“check engine” light woes

You’re a smart consumer. So before you buy that used car, you take it for a test drive.  You notice that there are no warning lights on the dashboard. You think everything is fine, and you buy the car.

But — shortly after you drive it home, the “check engine” light comes on. This spells trouble. BIG trouble. This scenario is playing out all over the country. It’s become a frequent complaint among used car buyers. “I just bought it and now the ‘check engine’ light is on.”  Adding to the woes experienced by consumers who are victims of “check engine-itis” — the repairs to get that pesky light to go off can cost $3,000 — $4,000 or more.

Margie Y of Hawthorne, CA contacted CARS and said she bought a used Toyota for her daughter, as a present for her 21st birthday, from a local dealership. Within a day, the “check engine” light came on. Then the alternator blew up, and the car caught on fire. When she had the partly charred Toyota towed to a mechanic, he said it needed a new alternator, catalytic converter, and solenoid — at an estimated cost of over $2400.  Money she didn’t have, since she had paid $6200 cash for the Flaming Toyota, and also traded in a vehicle that was running fine, plus had paid $300 for the tow.

Unfortunately, this story is all too familiar. So — what’s happening?  According to automotive experts, unscrupulous dealers buy “scan tools” over the internet that allow them to simply wipe out the error codes that trigger the “check engine” light. Then they sell the car.  As soon as it’s driven a short distance, the error codes register and — on goes the dashboard warning light.  Some dealers don’t bother to buy the scan tools. They just disconnect the battery, erasing the error codes and getting the “check engine” light to go off just long enough to foist the car off onto an unsuspecting used car buyer.

Not only are the dealers cheating their customers, they’re also falsifying smog test results and polluting the air. They know that chances are good their customers won’t be able to pay for the expensive repairs, and will end up driving the car despite the fact it doesn’t meet emissions standards.  The day of reckoning may come when the hapless consumer tries to register it, and it won’t pass the smog test. But by then, the dealer figures it will be too late for the consumer to take them to court.

What can you do to avoid becoming a victim of “check engine-itis”?  The most effective single thing you can do is to insist on getting your own trusted mechanic to inspect the car before you buy. They should be able to detect the fact the error codes have been wiped clean, and also do a check of the emissions system that will turn up the problems.  Where can you find a good, reliable mechanic?  Car Talk’s Mechanics Files is a terrific resource, where you can find the best mechanics in your area, based on reviews written by their own customers.

Check Car Talk’s Mechanics Files to find a reliable mechanic — before you buy

Tell the seller that you want them to take the car to YOUR mechanic before you’ll agree to buy.  If they balk at that, or try to talk you out of it, well, that’s why God gave you feet — so you can walk away from there. Pronto.  There are plenty of good used cars for sale.You don’t need to get stuck with one that will cause you hassles and headaches.

“The financing fell through” — car deals gone bad

It’s a consumer transaction like no other. When you buy any other product or service, once you’ve signed on the dotted line, the seller can’t unilaterally change the deal. But then you set foot on a car dealership lot, and it’s like you’ve entered a parallel universe where suddenly the rules of the road no longer apply.

No other shopping experience in your life prepares you for what auto dealers try to pull. It’s called “yo-yo” financing. It’s a shady practice that has made headlines nationwide, and is becoming notorious, but continues to happen at auto dealerships every day, all across the country.

You negotiate to buy a car. You reach an agreement. You make a deposit and trade in the car you own. You are then sitting across the table from the Finance Manager, who is all smiles and claims to be on your side. He says he’ll get you the “best terms” on a car loan. He shows you the federally required Truth in Lending disclosures. Total amount financed. Monthly payment.  You look it over, it appears to be reasonable, and you sign the Retail Installment Contract. The salesman hands you the car keys, and off you go, in your newly acquired car. Life is good.

But then a week or two later, you get a phone call from the dealership. They say that the financing “fell through.” They want you to go back and sign another contract. On worse terms. The interest rate you agreed to was 4%. Now they want to charge 16%. Or 20%. The monthly payment was a manageable $240.  Now it will shoot up to $480.   They claim that your credit isn’t as good as they thought. Which makes no sense, since they pulled your credit report before financing the car. Given electronic communications, they knew within seconds what rate you qualified to get.

What they’ve done is known as “de-horsing” — a term that harkens back to horse-trading days. Their goal is to get you out of the car you own, and take you out of the market and trap you into a deal with them. Once they have your trade-in and down-payment, chances are good you can’t just go somewhere else and buy a car on better terms.  They have you over a barrel.

If you balk at signing the new contract, they will threaten to report it as stolen.  Or they’ll threaten to repossess the car, and ruin your credit. If you drive back to the dealership in your newly purchased vehicle, they may park cars on both sides and behind it, to block you from being able to leave, until you sign the new contract. Typically, they refuse to return your deposit. They also claim they already sold your traded-in car, even though it’s actually sitting on a back lot.

You feel trapped into signing, even though it will cost you thousands more than you had initially agreed to spend.

This is the twisted world of “yo-yo” financing. The dealers claim that the financing “isn’t final” — even though you reached an agreement and signed a contract.

The ONLY way to make sure you don’t fall into the yo-yo trap: NEVER, EVER get a loan from a car dealer. Always get your own pre-approved loan. And don’t fall for it if the dealer claims it will get you better terms. Because those can change after you drive off the lot.

CARS recently heard from a consumer, Michael L., who was being scammed by a major car dealer in Sacramento. He and his fiancee are expecting their first child in a few months and wanted a bigger car.   Michael had pre-qualified for a loan at around 10%. He had the check, from Capitol One, in hand.  The dealership finance manager promised a lower interest rate. Thinking he could save some money, Michael agreed to go with dealer financing. Then came the phone call — sorry, the loan “wasn’t approved” at the lower rate. The dealer demanded that he pay 18%.  So instead of paying $23,000 for the loan, Michael was going to have to pay over $30,000 to finance the same car.

He contacted CARS and we brought his case to the attention of a major national news organization. When the dealership found out about the potential news coverage, it backed down and Michael got to keep the car on the original terms. He said he’d learned his lesson — never trust a car dealer, especially not on the financing.