Should I get “it” insured? Do I need an extended warranty? What’s the best way to finance “it”? What do I do if “it” breaks down or stops working when I’m 900 km from the nearest repair shop.
A person can spend a lot more money than they need to on a “big ticket item”. But with a little planning and knowledge, a person can save hundreds… even thousands of dollars very easily.
A case in point – a transaction that took place in August 2010.
An elderly Native couple took their 2007 Honda Pilot to get repaired at Carella Honda in Amos on a Friday morning. At the end of the day, they drove off in a new 2011 Pilot which, when it was fully paid off in six years, would cost them $67,000.
The couple’s intention that morning was to have their vehicle repaired and return home the next day. They were told that a part needed to repair their vehicle had to be ordered and wouldn’t be in until the following week and that if they decided to drive back without getting their vehicle fixed – they might not make it back.
At this point the salesperson suggested a replacement vehicle and no he didn’t mean a courtesy car. He meant a new vehicle. Not wanting to stay any more days than necessary, the couple agreed.
Besides the vehicle, the salesperson also sold them an “extended warranty” ($1400) and a type of insurance ($1800) that replaces your vehicle if you “total” it.
As part of the financing the dealer paid off the remainder of what was left to pay on the couple’s old 2007 vehicle. They then added $8500 to the price of the new vehicle to make up for the difference between what they had estimated the true value of the old vehicle and what they paid off.
There were also costs for transportation/delivery and a block heater. The deal was financed over six years at 7.2% interest at a financial institution that they did not have an account with at the time.
Good deal? No way and here’s why:
• Honda Carella (Amos) failed to mention that there was a $2000 rebate on this model. (When this was first brought up, the salesperson said the $2000 rebate was only applicable to people who paid cash. Later he said it was part of the financing.)
• The replacement vehicle insurance can be obtained through your vehicle insurance for approximately $100.
• “Experts” agree that extended warranties are rarely needed and are a waste of money, especially on reliable vehicles like Honda.
• The couple had no idea of the worth of their old vehicle and the value assigned to it may have been low.
• The vehicle was financed over a long period of time at a fairly high interest rate, which meant they would pay over $13,000 in interest.
• There is a 10% difference in retail and wholesale price on a new vehicle. Meaning the dealer adds on $3000 to $5000. The retail price can be “negotiated” via a reduction or possibly a new set of tires, or a hitch.
In the case of the elderly couple, they could have paid up to $10,000 less than what they finally will.
When the elderly couple’s family found out about the transaction (they were down East on vacation), they asked the dealer to reconsider and even pointed out that a mistake had been made. However, the dealership wouldn’t as they had done nothing illegal.
The family sought the advice of a lawyer who suggested Small Claims Court. They looked into it and found that using Small Claims Court was relatively easy. You give the reason you are suing the defendant, for how much (max is $7000), why you are suing for that amount and send it off to the court in Amos with a small fee. A judge looks over your claim and decides whether or not the case should go forward.
The paperwork, saying that the dealership was being sued for $7000 and why, was filled out and sent off. Within a few weeks, the couple was notified the case would be heard in court, but it took almost a year before a definite date was agreed upon. (Both parties have to agree on a date.)
Finally, notice was received that the case would be heard on November 28, 2011 in Amos. Oh yeah, I forgot to mention – no lawyers are permitted in Small Claims Court. You have to present your own case.
At the end of the court session, the judge said she would try to render a decision by Christmas. But it wasn’t until March 2012 that she gave her decision.
The judge stated that it was not legal for the dealership to say that the $2000 rebate was part of the financial transaction, but not to have it noted in the financial statement. She also decided that it was not legal for the dealership to correct a mistake made on the contract regarding the “replacement vehicle” insurance and not notifying the client.
The couple was awarded approximately $3800. Six weeks later the Carella dealership sent the couple a cheque for the full amount.
From talking with people who have purchased a vehicle I know that the vast majority pay anywhere from $1000 to $5000 more than they should. It would be interesting to see what would be turned up if an investigation were done in regards to the financing of vehicles.
If you are going to buy a vehicle in the near future, check out www.carcost.com. It gives the retail and wholesale price of any vehicle, plus it lets you know if there is any kind of a rebate for the vehicle. It cost about $35 for five vehicles, but it is well worth the cost.
Terry Gates is the editor of The Waaskimaashtaau, the Chisasibi news monthly.