The ways to get taken, bamboozled, oversold, and generally ripped off are too numerous to count.
But the good folks at NCLC have studied the car-buying extras and add-ons that pad the price of the car. The mark up on add-ons can be huge.
Add-ons, like GAP insurance, service contracts and window etching make up a large share of the dealer’s profit.
It’s the same in the restaurant business, according to one of my clients: restaurant breaks even on the entree, and rakes it in on drinks, salads, sides and desserts.
But in a restaurant, the price of the sides is disclosed and is the same for everyone.
In the car business, the price of the add-ons varies from buyer to buyer , and offers the dealership ways to discriminate against people of color.
According to the NCLC study, Hispanics are almost always charged more for the same product sold to others.
And there is no way for the buyer to know that she’s paying more than others do for the same product.
Tips for buyers
Here are strategies to protect your pocketbook through the car buying process:
- Avoid buying add-ons in the first place – often they are unnecessary and overpriced.
- Get GAP insurance, if you think it necessary, through your credit union or your insurance agent.
- Arrange financing before you visit the dealership – that allows you to negotiate with the dealer only over the price of the vehicle.
NCLC’s tip sheet, and links to consumer-friendly advice on service contracts, is available here.
Knowledgeable consumers will do better.
Ending rip offs
Policy changes could level the playing field. First of all, post the price of add-ons on the car just as the price is posted. Second, require collection of race and national origin information in non-mortgage credit transactions. Finally, encourage enforcement of anti-discrimination laws at the state and federal level.
Get a deal on your car after bankruptcy
Image courtesy of Peter Shanks & Flickr.