{"id":26,"date":"2011-06-27T14:16:51","date_gmt":"2011-06-27T18:16:51","guid":{"rendered":"http:\/\/roherlaw.net\/?p=26"},"modified":"2011-07-13T10:04:41","modified_gmt":"2011-07-13T14:04:41","slug":"with-the-benefit-of-hindsight","status":"publish","type":"post","link":"https:\/\/roherlaw.net\/?p=26","title":{"rendered":"With the benefit of hindsight…"},"content":{"rendered":"

To recap from last week:\u00a0 first Irene got into a car deal that was too expensive.\u00a0 When she went back to the dealership and asked them to help her get out of it, she wound up agreeing to pay three thousand dollars more<\/em> for a smaller, more heavily used car than the first one!<\/p>\n

What might Irene have done to avoid getting into this mess?\u00a0 With the benefit of hindsight, Irene made several common mistakes in buying her car.<\/p>\n

First, she didn’t know the value of the cars she agreed to buy.\u00a0\u00a0\u00a0 Maybe there was a price written on the windshield, maybe not.\u00a0 But Irene hadn’t done any comparison shopping or research to know whether those stated prices were a good value.\u00a0 In fact, the supposed cash price for the first car Irene agreed to buy, as stated on her Motor Vehicle Purchase Contract, was inflated by the $2,500 the dealer “gave” her as a trade-in on her old car.\u00a0\u00a0 Irene should have known her old gasping clunker wasn’t worth anywhere near $2,500.\u00a0\u00a0 But she didn’t make the connection between the trade-in allowance the dealer graciously offered and the price she was agreeing to pay for the new car.\u00a0 Dealers don’t “give” you anything!\u00a0 What appears to be given with one hand is always taken away with the other!\u00a0 Similarly, when the dealer agreed to take car #1 as a trade-in for car #2, Irene didn’t know or didn’t notice that the new contract called for her to pay more than $16,000 for a car that, according to Kelley Blue Book, she should have been able to buy from a dealer for $13,000.<\/p>\n

Second,\u00a0 Irene gave up her bargaining power at the beginning by signing over her trade-in, putting down a large cash down payment, and driving away in car #1 before she had been presented with a contract for the financing (called a Retail Installment Sales Agreement, or RISA).\u00a0 That is to say, she took possession of the car before knowing how she was expected to pay for it.<\/p>\n

Dealers love to do this to customers — treating the financing as if it were some kind of minor detail.\u00a0\u00a0 This has both a psychological and a practical dimension.\u00a0 Psychologically, you become invested in owning the car and not inclined to give a critical reading to the RISA when it’s put in front of you a few days later.\u00a0 Practically,\u00a0 even if you read the RISA and find that the interest rate is much higher than promised, or that the dealer made your monthly payments low by dragging out the contract to 4, or 5, or 6-1\/2 years, even though you have a perfect legal right to opt out of the deal, the dealer will make it very difficult to do.\u00a0 He’ll tell you there’s some reason he can’t return your trade, or he won’t refund your down payment.\u00a0 He has already run a credit check and knows that you don’t have the option\u00a0 of going elsewhere without the down payment. He has you in a vise.<\/p>\n

Third, and related, Irene didn’t insist on taking the RISA home to review at her leisure before signing it.\u00a0 Once you sign the financing contract, you are stuck with it.\u00a0 Dealers play on the idea many people have, deep in their mind, that you have three days to cancel a deal if you decide it was a bad idea.\u00a0 Unfortunately, this “cooling-off period” applies only to a very small set of contracts:\u00a0 basically, refinancing home mortgages and door-to-door sales.\u00a0 Irene’s RISA said, correctly, that\u00a0 NO COOLING-OFF PERIOD applied to her contract.<\/p>\n

Of course, dealers don’t want you to read the contract, much less shop it around to compare against other sellers, and have a well-developed set of techniques to prevent you from exercising your rights as a buyer.\u00a0 The chief method, as mentioned above, is to present the contract after you already feel committed to buying the car and have no alternative financing lined up.\u00a0 Another favored method is to have a stack of papers, most of which are unimportant, and run you through signing them all without reading them.<\/p>\n

The RISA is the most important document you sign when you have a dealer arrange financing for the car.\u00a0 It includes all the key terms you need to know whether you can afford the deal, whether it’s a good deal, and what will happen if the deal breaks down.\u00a0 Part of the RISA is a set of uniform disclosures required by the Truth in Lending Act:\u00a0 the Amount Financed, Finance Charge, Annual Percentage Rate, Total of Payments, and the payment schedule.\u00a0 In columns to come I will talk about the importance of each of these elements.<\/p>\n

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To recap from last week:\u00a0 first Irene got into a car deal that was too expensive.\u00a0 When she went back to the dealership and asked them to help her get out of it, she wound up agreeing to pay three … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[8,9,3,7],"_links":{"self":[{"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/posts\/26"}],"collection":[{"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/roherlaw.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26"}],"version-history":[{"count":5,"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/posts\/26\/revisions"}],"predecessor-version":[{"id":30,"href":"https:\/\/roherlaw.net\/index.php?rest_route=\/wp\/v2\/posts\/26\/revisions\/30"}],"wp:attachment":[{"href":"https:\/\/roherlaw.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/roherlaw.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/roherlaw.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}