It’s that time of year again when auto dealers try to make room in their showrooms and lots for next year’s models. The seasonal clearance sales that come right before the holidays are just as tempting as ever, beckoning consumers to get that proverbial ‘new car fever.’
But don’t let those shiny new cars blind you from the facts of a major consumer purchase. After mortgages and student loans, auto sales take a big bite out of your pocket and available credit.
A new analysis of car sales data reveals that many consumers are being charged triple-digit mark-ups on purchases that include a lot of questionable add-on products that cost consumers a bundle and reap major profits for dealers.
A new policy analysis by the National Consumer Law Center (NCLC), examined sales and financing practices widely used by car dealers. Aggressive sales of add-on products were frequently offered at inflated prices. Additionally, these same products and services are usually available for consumers to purchase more cheaply on their own. When these items are added to the financing of the vehicle, consumers end up padding the costs of finance, making the debt more costly than necessary.
After analyzing data on the sale of three million add-on products sold on 1.8 million vehicles from September 2009 through June 2015, these add-on costs were both unreasonably high and varied at the discretion of the dealership as to the price levels that would be charged.
“Our analysis demonstrates the negative consequences of opaque and inconsistent pricing of auto add-on products and the urgent need to bring transparency and consistency to this market,” said John W. Van Alst, the report’s primary author and director of NCLC’s Working Cars for Working Families Project.