as the crème de la crème of the secondhand auto world and even come with manufacturer-backed warranties.


But our research uncovered that certified labels don’t guarantee vehicles won’t have serious hidden mechanical or structural problems. We were astonished by some of the flaws we discovered, many that should have been noticed during promised inspections. We also found certified cars that were totaled wrecks that were rebuilt and resold, and even an SUV previously owned by the government and used in crash tests.


Because manufacturers count on their dealers to conduct the promised inspections needed to certify vehicles, certification labels are only as reliable as the diligence of the dealerships and their mechanics in doing the screening tasks and fixing any problems they find. And our research indicates they’re not always diligent. . . .


(Read the whole thing at https://www.checkbook.org/puget-sound-area/used-car-certifications-often-not-meaningful/)

0 Comments

How Much Cheaper Could Car Loans Be if Dealers Had to be Honest?

7/22/2019

0 Comments

 
Good Washington Post Article on How Car Dealers Rip You Off with Financing

Ian Ayres is the William K. Townsend professor at Yale Law School.


As websites such as Cars.com and TrueCar have made car pricing more transparent, auto dealers have turned to boosting their profits with hidden fees on loans.

When a consumer chooses in-house financing with an auto dealer, the dealer sends the customer’s financial information to a lender and is told the rate that the customer qualifies for. But it’s legal for the dealer to turn around and charge the customer a higher interest rate. You might qualify for a 5.9 percent interest rate, but if the dealer can get you to agree to a loan at 11 percent, the lender will kick back more than $1,000 to the dealership as pure profit. This discretionary markup of the interest rate allows auto dealers to arbitrarily increase their fees.

An analysis by the independent online auto-loan marketplace Outside Financial has found that dealers are charging an average markup of $1,791 per loan. By contrast, in 2003, Vanderbilt University economist Mark Cohen estimated that 10 percent of loans to Nissan’s borrowers were marked up more than $1,600. Now the average loan is boosted more than that.

. . .

Economists have had evidence for decades that car dealers tend to charge minorities higher prices. A series of studies I authored and co-authored in the 1990s found that auto dealers consistently charge black consumers prices that are hundreds or thousands of dollars more than their offers to white shoppers. These inflated prices can more than double the dealer’s profits compared with selling the same vehicle to a similar white customer.


. . .


The CFPB and other government agencies should be on the lookout for ways to better curtail dealership lending abuses. Yet instead of stepping up enforcement and protecting customers, the CFPB has rolled back rules on discriminatory lending practices and decreased enforcement of existing protections. Just last year, the Senate used the Congressional Review Act to overturn a CFPB rule that explicitly banned auto lenders from charging discriminatory fees on the basis of race.  . . .


0 Comments

The Car is Just the Bait: used car dealers are Payday Lenders in disguise

4/1/2019

0 Comments

 
 Turns out I'm not alone in recognizing that most used car dealers (not all, but most) are really just shady payday lenders disguised as merchants.

But I've been too optimistic!

Below is a quoted comment from an auto industry expert in the midwest. And this ins't me talking or another consumer attorney. This is a car industry guy talking - someone who helps dealers!

BHPH = "buy here, pay here" -- the classic small independent car lot.

He warns that even the big chain used car places have the same practices!

For used car dealers, the car is just the bait for the important part -- selling you an outrageous loan and optional "extras" that give the dealer much more profit than the car ever could. (Because, think about it -- the only reason 99% of the customers step onto the lot at one of these places is that they have such poor credit that they have to buy the car that someone else felt good about getting rid of.)

With the horrible increase in economic inequality in the US, this isn't going to change anytime soon.

But at least understand what you're dealing with -- if you feel like you have to buy a used car from a dealer, do everything possible to GET YOUR OWN FINANCING first, before you get anywhere within 100 miles of a dealer. Know what you are approved for IN TOTAL as well as in weekly or monthly payments, and walk away the minute the dealer tries to sell you financing.

Dealers are pushing out financing terms to absurd lengths to make used cars "affordable," but that just puts you into a negative equity trap (you owe much more than the car is worth) at trade-in time ... if the car even lasts long enough for a trade to be possible.


BHPH dealers are usually their own bank for holding the notes and collecting, and skirt the financial disclosure regulations in the process and in the re-titling of repos. (Assuming the title is ever placed in the buyer's name.) Often, their floor plan is private or through major auctions, and the finance arm is a wholly-owned subsidiary of the dealership.  

This particular predatory practice is not limited to the sketchy downscale boulevard dealers, but is often found in the flashy franchised used car groups, doing high volume sales with extremely detailed buyer qualification handbooks. They've been with us for years, but the increase in the mass of low income workers who need mobility 
now make the problem more visible. 

Often, the condition of the vehicles are blamed for the repo, but it's more likely to be the burden of repayment that triggers. It's a better business model to sell the best cars the particular market will bear, setting the markup aside. These dealers are selling money, and the car is just a mechanism that recognizes a need and opens the door to a payment process. It's a lot more profitable to repo a decent vehicle if you're going to resell it. 

0 Comments

In Oregon as in Arizona and New Mexico -- Never take your eyes off the dealer (the car dealer)

8/27/2018

0 Comments

 
Picture
  Remember -- you have EVERY RIGHT to take the paperwork home from a car dealer so you can get help reading and understanding it at your leisure before you sign!
   A car salesman who says "I can't hold this car for you if you leave" is a liar trying to pressure you into signing on the dotted line without having help reviewing the contract.


FTC press release:


Not all dealers play by the rules. In a
case announced today, the FTC alleges that Tate’s Auto Center of Winslow, Inc. — as well as related dealerships in Arizona and New Mexico and their owner and manager, Richard Berry --

* used deceptive advertising to get people in the door,
* failed to disclose required financing terms, and
* frequently falsified consumers’ income and down payment information in an effort to close the deal.

Instead of using the income information people gave, Tate’s often inflated numbers to make it look like people had higher monthly incomes.


https://www.ftc.gov/news-events/press-releases/2018/08/ftc-charges-auto-dealerships-arizona-new-mexico-falsifying

0 Comments

    RSS Feed

    Author

    John Gear Law Office -
    Since 2010, a values-based Oregon law practice serving Oregon consumers, elders, employees, and nonprofits.

    Categories

    All
    Advertising
    All
    Arbitration
    Autofraud
    Bankruptcy
    Borrowing
    Class Actions
    Consumer Law
    Consumer Protection
    Consumer Protection Class Actions
    Credit
    Credit Reports
    Debt
    Debt Collection
    Elder Abuse
    Elders
    Employment
    End Of Life
    Fairness
    Fdcpa
    Foreclosures
    Fundraising
    Funeral
    Games Car Dealers Play
    Garnishments
    Great Stuff
    Health Care/Insurance
    Identity Theft
    I (heart) Liz Warren
    Insurance
    Lawyer Referral Service
    Legal Resources
    Lemon Law
    Life Planning
    Long-term Care Facilities
    Media
    Military
    Military Assistance Panel
    Modifications
    Mortgages
    N.A.O.
    Nonprofits
    Oregonadminrules
    OregonLaws.org
    Plain English
    Preparing For Departure
    Privacy
    Pro Bono
    Regulation
    Resources
    Right To Repair
    Safety
    Scam
    Scams
    Strategic Planning
    Student Loans
    Tort Reform
    Training
    Used Cars
    Veterans
    Wage Garnishment
    Wage Theft
    Warnings
    Warranties
    Watchdogs
    Workplace

    Archives

    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    April 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2020
    March 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011

    RSS Feed

Picture

Lawyerly Fine Print:

John Gear Law Office LLC and Salem Consumer Law.  John Gear Law Office is in Suite 208B of the Security Building in downtown Salem at 161 High St. SE. That is right across High Street from the Elsinore Theater, a half-block south of Marion County Courthouse.

John Gear is only licensed to practice law in Oregon. This site may be considered advertising under Oregon State Bar rules. There is no legal advice on this site so do not take anything you read here as advice for your particular problem or situation. And I do not represent you and I am not your attorney unless you have hired me with a representation agreement. While I do want you to consider me when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials.  All original content on this site is Copyright John Gear, 2010-2022.
Photos used under Creative Commons from Tony Webster, brand0con, eirikso, Fibonacci Blue, Jirka Matousek, Rd. Vortex, rcbrazier - Brazier Creative, cogdogblog, marfis75, marcoverch, GWP Photography, byzantiumbooks, Mic V., notacrime, emrank, Family Art Studio, dotpolka, respres, Mark Cummins, a little tune, Insulinde, Bill Wards Brickpile, Roger Chang, AnthonyMendezVO, jonrawlinson, Andres Rueda, Franco Folini, inman news, Pictures by Ann, ph-stop, crabchick, Jilligan86, Elvert Barnes, p.Gordon, CarbonNYC, Digital Sextant, darkpatator, Neil T, rictic, Mr. Mystery, SeanC90, richardmasoner, www.metaphoricalplatypus.com, lindsayloveshermac, Santacreu, =Nahemoth=, ReinventedWheel, LadyDragonflyCC - On Vacation, See you all soon!, Mr. T in DC, Nisha A, markcbrennan, Celestine Chua, Furryscaly, smkybear, CarbonNYC, radioedit, Don Hankins, Henrik Hovhannisyan, CoreBurn, Mike Licht, NotionsCapital.com, David Masters, SeeMidTN.com (aka Brent), SoulRider.222, amboo who?, robwest, Rob Ellis', floeschie, Key Foster, TechCocktail, That Other Paper, marcoverch, oskay, Muffet, rodaniel, Alan Cleaver, Mike Licht, NotionsCapital.com, Horia Varlan, xJasonRogersx, billaday, BasicGov, One Way Stock, mikebaird, Nevado, shalf