CAR DEALER TERMS
When buying a used car, there are some important terms to understand so that you are not taken advantage of.
When a vehicle is sold AS IS it means the vehicle has no warranty or guarantee. What you see is what you get.
When a car dealer talks about the BOOK VALUE, he is referring to the Kelly Blue Book or N.A.D.A Book. You should never trade in your vehicle or purchase a used vehicle without first understanding these values. Search www.kbb.com and www.nada.com.
ETCH is a dealer “soft add-on product” commonly referred to as theft guard. It is a series of numbers etched into your windshield that the dealer claims will help reduce the chance of a vehicle being stolen. It generally costs about $20 to “apply”, but sold for hundreds more. Don’t waste your money!
Five Finger Close: A technique used by some car dealers to get the sales papers signed by the consumer without the consumer realizing that the numbers on the papers have been increased above what was orally discussed with the consumer, such as, the dealership Finance Manager holds the stack of sales papers still with one hand planted in the middle of the top document while pointing to the signature line with the other hand and asking the buyer to just sign here and here and here, etc., using their hand to cover up an area of the sales document where numbers appear that the dealer does not want the buyer to see. Then the dealer sets that sales paper aside and puts another one in front of the consumer and again puts one hand in the middle of the page while pointing to the next signature line with the other hand. The process is repeated through all the sales documents so that the buyer does not realize that the sales figures were changed on the earlier document, in other words, the repetitive routine disguises the fraud that earlier occurred in the process. It appears to the consumer that the Finance Manager is being helpful in holding the page still but in reality the technique is used to deceive the customer into believing that the numbers, such as the price, etc, are the same as what was talked about earlier when, in reality, they are not. It is sometimes also called a five finger spread or five finger push.
Five Finger Fold: Similar to the five finger close. It is another technique used to get the sales papers signed without the consumer knowing that the numbers on the papers have been changed. In this tactic the Finance Manager holds the stack of sales papers still with one hand planted in the middle of the top document while pointing to the signature line with the other hand and asking the buyer to just sign here and here, etc., thus using their hand to cover up the area of the document where the numbers appear that the dealer does not want the buyer to spot. As each individual sales paper is signed, the dealer folds up the bottom edge where it was signed, revealing the next page and the customer is again asked to sign. The process is repeated through all the documents being signed. It appears to the consumer that the Finance Manager is being helpful in holding the page still but in reality they are using the technique to deceive the customer into believing that the numbers, such as the price, etc, are the same as what was talked about earlier when, in reality, they are not. Sometimes called a fivefinger spread or five finger push.
When a vehicle is bought back by the manufacturer under the lemon law and then resold without proper disclosure that it was a lemon the vehicle is called a LAUNDERED LEMON. If you purchase a laundered lemon and the title is not branded as a vehicle bought back under the lemon law or if you are not given a list of the defects that caused it to be labeled a lemon, it is generally an illegal practice. You may have recourse under state laws so be sure to contact a lemon law attorney in your state to determine your rights. Burdge Law has helped many consumers get rid of their laundered lemon and we can help you too.
When your trade in vehicle is not worth what is owed on it, It means that you have no ownership equity in the vehicle and, in fact, you have a negative ownership balance which is called NEGATIVE EQUITY. To close the loan would require paying additional money on top of the amount already paid. It is a negative number which is then added into the cost of the vehicle you are buying and which can potentially create problems for you when you go to get rid of the car. See the “upside down” explanation for more information about this.
SOFT ADD-ONS are such things as service contracts, Etch, disability insurance, wheel protectant, Gap insurance, etc. and are sold by the F&I Manager . They increase the overall vehicle price but add no hard value to the goods being sold, which is why they are called soft add on items. Many times these additional items are preprinted on the sales and financing forms. This is where most dealers make their biggest profit margins in a deal.
A SPOT DELIVERY is when all phases of the purchase and delivery are completed the same day but financing is not in place yet although the dealer may imply it is. This may be with or without any kind of credit check.
The term UPSIDE-DOWN generally refers to the situation where a car buyer owes more on his auto loan than his vehicle is worth. Being upside down causes problems when trying to sell or trade a vehicle, or when a vehicle is destroyed in an accident or fire. The amount by which your loan balance exceeds the vehicle’s market or trade-in value is called negative equity. Getting to be “upside down” happens most often with long-term car loans in which little or no down payment was made at the beginning of the loan, or in cases where a previous car loan was “rolled over” into a new loan for a new car. The problem occurs when you attempt to sell or trade a vehicle with an upside down loan.
Upside-down loans can result from paying too much for a vehicle, paying little or no down payment, having a very long loan term (72 months or more), having a high interest rate (possibly as result of bad credit), or rolling over a balance from a previous vehicle loan that was also upside down. Some or all of these factors can help contribute to negative equity.
The term UNWIND A DEAL means the dealer wants to take back a vehicle that is already delivered and void all papers that were used in reference to its delivery, as though the sale never happened at all. This usually occurs when the financing has not been approved. It becomes troublesome when the dealer refuses to refund your down payment or when the vehicle you traded-in has been sold. These situations usually do not resolve themselves easily or equitably. If you want to better understand your legal rights, contact Burdge Law Office.