Certified cars are a boondoggle

Is it worth it to pay extra to get a “certified” used car? In a word, NO. Auto manufacturers and dealers came up with the notion of “certified” cars to prop up the price of used cars, and increase their profits.

Basically, you are paying extra — an average of thousands of dollars more — just for the name “certified.”  Keep in mind — the dealer who gives the car that “156-point” inspection  has an obvious conflict of interest. Plus the manufacturer doesn’t actually do the inspection. If there’s a problem, the manufacturer will just point fingers at the dealer.

Some dealers have “certified” cars that were grossly unsafe.

For example, one dealer in Michigan sold a GM “certified” car that was actually two cars — a classic “chop job.” The front half of one wrecked car, welded onto the back half of another wrecked car. If the car was in even a minor collision, it would have split in two. GM and the dealer refused to give the buyers –who finally discovered they had been snookered — a refund.

Another dealer in Los Angeles sold a Mercedes that had been in a severe crash as a “certified” used car. The owner noticed that the tires were wearing unevenly. He took the car to have it aligned, and was stunned to hear that it wasn’t possible to get it into alignment because it had been so badly damaged the unibody was twisted out of shape. It was so unsafe, the repair shop told him not to drive it home, but to have it towed. When he confronted the dealer, the dealer refused to give him a refund. He finally sued, and eventually settled his case for a confidential amount.

Many “certified” cars are former rental cars or fleet vehicles that were driven hard and may be poorly maintained. Instead of being worth more than Blue Book, they are usually worth less. But dealers can get away with charging more for them by calling them “certified.”

Instead of paying thousands extra for a “certified” car, pay $100 to get your own, independent inspection. Do it BEFORE you buy. And save thousands of dollars.

Read more: “Certified” car may not be accident-free — CBS Channel 5, San Francisco report



Take the pledge — I won’t text while I drive

You’ve probably seen the ads. A young man who has difficulty talking is reaching out to the rest of us, to warn us — don’t text while you drive. He was brain-injured in a crash, where a moment’s inattention resulted in a lifetime of dealing with serious brain damage.

No text or other message is worth risking your life, or harming your passengers or other people who share the roads. Imagine how horrible you would feel if you killed someone inadvertently just because you couldn’t wait to send a text.

AT&T has launched a national drive, to urge everyone to pledge not to text and drive. It’s a good idea, even if they are motivated partly because they want to stave off laws that prohibit texting and driving.

Don’t let your last text end with a crash.

Car Dealer Arrested by Federal Agents

The former owner of a Suzuki dealership in South Carolina and eight of his former employees have been indicted and are facing federal charges. Prosecutors say they used deceptive advertising that promised low monthly payments to entice customers to buy new cars.

According to the charges that were filed, the deceptive advertising and sales scheme occurred from 2006 through August, 2008.

In TV and radio ads, plus direct mail to consumers, Gibson and his co-defendants allegedly lured customers into buying cars, promising them very low monthly payments — usually between $44 and $99 — and here’s the kicker — at the end of several months, they could trade in the car for new one, at no additional cost.. However, when the “promotional period” ended, the customers’ payments skyrocketed. They were also not allowed to swap cars. Thus, they were trapped with high payments that busted their budgets.

According to a news report in the South Carolina Herald-Journal, “one couple bought a Suzuki in March 2007, [and] agreed to make monthly payments of $47 and were soon slapped with demands for $509 a month to keep their sedan.”

Under a court order issued in 2009, dealership customers divided $2.7 million in funds established by American Suzuki Motor Corp., lenders and the company’s insurance carrier.

Assistant U.S. Attorney David Stephens is prosecuting the case with the assistance of the U.S. Postal Service and the FBI.

Read more:

Spartanburg, SC Herald-Journal, Sept. 14, 2012


Extended Service Contracts — Worth it, or not?

It’s hard to buy a car today, from a dealer, without having to pay $1000 or $2000 or more for a “service contract.” Some dealers pressure car buyers into these notoriously high-priced add-ons by telling them that if they don’t get the contract, the lender won’t approve their loan.

In some states, that is an unfair and deceptive trade practice. But it’s usually very difficult to prove.

What dealers won’t tell you is that they get hefty kickbacks from lenders, insurers, and other companies that sell service contracts, in exchange for selling them. A dealer may make more on the service contract than on the price of the car.

But are they a good deal for car buyers? According to Consumer Reports, based on the respected consumer magazine’s survey of 8,000 new-car buyers, the answer is NO.

Among the reasons service contracts tend to be a bad deal:

They often exempt coverage for pre-existing conditions, or items that are prone to break down.

They usually won’t cover prior damage, which gives the service contract company a convenient excuse to deny claims. If the car was in a wreck or flood, chances are the warranty will be partially or totally void.

Some dealers fail to forward the money you pay for the service contract. Instead, they pocket it and leave their customers in the lurch. It’s a very unwelcome surprise to find out that the coverage you thought you had — doesn’t even exist. Especially when you face an expensive repair. Even major franchised car dealerships have been caught engaging in this scam.

The products are overpriced. Based on loss/claims ratios, the charges are often outrageously high.

The contracts are written with many exclusions and limitations hidden in the fine print. Blown gasket? “Sorry — you can’t prove the used car you just bought had the oil changed every 3,000 miles. Claim denied.”

Some service contract companies have gone under, leaving both the consumers and dealerships holding the bag.  Even some that were highly rated by “objective” ratings companies were actually a stack of cards. This has happened over and over again.

Bottom line: You’re usually better off spending $100 to get a reliable, independent auto technician to inspect the car BEFORE you buy, rather than spending an extra $1000- $2000 for a worthless contract that is loaded with loopholes.

Read more:

Consumer Reports “Extended warranties: a high-priced gamble”