SoCalLemonLaw.com Blog

Dear Readers,

Happy Father’s Day and happy first day of summer, or summer solstice, if you happen to be out at Stonehenge.

I ran across this article in Yahoo Finance and thought it definitely worthy of a reprint here. Hope you find it helpful.

Car Dealer Tricks to Watch For
What to be wary of when you’re negotiating your next new-car purchase.

We know. Not all car dealers are unscrupulous, and not all are going to take you to the cleaners. Among all the “Honest Bobs” out there walking the lots, many really are trustworthy. But there is a simple reason so many people dread buying a new car: the potential for rip-off is astronomical, and common practices over the years have often justified consumers’ fears. If you catch a whiff of any of the scams below, be on alert.

Juggling the Four-Square

This isn’t really a trick, but awareness here is important for a buyer. When you sit down to negotiate, the salesman will pull out a “four-square” worksheet on which to work out the terms of the deal. In the four quadrants of the sheet the salesman will record purchase price, down payment, monthly payments, and trade-in value. He will fill in the sheet as you talk, working the deal like a shell game—if he thinks you are preoccupied with getting a fair deal on your trade in, he might give you a good price for that and then nudge your new-car purchase price north. Take it slow, focus on one item at a time, and be sure you are comfortable with each individual aspect of your purchase.

Profiting from Rebates

Rebates bring a lot of customers into a showroom, but the discounts can hide several tricks dealers employ to suck a few bucks from a buyer. First, don’t let a salesman tell you that you are getting a good deal because of a rebate; rebates come from the manufacturer and usually apply regardless of the price you negotiate with the individual dealer. Negotiate as if there are no rebates. Second, make sure the rebates are deducted from the purchase price. If you allow the dealer to mail you a check after the sale, you end up paying taxes and interest on the rebate. And never let an incentive like a low APR or a rebate rush you into a purchase you aren’t ready to make. If there’s an incentive on a car today, odds are there will be incentives on it again. Salesmen will often tell you there are strings attached to incentives, such as that you have to buy a certain trim, engine, or option package in order to qualify. This is not always true. Do your homework.

Inflating Payments

Talking monthly payments at the car dealership can be as dangerous as saying “bomb” at the airport. A salesman asks how much you are willing to pay each month, and you throw out a number—say, $450 a month. He asks how much more you could afford—just getting a feel for you. You tack on another 50 bucks. In your mind, you were just theorizing, but to the salesman, you just committed to a $500 minimum monthly payment. Instead, when a salesman asks how much you can pay each month, tell him you will not discuss monthly payments and only want to talk purchase price; you’ll decide on monthly payments after you’ve settled on a fair price.

Fees and Extras

Delivery charges, titling fees, and a few other closing costs are inevitable extras associated with buying a new car. But aside from a few essential add-ons, most fees or extra-cost items are either inflated or altogether unnecessary. Negotiate fees down, or outright refuse to pay them. And deny any extras offered by the finance and insurance manager. Basically, if it’s anything he offers you after you’ve negotiated your sales price, you don’t need it and you shouldn’t pay for it. Particularly egregious are paint protection and fabric guard, essentially wax and Scotch Guard dealerships often charge hundreds of dollars for.

Interest-Rate Bumping

You should always shop for your own financing before you head to the dealer. Maybe you’ll get a better rate; maybe you’ll just get a better idea of what rate you qualify for so you can police the finance manager. It is not uncommon for the dealer to secure financing for you at one APR but offer you a rate one percentage point higher—and then pocket the difference.

Altering the Bill of Sale

Never sign a bill of sale with blanks or terms that are “subject to bank approval” or have similar wording. Some dealerships will let a customer sign such a document and release the new car to its happy owner, only to call the buyer back a few days later to say that the loan fell through and they need to come back in to sign some new paperwork, which just happens to cost the buyer more than the negotiated price. Never drive your car off a lot until all the paperwork is filled out completely.

The following four are the most underhanded and childish dealer tricks. Fortunately, they don’t happen very often anymore. But if a dealer pulls any of these stunts on you, they don’t deserve your business. Walk away.

Ransoming Your Check

The sales manager gets cast as the villain in a good cop/bad cop routine some salesmen play with buyers. You’ll negotiate a price, and the salesman will leave to get approval from his sales manager, painting the salesman as your ally and the manager as a common enemy. Be wary if the salesman asks for a check to prove to the manager you are serious. Sometimes, your offer will be rejected, but your check won’t be returned right away—it’s been “misplaced” or some similar nonsense. Now they’ve got your money, and you feel pressured to concede to their terms. Remember that you can always walk away and cancel the check later.

Eavesdropping

While it’s a good idea to bring a friend or family member shopping with you—someone else to watch the deal, question the terms, and help keep your emotions in check—this opens additional avenues for nefarious dealers to use the wingman against the buyer. When the salesman leaves the cube, people drop their guard and feel comfortable discussing the aspects of the deal they wouldn’t mention in front of the salesman. With just a couple subtle pokes at their phones, salespeople can leave the intercom open with the sales manager’s office, where they will go not to seek approval on your terms, but to eavesdrop on your conversation, harvesting information to use against the customer. There are even stories of salespeople hiding baby monitors in their offices. When the salesman leaves to talk to the sales manager, that’s your cue to leave and get a cup of coffee.

Lying About Your Credit Score

In addition to shopping around for financing, you should take a look at your credit report and strongly consider spending the few bucks to learn your credit score before you go to a dealership. Many of the best offers to be had on new cars are contingent on the buyer having qualifying credit, and dealers occasionally have been known to lie to customers about their credit scores and the financing for which they qualify.

Misplacing Trade-In Keys

If you are thinking of trading in your old car when you buy a new one, someone may borrow your keys to evaluate your ride. If negotiations stall and you try to leave, you might find that they’ve been “misplaced” in order to prevent you from leaving and entice you to make a deal you aren’t comfortable with. If you bring two sets of keys with you, this won’t be a problem.

Not every dealership is guilty of these tricks. Which is all the more reason to stick with a good one when you find it.

Hello Readers,

With the economy the way it is, I guess we’d better all learn more about buying used cars. This article just ran in US News & World Report. It’s not the greatest but it does have some useful tips. Hope you enjoy.

Oh, and by the way…DON’T BUY CARS ON EBAY!!!!!…unless you have them inspected first by a local reputable mechanic or service technician. I’d also arrange to have the local service technician ship the car to you, so the owner does not engage in monkey business between the time of the auction sale and the time of the shipping.

Here’s the article:

Buying a new car can be very exciting. Going into the dealership and negotiating a price can be stressful, but it all seems worth it once you drive your brand-new car off the lot.

But for some used car shoppers, that stress isn’t so quick to evaporate once the purchase is made. It can be hard to be sure you got the best price, and only time will tell whether the car is dependable or a lemon.
More from U.S. News & World Report

» Best Used Car Deals: March 2009

» Is it Better to Buy Used or New?

Although most used car sales go off without a hitch, sometimes there’s miscommunication or purposeful deception that can sour the experience. However, you can prepare yourself for some of the common pitfalls used-car shoppers face when closing the deal. Keep these pointers in mind as you shop:

1. Bargain-Basement Pricing

You can get a great price on used cars, but beware of deals that seem too good to be true. There could be something seriously wrong with a car that a seller is practically giving away. Check the suggested value on Kelley Blue Book’s or NADA’s web sites before you begin negotiating and don’t be afraid to ask the seller why the car is priced so low. Remember, just because the car is cheap doesn’t mean it is a great deal.

2. No Further Inspection Necessary

A certified pre-owned vehicle is more likely to have been inspected than a car that’s privately sold. But in both cases, you can protect yourself by having an independent mechanic look over the car. Paying for your own inspection can confirm problems you already knew existed, or bring to light additional issues that give you room to negotiate a better price. Ask the seller if your regular mechanic can give the car a once-over before you agree to purchase. If you’re buying a CPO vehicle, ask the dealer if you can speak with the mechanic who performed the inspection.

If in either case you are told this can’t be arranged, you should consider walking away from the deal.

3. Missing Paperwork

A private seller that tells you they don’t have the title or maintenance records for the vehicle could be trying to keep something from you. Luckily, you don’t have to rely on them to be transparent, as long as you have a Vehicle Identification Number (VIN). Web sites like NADA.com or CARFAX can provide a vehicle history report to compare with the information the seller has given you on the life of the car. These reports will also give you an ownership history if you’re concerned with how many times the car has changed hands.

4. Not Available for Test Drives

If you can, it’s always best to take the car for a spin before agreeing to purchase. Test driving a used car will not only give you a handle on how it drives, but it could alert you to any problems the seller downplayed or didn’t mention. If you have time, let a friend drive the car as well — they might notice something that you don’t.

5. Sight-Unseen Transactions

The internet has made it easier to find great deals on a wide selection of used cars. But not all of them are in a location convenient to handle the transaction face-to-face, and there are several things to keep in mind when purchasing a car located elsewhere. First up, never transfer any money to a seller until you have the car and its title in hand. Second, be wary of sales that require more than basic transaction information to complete the sale. Third, only use online escrow accounts that you’re familiar with to transfer the money and, if possible, pay in person with cash or a check instead. Fourth, try to negotiate a trial period with the car so that you can return it if you’re not satisfied — and get an agreement in writing.

6. Warranty Fine Print

If warranty coverage is offered with your used car, make sure that you understand the terms. Find out when the coverage began. While some manufacturers’ plans begin from the time you purchase the vehicle, others modify the time by the age of your vehicle. If you’re buying a car from a private seller, double-check whether their original warranty is transferrable so you can retain coverage. Determine whether your warranty includes maintenance, wear and tear, and roadside assistance. Lastly, ask what dealers (if not all) will honor your warranty coverage.

Hello Readers,

These are trying times indeed. Two of the larger RV manufacturers, Fleetwood and Monaco, declared bankruptcy just within the last week. This adds to the growing list of RV manufacturers that have declared bankruptcy, including National, Alfa and several others.

The key tip for the RV buyer in the marketplace currently: go online or have your broker check on the company’s financial status, as well as whether there are any rumors of bankruptcy filings. If so, remember that you might get a great out-the-door deal on the coach, but there may be no one there to perform warranty repairs if you have problems. I would stick with strong companies even if it means paying a few more dollars. And, buy an extended service contract. This way you have a much better chance of getting warranty services even if the manufacturer declares bankruptcy. Make sure your service contract is comprehensive and provides coverage for major components in the event of a manufacturer’s bankruptcy.

Best of luck & I hope we all pull through these trying times.

Bob Brennan

Hello readers,

On Yahoo today there was an article providing some tactics for not getting cheated at the car dealer and I thought it was worth passing along. Here it is:

Our reviews, road tests, and Buying Guide will help you choose a single vehicle from the 430 or so on sale today, but how do you negotiate the often contentious dealer experience? It can be an intimidating and unpleasant process, and while most dealers are honest, salespeople are in the business to close deals quickly and get you to pay top dollar. Most engage in tried-and-true psychological tactics designed to get them the best possible deal. So how do you make sure you’re doing the same for yourself? We’ve debunked the eight most common hard-sell tactics. More important, we tell you how to turn around each of them and use them to your advantage. Should you find yourself getting pressured, these replies will regain control of the situation.

What the Dealer Says:

“You have to make the deal today.”

What You Should Say:

“Sorry, this offer expires tonight.”

In this scenario the dealer quotes a price, but to apply pressure to the buyer the deal is only good for that day. This gives the buyer little chance to research the price or find a competing offer from another dealership. Fortunately, the buyer can regain control by coming up with his or her own price and adding, “My offer is only good for tonight.” A dealer desperate to make a sale will have little recourse, and should they not agree to the price the buyer is free to walk away. Just be sure to do your research before you go to the dealer so your offer is actually low enough.

What the Dealer Says:

“I have to check with my manager.”

What You Should Say:

“I have to check with my spouse.”

A salesperson often will tell you that he has to confer with a sales manager to see if the price he comes up with is agreeable. Thus, the manager becomes the bad guy and the salesperson comes off as being in the buyer’s corner. Don’t be fooled and don’t be afraid to use the same tactic. If you need time to think about it and you don’t want to come off as the bad guy, tell the salesperson you have to confer with your spouse. It helps to paint the spouse as the disagreeable sort. Don’t have a spouse? Try accountant, therapist, astrologist, cult leader, food taster, or any other authority figure whose opinion you supposedly value. Have the other person play the role of the bad guy who’s holding up the deal. It’s not uncommon for salespeople to belittle a customer for letting the “little lady” or “chauvinist husband” tell them what to do, so be prepared to set your ego aside and admit you’re only one member of the team making the decision.

What the Dealer Says:

“I have to put food on my table.”

What You Should Say:

“I have to keep food on my table.”

To play on the buyer’s compassion, the salesperson might tell you that he has to put food on his table. Apparently, the deal is so in favor of the buyer that the salesperson will starve if the deal gets any better. Remember, you’re the one unloading the cash, not the salesperson. Tell them, “I have to keep food on my table.”

What the Dealer Says:

“We’re already losing money on this deal.”

What You Should Say:

“I’m already losing a hell of a lot of money on this deal.”

To convince the buyer of the excellent deal that is being made, the salesperson might tell the buyer that the dealer is losing money on the deal. This is another tactic designed to appeal to one’s sympathy. Consider that the buyer is the one who is losing, or at least giving up, thousands of dollars. Be sure to remind the salesperson that you are the one losing the money.

What the Dealer Says:

“I’ve got another offer, this is in high demand.”

What You Should Say:

“I could go down the street and get the same car.”

Car salespeople will always try to convince the buyer that the car they are considering is in such high demand that they’d better move quickly or risk losing the car. “Other interested buyers” and “production shortages” are ruses designed to make the buyer believe that buying immediately is necessary. Mass-produced cars are, as the name implies, built in huge numbers. Even if what the dealer tells you is true, another just like the one you want will be built and available soon. And there are almost always other dealers that will have the same car or something close.

What the Dealer Says:

“This is the only one like it, take it or leave it.”

What You Should Say:

“I am the only person who would ever buy this ridiculously unusual car.”

Hard-core car enthusiasts often find themselves considering cars that ordinary buyers don’t even know exist. Consequently, the automaker doesn’t make a lot of these cars because the market for them is so thin. But they are out there. Somewhere a Cadillac dealer has a CTS with a six-speed manual transmission and it’s more than likely that the salesperson is telling the buyer, “This is the only one like it, take it or leave it.” The seller should respond in kind with, “I am the only person who would ever buy this ridiculously unusual car.”

What the Dealer Does:

Last-minute price increase or hidden fees

What You Should Do:

Last-minute offer decrease

If the dealer knows that you’re seriously interested and a price has been agreed upon, occasionally the dealer will surprise the buyer with a last-minute price increase or previously undisclosed fees and, of course, a plausible-sounding excuse for the increase. Don’t give in to this tactic. Try countering with a last-minute offer decrease.

What the Dealer Says:

“I’m throwing in all this for free.”

What You Should Say:

“I don’t even want all this stuff.”

A salesperson will often attempt to justify an inflated price by including valueless items like pinstriping, undercoating, fabric or paint protectant, or pre-sale inspections. Sometimes even optional equipment may be part of the deal and appear to be free. If you don’t want the extra options, just let the dealer know. Tell the dealer, “These non-factory items, if anything, make this car worth less to me.”

Hello readers,

I’m working on MLK day because I’m old enough to remember MLK Jr., and, in my recollection, he worked a lot. So, I’m honoring his memory, and his dream, by working to make things better–for my clients, for my firm and hopefully for consumer protection and consumer rights in California.

Ahhh, Carfax…I well recall in the 1990’s, Carfax approached me to do an infomercial promoting their new service which would notify consumers about car histories and thereby prevent fraud in used car sales. I gladly complied. Little did I know at that time that Carfax is wholly inadequate to notify consumers about the histories of most cars in its database.

The problem is the limited sources of Carfax’ information. Most Carfax information comes from state databases, like the California DMV. Thus, Carfax will accurately pick up the following in at least many, and possibly most, cases: 1. Title histories (these are state records); 2. Changes in title status (i.e. when a car is titled with a state agency as a “salvage”); and, 3. Accidents which are reported to public agencies, including the police.

However, as we all know, the majority of collisions with vehicles, and the majority of vehicle problems, are not reported to state agencies. Instead, these are reported to insurance companies and to car manufacturer warranty repair databases.

Guess what? Carfax does not tap into, and does not carry, insurance company information and car manufacturer warranty repair records!

Viola! Carfax lacks MOST of the pertinent history of MOST of the vehicles in its database.

At best, Carfax is a band-aid. In many instances, the information on Carfax is useful, but in many others, it is wholly insufficient. If a vehicle is driven without an accident and with an unremarkable title history, Carfax is useful. If a vehicle is salvaged because of flood, fire or wreck damage and this is reported to the state’s motor vehicle department, Carfax is useful. If the accident becomes the subject of a police report, Carfax can be useful. Beyond that, you’re on your own.

I hope this information proves useful to you and thank you for reading.

We have been receiving a lot of calls from consumers who trade in their cars to financially distressed dealers (the consumers rarely know that the dealers are distressed), and the dealers then fail to pay off the loans on the trade-in vehicles. Obviously this can ruin the consumer’s credit. California did enable a board to address this problem but unfortuantely, with California’s current budget situation, the board has not yet fully gotten off the ground. Here’s an article on the situation from yesterday’s San Francisco Chronicle:

A program to help California car buyers when dealers fail to pay liens on their trade-in vehicles, set to begin at the first of the year, has been delayed by several months because of inaction by state leaders.

Under the law that created the program, state officials from the governor to heads of a state agency were to appoint people to a board overseeing a fund intended to address a growing problem in the state as more car dealers go out of business or declare bankruptcy.

Gov. Arnold Schwarzenegger signed the law in 2007 and the state has collected money from dealers since July 1, but the Consumer Motor Vehicle Recovery Corp. remains without a full six-member board. Schwarzenegger announced two appointments to the board Tuesday.

“It looks like the ball just got dropped,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, which lobbied for the program. For months, she told people they could seek relief beginning Jan. 1.

A dealer’s failure to pay off a lien can leave a car buyer stuck with two car payments and has resulted in repossession and impacted people’s credit, including their ability to buy another car or rent an apartment.

The new nonprofit agency was to allow consumers who traded in vehicles after July to apply for money to cover the remaining amount on their loans if a dealer failed to do so. Dealers have contributed $465,000 to a fund that will grow to $5 million, according to the DMV.

Sen. Alex Padilla, D-Pacoima (Los Angeles County), who sponsored the legislation, did not return telephone messages seeking comment on the delay.

The governor, attorney general, Assembly speaker and heads of the Department of Consumer Affairs and a Senate committee are supposed to appoint members to the agency’s board; the attorney general’s office is to regulate the program.

On Tuesday, a spokesman for the Consumer Affairs Department said other appointees could come later in the week. A spokeswoman for Attorney General Jerry Brown’s office said the program is expected to be functioning “in the next couple of months.”

A spokeswoman for Gov. Arnold Schwarzenegger said finding potential board appointees able to serve had taken longer than expected. The law creating the program requires that they own or manage a dealership and have not been convicted or accused of a civil or criminal violation by a public prosecutor.

“This is all ‘the dog ate my homework’ stuff,” said consumer advocate Shahan. “They didn’t care enough to make it a priority, that’s what it comes down to.”

Stephanie Feliciano bought a used BMW in April 2007 from a Sacramento car dealer, trading in her Toyota Camry; the dealer promised to pay what she owed on it.

Three months later, she applied to rent an apartment but was turned down. Her credit record included a repossessed car, she was told, because the dealer never paid off the Camry. She had several subsequent interactions with the dealer, who sent a series of checks to the finance company that bounced, she said.

“This really stripped me down to the bone. It took my dignity and it took my trust,” said Feliciano, 31, who lives in Roseville (Placer County).

She eventually sued, after the dealership repossessed the BMW when she refused to continue making payments, and her attorney is negotiating a settlement with the bond company that insured the dealership.

The owners of the dealership closed it down soon after repossessing her car and have disappeared.

Feliciano’s experience is becoming common as car dealerships go bankrupt or out of business in the state and across the country. As of mid-December, 120 new-car dealers had closed in California during 2008 compared with 20 the year before, said Brian Maas, director of government affairs for the California New Car Dealers Association.

The Solano County district attorney’s office is litigating a civil suit against Vacaville Ford Mercury Inc., which is accused of failing to pay off nearly $500,000 in trade-in vehicles.

Feliciano did not qualify for the new state program because she made the trade-in before July, but her San Francisco attorney said the fund should help others.

“If there was a fund you could turn to without having to wait nine months or a year for a lawsuit, that would be helpful,” attorney Mark Anderson said. “But let’s see it happen.”

Dear Readers,

Here is the list of the top safety vehicles for 2009, per the Insurance Institute for Highway Safety. I borrowed this list from my friend Ron Burdge in Ohio, widely regarded as one of the two best lemon law attorneys in that state (the other being Laura MacDowell). If you’re interested, Ron’s blog is found at http://ohiolemonlaw.blogspot.com/, and he updates it very regularly with very useful information. Here’s the list:

LARGE CARS: Acura RL, Audi A6, Cacillac CTS, Ford Taurus, Lincoln MKS, Mercury Sable, Toyota Avalon, Volvo S80

MIDSIZE CARS: Acura TL and TSX, Audi A3 and A4, BMW 3 Series, Ford Fusion, Honda Accord, Mercedes Benz C, Mercury Milan, Saab 9-3, Subaru Legacy, VW Jetta and Passat

MID SIZE CONVERTIBLES: Saab 9-3, VW Eos, Volvo C70

SMALL CARS: Honda Civic, Mitsubishi Lancer, Scion xB, Subaru Impreza, Toyota Corolla, VW Rabbit

MINI-Car: Honda Fit (but only with the option ESC)

MINIVANS: Honda Odyssey, Hyundai Entourage (but if you buy one be sure that within 30 days you send them a registered letter saying you reject their binding arbitration or they automatically rip off your legal rights), and Kia Sedona

LARGE SUVs & CROSSOVERS: Audi Q7, Buick Enclave, Chevrolet Traverse, GMC Acadia, Saturn Outlook

MIDSIZE SUVs & CROSSOVERS: Acura MDX and RDX, BMW X3 and X5 (our personal favorite for its remarkable navigation system and hidaway 3rd row of seats and rear climate control), Ford Edge and Flex and Taurus X, Honda Pilot, Hyundai Sante Fe and Veracruz (but if you buy one be sure that within 30 days you send them a registered letter saying you reject their binding arbitration or they automatically rip off your legal rights), Infiniti EX35, Lincoln MKX, Mercedes M Class, Nissan Murano, Saturn Vue, Subaru Tribeca, Toyota FJ Cruiser and Highlander, Volvo XC90

SMALL SUVs & CROSSOVERS: Ford Escape, Honda CR-V and Element, Mazda Tribute, Mercury Mariner, Mitsuibishi Outlander, Nissan Rogue, Subaru Forester, Toyota RAV4, VW Tiguan (where do they get these VW names?)

LARGE PICKUP TRUCKS: Ford F-150 (in spite of its many, many defect issues and recalls over the years, it just keeps on selling), Honda Ridgeline, Toyota Tundra

SMALL PICKUP TRUCKS: Toyota Tacoma

Out of 72 models on the list, here’s the American Big 3 Scorecard: Ford 12, GM 6, and Chrysler -0-. That’s only 25% of the vehicles on the list. Not a single Big 3 product made the Small Car or Small Truck category. Stranger yet is the fact that in the Large Pickup Truck list only Ford made the list and it only made it with one model.

Hello again, readers, and I hope 2009 is a splendid year for you. The recession will past, I can promise–the question, of course, is when & for how long.

Many consumers are contacting us with questions about whether they can trust manufacturer’s warranties when the manufacturers appear headed for bankruptcy, as with Chrysler and GM. As a general rule, I’d follow closely what happens with the manufacturers. If you had a warranty from a car manufacturer that then declared bankruptcy, your ability to obtain warranty service or, later on, enforce lemon law rights, would most definitely be jeopardized. This would be because the dealers–the warranty service providers–would be treated as “creditors” in any bankruptcy proceedings and would have to stand in line along with other creditors for warranty reimbursements. Also, replacement parts manufacturers would be standing in the same line. Not a pretty picture.

I definitely do not want any major auto manufacturer to declare bankruptcy. Even the smallest of the big three, Chrysler, has a huge number of direct employees and an even larger number of dealer employees, finance company employees, parts manufacturer employees, etc. who would be affected.

However, at the same time, if you are shopping for a new car right now (if you are one of the VERY FEW who is out shopping for a new car right now), I would caution against buying a GM or a Chrysler product until we see what happens with the bailout, etc.

But, given that there is uncertainty and given that GM and Chrysler are pretty much desperate to move cars, you may get a good enough bargain that it compensates for the risk that you might have to pay for repairs to the car yourself during the warranty period.

So, moral of the story: if you are going to be buying GM or Chrysler, don’t be shy about pushing for a bargain!

I hope this helps answer these questions.

Bob Brennan

Hello Again and may 2009 be your best year yet!

We’re seeing quite a few former lemon vehicles from all manufacturers, and particularly including Mercedes, showing up as “Starmark” or “Certified” used cars. Manufacturers these days are handling lemon claims but offering to make a few lease payments in exchange for releases of liability, or sometimes just making cash payments to the consumers, also for releases of liability. The manufacturers then claim that these were not “lemon law buyback” because they did not buy the car back.

If you get a “certified” or “Starmark” car where the manufacturer made lease payments or a cash payment in exchange for a legal release on a lemon law claim, and this was not clearly and conspicuously disclosed to you, you have been the victim of a fraud and we’re handling a lot of these cases very successfully.

Thanks for reading!

Bob Brennan

Hello Readers,

I hope the economic downturn is not beating you up too badly. Obviously it’s taking its toll on several sectors of the economy, one of which is car dealers.

I would hope that car dealers will fight their way out of the downturn with ethical and honest sales and service, and undoubtedly some will. However, there will be those that will not, and will turn instead down the dark path of deceiving consumers. To prevent against these dealers and these deceptions, we offer the advice and insight as found on my blog and in several articles I have written for many publications.

One area of car dealer fraud that we continue to see quite a bit of involves fraud in car leases. Even with the credit crunch, dealers are still able to arrange for financing for car leases, and car leases are frequently more expensive for consumers, although they appear as less expensive on the surface.

The classic lease fraud is the “bait and switch,” where a consumer goes to a dealer to buy a car and believes he is buying a car, but is instead switched into a lease. Sometimes dealers will tell consumers that they need to sign up for a lease “for a short time” to let interest rates come down, or some other malarky, and promise to change the deal to a purchase deal “in a few weeks.” When the consumer returns “in a few weeks,” the salesperson who negotiated the lease with him is nowhere to be found and no one at the dealer has any interest in changing the consumer into the promised purchase transaction.

There are various reasons why dealers would prefer to put you into a lease as opposed to a purchase. For one thing, dealers often get larger incentive bonuses from the leasing companies to put consumers into a lease, so dealers frequently make more money from the lenders on leases. Same with the manufacturers: depending on what is going on with vehicle inventory, manufacturers will often give dealers incentives to put consumers into leases instead of purchases. Finally, lease contracts are confusing, permitting dealers to throw more curveballs into the lease which result in higher hidden fees and payments by the consumer.

Currently, as of today, GM sales are off by over 40% and Ford sales are off by over 30%. I do not know the current status of Chrysler sales, but it’s probably similar. GM and Ford are in a position where they, and their dealers, will do just about anything to move vehicles off the lot. As stated above, there are truthfully quite a few dealers who will respond to the current pressures with honest ways and means of promoting vehicle sales, but there are also those that will respond dishonestly.

I do have a few tips if you are concerned about being switched into a vehicle lease, or if you are confused as to whether you will be paying more for a lease than for a purchase. Here are a few tips and pointers:

1. Remember that, with a lease, you are not buying the car. You are borrowing it, or renting it, for a longer period of time, and a lease deal actually has much in common with renting a car. There are often hidden fees at lease end which can make a seemingly less-expensive lease actually cost you more. There are hidden fees for excess mileage and wear and tear to the vehicle. If you know you drive 25,000 miles a year, then your lease should reflect that you drive 25,000 miles a year. If you lease a vehicle with a lease allowance of 15,000 miles a year, you would be penalized severely at lease end for the additional 10,000 miles a year.
2. It would be virtually impossible to describe all of the ways in which a lease can be more expensive than a purchase. First and foremost, you are buying nothing other than the use of the vehicle for a period of time within certain mileage limits, nothing more. You are not buying any ownership interest in the vehicle. Right then and there, a lease is usually more expensive because you have no trade-in at lease end. Many consumers are confused because they believe they can trade in a lease at lease end and receive credit, as if they owned the vehicle. This is not true.
3. At lease end, if you have any outstanding obligation on the lease (mileage penalty, condition penalty, unpaid lease payments), these are often rolled into your next vehicle purchase or lease. Watch your contract carefully to make sure that you get a fair deal on your next purchase or lease.
4. I recommend to all of my clients that they not sign anything on the spot at the dealership. Take the lease or purchase contract home and digest it overnight. Discuss it with a friend or a spouse. Go over it more than once. If consumers took this step alone and nothing more, they would likely avoid much of the fraud and monkey business at dealers because they would not be signing documents in a pressurized situation, after having been worn down by hours at the dealership.

If you, or your friends, have any further questions on leases and the potential for lease frauds, please do not hesitate to contact us. And, if you have been cheated on a lease, please consider us for your attorneys to resolve the situation.

Thank you for reading.

Bob Brennan