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Car Ads: Reading Between the Lines

Buying the right car at a fair price can be challenging. Auto dealers know this, and some promote vehicles they want to sell with misleading or fraudulent advertisements. This can lead to car buyers facing unexpected costs and disappointment.

Some car advertisements simply seem too good to be true. While some deals may work for you, others can cost you more in the long run.

This page will help you recognize and avoid common car advertising scams. You'll also find:

  • Misleading and fraudulent car ad examples and what they really mean
  • How to report fraudulent and misleading sales tactics
  • Consumer protection laws that promote fair business practices and restrict false advertising
  • Other information

Misleading Financing Information

"Zero Money Down! Zero Percent Financing!"

"Buy It Now for $200 per Month! Bad Credit or No Credit Accepted!"

These kinds of claims seem to promise you a car for no down payment and a non-existent interest rate. But what you don't pay upfront will likely come back to you in higher interest payments later.

Zero percent financing is usually only available with an excellent credit rating. Even then, it usually only lasts a few months. After that, the interest rate usually increases to more than you might have paid without the promotion.

This problem is compounded if you choose to pay no money down. This is because you'll pay interest on more of the car's purchase price. Be sure to review any loan documents you sign carefully. In particular, look for the capitalized cost or the expected total cost of payment after the car loan is repaid.

Compare that number with estimates from other banks or credit unions. You may spend less overall if you opt for a deal with fewer gimmicks.

Again, these claims will likely mean higher interest rates for you or a longer payment period. Lenders can alter loan terms to set monthly payments at attractively low amounts. But this means that the loan is drawn out over a longer period of time. Similarly, dealerships offering financing to buyers with bad or no credit will charge a higher interest rate as the price for taking on a borrower with higher risk.

You may still be able to take advantage of these deals by comparing the vehicle's capitalized cost under several different financing plans. Also, check for any penalty fees for repaying the loan early. If you can pay off your car loan within the first few months, you can avoid paying the bulk of the finance charges.

Hidden Fees and Junk Fees

“Buy a New Compact Car for Less Than $20,000!"

Some dealer ads may not disclose all the fees associated with a vehicle purchase. These hidden fees, or junk fees, are often unnecessary or excessive. They can also significantly increase the overall cost of the car.

Sometimes, buyers find out about these additional costs only after they decide to buy the car. They can include:

  • Documentation fees
  • Reconditioning fees (often used in used car purchases)
  • Dealer preparation fees
  • Delivery charges

Car sellers will also likely offer add-ons (like an extended warranty or gap insurance) at an additional price. These are optional and will inflate the total cost of your vehicle purchase if you decide to add. Review your personal auto insurance policy and the manufacturer's warranty terms to determine if these are worth the extra cost.

Also, review the fine print of your purchase agreement before you sign. Ask about any fees you didn't explicitly agree to. Most dealers won't tell you that you may be able to negotiate some of these fees.

Misrepresentation of Vehicle Trade-In Terms

"We'll Pay You $5,000 for Your Clunker!"

“We'll Pay What You Owe on Your Car!"

These types of ads seem to offer a great deal for your trade-in and a cost-effective solution for offloading your old vehicle. However, car dealerships may not simply deduct your trade-in from your new car's cost. Instead, they may cover the difference between the actual value of your car and what they paid you for it by adding it to the price of the vehicle you're buying.

For example, a dealership offers you $5,000 toward a new car if you trade in your vehicle. Your current car's actual worth is $1,000. You want to buy a car worth $30,000. Under normal circumstances, the dealership will appraise your vehicle at $1,000 and then offer you the new vehicle for $29,000 plus the trade-in. However, since the dealership has this promotion, they might increase the starting price of the new car to $35,000—meaning you end up paying $30,000.

The best way to avoid losing money on these kinds of promotions is to look up the worth of your car and the car you want to buy on sites like:

You can then negotiate a fair price for both vehicles regardless of the promotion.

Inflating the Invoice Price

"Buy It for Below Invoice Price!"

This type of ad implies you'll buy a car for less than the dealership paid—and well below consumer prices. However, no dealership willingly takes a loss on their stock. The dealer will likely get a manufacturer's rebate or some other incentive from the manufacturer for selling the car at the offering price.

Again, accurately price out the vehicle you're interested in. Knowing the actual price the vehicle retails for will help you determine if you're actually getting a good deal.

Bait-and-Switch Tactics

“This Weekend Only: Brand-New Current Model Year Honda CR-V Starting at Just $23,999!"

Bait-and-switch advertising occurs when a car dealer lures buyers to the dealership by advertising a particular vehicle at a low price. Then, the dealer tells customers the vehicle is no longer available or quickly sold out. At that point, they steer customers towards more expensive vehicles or an upgraded variant of the advertised vehicle.

Bait-and-switch advertising tactics are illegal in most states. The Federal Trade Commission (FTC) has determined that bait-and-switch tactics constitute unfair or deceptive trade practices that violate the FTC Act.

The next section details how to report bait-and-switch advertising and other deceptive sales practices.

Reporting and Combating Auto Retail Scams

Car sellers use various methods to advertise to customers. Today, dealers can circulate misleading ads via direct mail, email, and even social media and text messages. Scammers also post misleading or fraudulent ads on online marketplaces like Facebook Marketplace and Craigslist.

It's a good idea to review recent consumer alerts from the Federal Trade Commission (FTC) before you visit a dealership. This resource calls out recent consumer scams. It also provides tips and best practices for avoiding scams.

You can report fraud or a misleading car advertisement to the FTC. You can also make a complaint with your state's Attorney General's office.

How the CARS Rule Helps Fight Scams

The FTC finalized a new rule in December 2023 that further protects consumers from automotive scams and deceptive car sales. The Combating Auto Retail Scams (CARS) rule specifically restricts predatory junk fees and bait-and-switch tactics.

This new rule also provides more comprehensive protections for military families and servicemembers. Under the new rule, dealers cannot:

  • Lie about whether a servicemember can transport the vehicle out of state after purchase
  • Misrepresent vehicle repossession laws that apply to servicemembers and their families

Falsely claim the dealership is affiliated with the military, Department of Defense, or another governmental agency

Get Legal Help With an Auto Fraud Issue

Buying a vehicle is a significant purchase. These transactions involve sales, warranty, and financing contracts. Dealers must follow contract and consumer laws, but some car sellers use tactics outside the law.

If you suspect you've purchased a vehicle from a scammer or were subject to an unlawful advertisement, a consumer protection attorney can help. An experienced attorney can review the contracts, advertisements, and applicable laws. They will offer you legal options that make sense for your situation and help protect your rights.

Contact a consumer protection attorney in your area today to learn how they can help you.

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