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Car Salesman Confidential: How To Read A Car Ad

Motor Trend logo Motor Trend 4/28/2015 Mark McDonald

A car pulled up in front of my dealership the other day, and an older gentleman got out and introduced himself as Dr. Faraz. I asked him how I could help him, and he told me he wanted to look at a new Zorch Aventa sedan. He had seen our national ad, the one advertising $199 a month, and wanted to talk about that after he looked at a car. Thinking I had a good chance of making a sale, I walked Dr. Faraz to a row of Aventa sedans, quizzing him about the features he wanted in his new car. After a few minutes we picked out a car that had everything the doctor wanted: leather seats, navigation, blind-spot monitoring, and backup sensors. The sticker price was around $31,000. "Would you like me to work up some numbers for you?" I asked Dr. Faraz, and he said yes.

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Ten minutes later I returned to my office and went through my presentation, asking Dr. Faraz for his OK at the bottom of the paper. The doctor's eyebrows furrowed. "I don't understand why this is so high," he said. "The ad I saw said you could get a new Aventa for $199 a month. This is more than twice that."

After a little questioning, I discovered that Dr. Faraz didn't know that the ad he had seen was for a lease. He thought it was for regular five year financing. So I had to explain the differences between leasing and financing to him. He grasped that but still couldn't understand why the payments were so much higher. I pointed out that the car in the ad was a base model with an MSRP of $23,725. But the car he picked out for himself was roughly $7,000 more. I asked him if he could do without the leather, the navigation, and all the safety features, but he was unwilling to part with any of those things. Dr. Faraz was polite and listened to everything I said, but I got the feeling he still thought he was being tricked in some way. In the end he left without buying a car, promising to "think about it" over the weekend.

This kind of thing happens every day in dealerships all across America, and it's very, very frustrating for the typical salesperson. The problem has two causes. First, most people don't know how to read car ads. Second, most salespeople, myself included, don't know how to head off objections that can arise when customers come in on an advertised lease special. Just so we all know what I'm talking about, here's an example of the typical ad:

$199/month
Brand New 2015 Zorch Aventa!

$199.00 per month for 36 months. $1,999.00 total due at signing.
Offer valid from 6/1/2015 through 6/30/2015

blah blah blah blahblah blah blah-bla-bla blah blah blah blah blahdont look here-bla-bla blah blah don't look hereblah blah blah-bla-bla blah blah blah blah blahblah blah blah-bla-bla blah blah blah blah blahblah blah blah-bla-bla blah don't look here blahblah blah blah-bla-bla blah blah blah blah

Car Salesman Confidential 1024 680© Provided by MotorTrend Car Salesman Confidential 1024 680 As a consumer, here are the five most important things you need to know when you see an ad like the one above:

1. It's a lease. When you see $199 A MONTH!!! " flashed on a TV screen for a quarter of a second or on some website, it's almost always for a lease, not regular financing.

2. It's on the cheapest car they make. That ridiculously low payment is almost always on the lowest-priced vehicle the manufacturer makes, not on their top-of-the-line vehicle. If you pick out a car with more equipment — and a higher price — your payments will be higher.

In Dr. Faraz's case, the ad he saw was for a base model, which comes with a manual transmission, beach chairs instead of conventional seats, solid rubber tires, optional steering wheel, and a 72-horsepower engine. There's a reason Zorch offers such a great lease on this car. It's because they can't sell them otherwise.

3. You'll need money down. Almost every lease requires money down, which is clearly stated in the ad. Even when they say "0 Down" or "No Money Down," what they really mean is "No money down AFTER you pay for all The Extra Stuff." (See below for "The Extra Stuff.") Or they mean "No money down … except for your first monthly payment, of course."

4. It doesn't include everything. Nationally advertised lease specials do not include the following Extra Stuff:

  • tax ..... manufacturer installed options
  • tag ..... dealer-installed extras
  • title ..... dealer fees
  • registration ..... car insurance

Taxes aren't included because the ad is run all over the country and the manufacturer doesn't know what the taxes are in your area. The cost of a new tag, title, and registration aren't included for the same reason: They vary from area to area. And dealer fees can range from $50 in Houston to $2,000 in Miami (not to pick on Houston or Miami). But here's the one that really gets overlooked: Everything that's been added to the vehicle by the manufacturer and/or the dealership. I'm talking about legitimate stuff that the manufacturer adds to the vehicle at the factory, such as a first-aid kit or step rails or a towing package. Those things can boost up the MSRP quite a bit. And then there's the not-quite-so-legitimate stuff that dealers like to add, such as paint protectant, pinstriping, splash guards, nitrogen in tires, and so on. When you add all these things up, the final price of the car you're trying to buy — even if you've been careful to select the base car that's advertised in the lease special — can end up being hundreds or even thousands more than you expected. So take note of what's been added to the car you're looking at because the dealership will base the payments they show you on the actual price of the vehicle in stock, not on the MSRP of the "generic model" in the ad.

5. You Have to Qualify. In other words, you have to have good credit to get $199 a month. Right there in black and white in a font so small it takes a Motor Trend Magic Magnifier to read it, it says "For well-qualified lessees." And "Available only to well-qualified lessees approved by Zorch Financial Services. Not all lessees will qualify." And if you missed all that: "Higher lease rates may apply for lessees with lower credit ratings." And to cover themselves even more, there's the ever popular "SEE DEALER FOR COMPLETE DETAILS." The devil is in the complete details, folks.

So the bottom line is, when you see that incredible payment, that great big red "$199 A MONTH!!!" jumping out at you … it's not really $199 a month. It's more like $250, once you get through adding all the other things.

At this point you're probably saying, "Those dirty car salesmen! Isn't that deceptive advertising?" The answer is … yes and no. Yes, in a sense it is. The manufacturers want you to see "$199." That's what gets you excited. By the same token, they tell you up front you'll need $1,999 down, and the payments don't include tax, title, tag, add-ons, or fees. So the information is there. It's not being hidden. People just aren't paying attention to it.

Take Dr. Faraz. An educated man. He's been through medical school, he's a successful physician who's been practicing in my area for years, he's making a six-figure income … but he didn't read the fine print. You've got to read the fine print if you don't want to be disappointed.

And the next time someone tells me they saw the national ad, the first thing I'm going to do is walk them straight to the only base model we have, let 'em sit in the folding beach chairs, and ask them "… Is this really the car you want? If not, you're going to pay more."

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