New FTC guidelines "CARS rule" is changing how cars are advertised

[agreywolfe]

Set to go into effect July 30th these new rules will outlaw two major scummy dealership practices.

First is, while it won't stop ADMs outright, all ADMs are required to be included in all posted advertising for the vehicle. The one thing not required on advertised price is government charges.

Next is outlawing non-beneficial upcharges on auto sales "nitrogen filled tires" was called out explicitly in this. So was charging for coverage on stuff already included in a manufacturers warranty.

Full read up if you're interested: https://www.ftc.gov/business-guidan...ule-combating-auto-retail-scams-dealers-guide

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[Crew4991]

Finally, this should have been passed about a decade ago. Transparency is everything and is usually why lots of people do not have a pleasant experience at a dealership since the real price was hidden until the last minute.

 

[DCS]

Set to go into effect July 30th these new rules will outlaw two major scummy dealership practices.

First is, while it won't stop ADMs outright, all ADMs are required to be included in all posted advertising for the vehicle. The one thing not required on advertised price is government charges.

Next is outlawing non-beneficial upcharges on auto sales "nitrogen filled tires" was called out explicitly in this. So was charging for coverage on stuff already included in a manufacturers warranty.

Full read up if you're interested: https://www.ftc.gov/business-guidan...ule-combating-auto-retail-scams-dealers-guide

Great to know. Won't help me though. I hope to take delivery no later than April.

 

[Bybotie]

If you thought the finance manager was cooking consumers in the rate before, just wait. They will shift all their little "BS" charges to the rate. Never get a car note from a dealership. If the government actually cared about consumers, they would force all finance managers to show their YSP. They are all making a minimum of 1% YSP, most are closer to 1.5%. Half to the house, half for the finance manager. That wasn't a big deal when cars cost $20k+ now it is a whole different ballgame.

 

[GT-24]

Great to know. Won't help me though. I hope to take delivery no later than April.

Try this website it may give you an advantage “https://www.autocheatsheet.com/“.
Also search “Calculate Dealer Holdback on Any New Car”

Good Luck

 

[agreywolfe]

If you thought the finance manager was cooking consumers in the rate before, just wait. They will shift all their little "BS" charges to the rate. Never get a car note from a dealership. If the government actually cared about consumers, they would force all finance managers to show their YSP. They are all making a minimum of 1% YSP, most are closer to 1.5%. Half to the house, half for the finance manager. That wasn't a big deal when cars cost $20k+ now it is a whole different ballgame.

I'm a little confused by your argument here, YSP is a term for Mortgage loans and doesn't apply to auto loans.
If you're complaining about dealer sell points that's negotiated between the dealer and the institutions they represent and can easily be circumvented by just getting a pre approval.
If you're saying dealers will hide the fees in the finance terms, that's illegal per the CARS rule, ALL costs need to be advertised and agreed upon by the buyer outside of government charges. That includes all finance charges.
TBH it's always best practice to get pre approved for an auto loan anyway as that rate will usually be on par or lower than a dealer rate.

 

[Bybotie]

I'm a little confused by your argument here, YSP is a term for Mortgage loans and doesn't apply to auto loans.
If you're complaining about dealer sell points that's negotiated between the dealer and the institutions they represent and can easily be circumvented by just getting a pre approval.
If you're saying dealers will hide the fees in the finance terms, that's illegal per the CARS rule, ALL costs need to be advertised and agreed upon by the buyer outside of government charges. That includes all finance charges.
TBH it's always best practice to get pre approved for an auto loan anyway as that rate will usually be on par or lower than a dealer rate.

I'm saying that the dealer's sell rate has at least 1% baked into it. I know this isn't YSP, but it effectively is the same thing. That number will only increase when they can no longer make money through "BS" fees. Most finance guys prefer fees as it is "upfront" cash for them. Baking that money into the sell rate lowers their take as the dealership takes a haircut for getting the cash upfront as opposed to a rate split. Dealerships do not have to show you the investor's buy rate. They do have to show you any fees they charge. I do agree, get approved elsewhere and have a rate/deal lined out before you sit in the finance office.

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