Beware Bogus Advertising Slogans

The adage, "If it sounds too good to be true, it probably is," goes double for new-car advertising. The typical dealer ad in the newspaper or on the radio blares out in large headlines or in high pitch why you need to rush down, right now, and buy at prices and incentives you'd be crazy not to take advantage of.

More from

New and Redesigned Autos for 2010

Great Deals on "Orphan" Models

Should You Buy a Used Hybrid?

Unfortunately, too few people read the small print at the bottom of the newspaper ad or listen to the so-fast-it's-gobbledygook at the end of the radio commercial. If they did, they would better understand some of the traditional advertising gimmicks dealers use and what they can really mean. Here are some of our favorites:

Zero-percent financing: That is what you read in large print. In tiny print, you'll find a phrase such as: "With approved credit,'' or "All financing subject to credit approval.'' To qualify for zero-percent financing, you must have a high FICO credit score, which means 700 or above.

We'll give you $4,000 for your trade no matter what the condition: This ad is infamously known as the "push-pull-or-tow-it-in" concept, which dates back to the 1950s. If you believe this ad, you have to believe the dealer is so stupid and so eager to sell cars that he is going to pay you far more than that old clunker is worth. Don't believe it. If he's paying you too much for your trade-in, he's adding that and more to the price of the new car and taking away your negotiating power at the same time. The best defense to this ploy is to become aware of the value of your car through such Web sites as Kelley Blue Book and Edmunds.

More from Yahoo! Finance:

Lucrative Fees May Deter Efforts to Alter Troubled Loans

Subprime Brokers Resurface as Dubious Loan Fixers

Big Car Bargains: Deal or No Deal

Visit the Loans Center

Buy it now for just $189 a month: When you see or hear an ad like this, you can substitute just about any figure you like, because no matter what the total price of the car, you can make your payments come out to any figure. You can make it $10 a month if you juggle the amount you put down and the terms of the loan. And besides that simple math, the monthly payment that's enticing you could be a lease amount, which involves annual mileage restrictions and money down at the beginning or end of the lease. Or the really small print may specify a huge down payment. Even if it's an offer with nothing down, it will be based on your credit. If you don't have excellent credit, the payments will be higher. It also can be a form of the bait-and-switch tactic, with the price pertaining to only one car on the lot. Or that particular model may be stripped, without any of the options most people want.

We'll pay off your old car no matter how much you owe: Call this a kissing cousin to push-pull-or-tow-it-in. Let's say you owe $8,000 on your present car and it's worth only $3,000. When the dealer boasts it will pay off your old car, it doesn't mean you're going to get $8,000 deducted for your trade: it means the dealer is just going to add the $8,000 to the cost of your new car. It gets even worse: Because the new lender -- the manufacturer or another lending institution -- is fully aware that the amount being financed exceeds the value of the new car, your loan will be treated as an unsecured loan and will carry a significantly higher interest rate.

Huge end-of-year sale/must make room for new models: Dealers love to say it's the biggest chance of the year to save the most money on a new car (it may be new, but it's last year's model). In some ways, they might be close to telling the truth. It might be true if you keep the soon-to-be-year-old car for seven years or more -- long enough to drive it into the ground -- and don't figure on getting much for it when you sell it. However, if you usually sell or trade in your car every two or three years, buying a year-old model could cost you big-time.

Buy this car at below-invoice price: Don't let the dealer convince you he's selling that car at no profit just because it is at invoice or below. The invoice price does not necessarily mean that's what the dealer paid for it. He may be getting a rebate, and he is definitely getting a dealer holdback fee from the manufacturer. This is a percentage of the price held back by the manufacturer when the dealer buys the car and paid to him when he sells it. Depending on the car, it usually ranges between 2 percent and 3 percent of the manufacturer's suggested retail price. So make sure you are getting the real invoice price. How? Again, both Kelley Blue Book and Edmunds are excellent resources.


View Comments (0)

Recommended for You

  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Only 4 states will see cuts to food stamps

    Cuts to the nation's food stamp program enacted this year are only affecting four states, far from the sweeping overhaul that Republicans had pushed, an Associated Press review has found. As a result, it's unclear whether the law will realize the estimated $8.6 billion in savings over 10 years that…

    Associated Press
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance33 mins ago
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

  • Gold loses luster on Fed; Barclays cuts forecast

    Barclays cuts gold forecasts, sees increasingly bearish backdrop Bloomberg MA MB MC MD ME SAN FRANCISCO (MarketWatch) — Gold prices dipped Wednesday on concerns about a stronger dollar ahead of the Federal Reserve policy statement and in response to Barclays lowering its gold forecast.

  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • AARP® Auto Insurance Program from The Hartford

    50+? Request a free quote and you could save $404* on Auto Insurance from The Hartford!

    AdChoicesThe HartfordSponsored
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Romney-Sized IRAs Scrutinized as Government Studies Taxes

    The preliminary report attaches data to an issue that drew attention during the 2012 presidential campaign, when Republican nominee Mitt Romney reported an IRA worth $20 million to $102 million. Senate Finance Committee Chairman Ron Wyden said many of these "massive" accounts come from deals…

  • Russian billionaire placed under house arrest

    A billionaire Russian tycoon was placed under house arrest Tuesday in a money-laundering case that has drawn comparisons with a government crackdown on Russia's Yukos oil company more than a decade ago. The Investigative Committee, Russia's top investigative agency, said that Vladimir Yevtushenkov,…

    Associated Press
  • The Government Keeps Helping People Buy Failing Cold Stone Creamerys

    Would you loan someone money to buy a Cold Stone Creamery franchise if you knew that more than a quarter of those loans default? Over the last decade, franchisees in the Cold Stone Creamery ice cream chain defaulted on 29 percent of working-capital loans backed by the government, costing taxpayers…

  • Dow closes at record after Fed keeps rates intact

    The stock market got the reassurance it wanted from the Federal Reserve Wednesday. Low rates have been a boon to the market by helping stimulate the economy and making stocks more attractive compared with bonds. "The Fed is not going to take the punch bowl away," said Brad McMillan, chief…

    Associated Press
  • Tired of Living Paycheck to Paycheck?

    New website reveals how to save $1,000's when you're living paycheck to paycheck. See exactly how.

    AdChoices Media ForceSponsored
  • Facebook Is Hiding Important Information From Investors

    Facebook Is Hiding Important Information From Investors On July 23, when Facebook reported its earnings for the second quarter, the company stunned everyone. Revenues were $2.68 billion, up 67% from the same quarter during the year

    Business Insider