APR Scam???

[dk31]

This might be a little long and confusing but I'd like to know everyone's opinion.

I bought a Mazda3 hatch over the weekend for $18670 before taxes and rebates. I paid off all my student loans on time and I pay all my credit card bills on time, so I would assume that I have good, if not great, credit. But the salesman went to check my credit and came back with an interest rate at 5.9%, which I thought was a little high. They told me that because I was a first-time car buyer, and since I had never financed anything before, 5.9% was a good deal. So after some hesitation on my part and having the saleswoman assure me that usual first-timers get anywhere from 8-10%, I signed their price worksheet. After $500 college grad rebate and $5000 down, the agreement was 5.9% for 48-months at $364 per month.

I then go see the F&I guy prepared to turn down everything he offers me. He kept pushing me for the upgraded alarm, since 3's only have the stock immobilzer, but I wouldn't give in. He offered me $500 for it but I said no. He then said that he has some factory coupon which he could use for me, lowering my interest rate to 5.75% if I bought the $500 alarm. He calculated the monthly payments at the new interest rate and said he could lower it from $364 to $361 if I bought the alarm. So it looked like a win-win for both of us right? I got an alarm and a lower interest rate which lowers my monthly payment by $3, and he gets his commission for selling an alarm.

Well, when I got home I wanted to make sure the numbers were correct so I went to edmunds.com and punched in the numbers from my contract into their payment calculator and the monthly payment came out to $361. So far so good right? Then I calculated the numbers minus the $500 alarm at 5.9% and what do I get? A monthly payment of $350!!!!

I was like "wait a minute", didn't the salesguy say that my monthly payment at 5.9% for 48 months was $364? I went to several other car and finance websites to calculate the monthly payments and they all said $350. There is no way that all of those websites are wrong. I wanted to see how they got the $364 figure and I found out that they used a 7.9% interest rate when they told me 5.9%.

Now I felt like I had been cheated and lied to. I mean the only reason I bought the damn alarm was because it lowered the monthly payment they gave me from $364 to $361. They misled me to think I was getting a good deal by falsifying the monthly payment by telling me it was $364 when it should have been $350 at 5.9%. I would rather have stayed at 5.9% and pay $350 a month than spend $500+ on an alarm I never wanted in the first. I could get an even better aftermarket alarm for like half that price.

The problem is that I don't have any documentation from the dealer where it says $364 at 5.9% for 48 months. The worksheet I signed with that deal was written in black marker and they kept the only copy.

I will call them up to complain and show them my figures, but is it my word against theirs since I don't have it in writing? What else can I do? If anyone ever experienced something like this before please let me know. I love my car but this thing is just eating away at me. Any help would be great.

 

[dulog]

Sorry to hear that. I would definately complain about being misled. I don't know if state's have laws allowing consumers to bring the car back for a refund within say 1-2 business days to protect consumers about these things. You could contact your state's attorney general's office to find out. Other places you could seek out for help if the dealer won't operate honestly would be the better business bureau and Mazda USA. I doubt Mazda USA will be of to much help as they'll probably say dealerships are independently owned and managed. If your dealer doesn't want to make things right and take the alarm back for you you could at least let them know that you plan to give them an awful feedback survey and make other complaints to the bbb and similar groups if they don't cooperate. Another idea is to contact your local paper and tv station to see if they are interested in a story about this. That last one is a real longshot but there have been consumer advocate stories out there where they help out the average Joe rectify the situation when they got ripped off.

 

[rodslinger]

It's a scam... They're working a "point spread". Know your credit report when you go in. With that kind of money down and a decent history, there is absolutely no reason why you shouldn't get the advertised rate.

The best thing to do is be prepared for the F&I bulls***. Go ahead and get pre-approved for the loan though your local bank or credit union and take the blank check with you. Check rates first and don't just apply to 20 places. You can usually find 60 month financing locally for about 5%. Then when the dealer starts to pull finance games, just whip out the bank check and pay for the car. They'll either backpedal and stop playing games or you can take the car under more decent terms.

 

[dulog]

It's a scam... They're working a "point spread". Know your credit report when you go in. With that kind of money down and a decent history, there is absolutely no reason why you shouldn't get the advertised rate.

The best thing to do is be prepared for the F&I bulls***. Go ahead and get pre-approved for the loan though your local bank or credit union and take the blank check with you. Check rates first and don't just apply to 20 places. You can usually find 60 month financing locally for about 5%. Then when the dealer starts to pull finance games, just whip out the bank check and pay for the car. They'll either backpedal and stop playing games or you can take the car under more decent terms.

I agree with your advice about getting pre approved. In my case credit union came in lower than Mazda's advertised rate at the time. That's great advice though the question for dk31 is what to do now that they've already pulled this on him. I suppose another option is to see what banks would refinance him/her at, but then they'd still have the alarm they didn't want unless the dealer would be willing to take that back. I really think it's worth calling the state's Attorney generals and the BBB to find out your rights here to find out what you can do about this alarm you didn't want.

 

[gino]

...it's worth calling the state's Attorney General...

Ask for their Consumer Fraud Office.

 

[harrison888]

what's your tax %?

below is a good excel file to calculate car payment

 

[mp5jeff]

car dealership doing a scam? no!!! =), but IMO you also ****** up when you didn't get any copies of the papers....

 

[eting_pro5]

I don't know what to tell you about your problem.

But along the lines of your 5.9% financing...there's a guy on this forum paying 13.9% APR for his 3. He would've been better off using most credit cards...

 

[dk31]

CONCLUSION:

So I actually called my salesperson the day after I bought my car, and explained everything to her, but she said she needed to talk it over with the F&I guy to figure out the numbers. Fine, so I wait and she never calls me back.

The next day I call and look for her but "surprise", she had the day off. I ask for the sales manager but then he was off too. So I'm gettin a little annoyed here and I go and talk to the Finance guy. I explain the problem to him and then he starts to deny all of it, saying he doesn't remember the original rate and that it could have been a range of numbers. I was like you told me in your office that you could lower my rate from 5.9% to 5.75% and payments from $364 to $361 if I bought the alarm. But it was like he didn't even want to talk to me. He said the alarm was ordered already and there were no refunds, and the contract was already sent to the bank so he couldn't get it back. Now I was pissed.
(flame)

The next day I called and asked for any supervisor or manager that was higher up. I got a different sales manager this time and I explained everything again. I told him about all the bulls*** that the Finance guy was spewing at me and how they misled me into buying the alarm. This guy was cool and said he'd look at my contract again and write up a new one with the correct figures of $350 @5.9%. So I went back there and they voided the old contract and wrote up a new one for me w/o the alarm.

So everything finally worked out in the end. (2thumbs)

I did some research and I found out that what they did to me was actually a very common scam that dealers use called "dealer loan packing". They inflate the monthly payment and persuade you into buying a dealer add-on which lowers the inflated payment a little and makes it look as though you're getting a good deal, when in fact their figure is still significantly higher than the true monthly payment. It explains it much better in this article:

http://abclocal.go.com/kgo/news/7oys/090704_7oys_car_deals.html

I thought I was prepared before buying my car, but this just shows how there are so many ways that a dealership can rip you off. I'm just glad I found out in time and had them give me a new contract.

 

[dupa12345]

wow man .. congrats for getting this straight .. i mean it .. they didnt really need to do s*** but just avoid you until you let off

on the other hand, i would never buy into that bs from the finance guy
rule of tumb is never buy by monthly payments always by total price .. the biggest bs they are able to pull by confusing people is by mixing that in right off the start .. plus u should have an idea what apr youll get anyways

once the price is set make them work for a good apr .. thats the only way to buy a car and anyone who does it differently gets most likely ripped .. if they dont satisfy you say u'll be back with a check from a bank the next day and thats the end of that

whats even better is buying over the phone .. why .. a lot of reasons
no waiting for the dumb ass salesman to make round trips back and forth to his mgr
no late evening being tired and stress
ability to request all figures via fax/email
no bs with sales/mgr/finance guy cause the final price was faxed to you

it took me about 10 calls to get my p5 .. i finally went there to pick it up and the whole thing lasted about 20 mins .. i cant imagine it being any smoother

 

[harrison888]

Tell ALLLLLLLLLLLL your friends about this story and tell them not to go there to buy mazda, and tell your friend to tell ALLLLLLLLLLLLLL of their friends about this story, I believe this Mazda dealership will close down soon !!!

 

[dulog]

Good job getting things worked out. Glad to hear.