Cars: Here’s one Gap you don’t want to fall into

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Next to your home, cars are often the largest purchase a consumer makes (hopefully not THE largest). Because that’s the case, I want to spend some time on this subject. I average at least five calls a week from local consumers with complaints relating to cars and trucks.

One recent twist to car buying is “Gap” insurance. At least it’s new to me. Here’s what Wikipedia says, in part, about Gap insurance: “This coverage is marketed for low down payment loans, high interest rate loans and loans with 60 month or longer terms.” Gap insurance is typically offered by a finance company at the time of purchase, but not by the dealership. It’s usually offered by insurance companies, independent of the dealership. Gap insurance is usually paid upfront and, for that reason, refunds are hard to come by. It’s also very expensive for what you’re actually getting.

I am a licensed insurance adjuster in Idaho and I wouldn’t ever buy gap insurance. My thought on gap insurance is this: Don’t ever pay more for a car than it’s worth, and you won’t need it. Carry good normal car insurance from a reputable insurance company with as high a deductible as you can afford. Why would you ever pay more than a car is worth or than you can afford? Given the wealth of information about car and truck values on the internet, there’s absolutely no reason to overpay — EVER!

People get snared by the billions of dollars spent each year to lure YOU into buying a new piece of rusting iron. I have nothing against buying a car, even a new one, even an expensive one. However, if you require “no interest for 72 months, nothing down, and easy payments,” you should probably think twice about the purchase. Sorry, the money is coming from somewhere and ultimately it’s you.

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ANALYTICAL IS BETTER: Car buying should NEVER be an emotional matter. Do your research before you go into the dealership. Write the information down. Stick to your budget. The best way to really get a great deal is to pay cash — no added extras or doodads. The “add-ons” are where dealers make a lot of money. Extended warranties are sometimes a good deal — as long as they are offered by the manufacturer — not a third party. (Read: Here today, gone tomorrow.) I have had many complaints from people in our area who find the “extended warranty” they purchased isn’t worth the paper it’s written on. Remember: The minute you drive that vehicle off the lot, it instantly starts to depreciate.

(Interesting note: If you watch car commercials carefully, they seldom actually show the face of the person racing along in their new car. They want you to imagine yourself in that driver’s seat).

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CRAIGSLIST and CARS: Car dealers always seem to offer great deals on almost every vehicle on the lot. Different states have different laws on what car dealers can and can’t do. Some dealers put cars (usually cars with major problems) on eBay and Craigslist and attempt to make them look like private parties are selling them, thereby evading laws that apply to dealers. In the industry this is so common it has a name: “Curbstoning.” BIG BEWARE: If you buy a bad car or have other trouble with a vehicle on eBay or Craigslist — YOU’RE ON YOUR OWN. Neither eBay nor Craigslist will back you up.

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THE CAR WASH: Not the kind you think. Remember all the recent images of flooding from the hurricanes? Remember all the vehicles up to their rooftops in filthy water overflowing from storm drains and sewers? Well, they’ve been cosmetically cleaned up and sold to the lowest bidders by the insurance companies and are now finding their way to wholesale car auctions to be sold to small, independent dealers all across the country.

These vehicles wind up in places that don’t have hurricanes and flooding. Many states require that when a vehicle is totaled, like in a flood situation, the title is marked as such. Unscrupulous dealers and wholesalers take these vehicles to states that don’t require identification as salvage vehicles, retitle them in the new state, and voilà, you have a vehicle with a new, unblemished title.

Setting aside the obvious mechanical problems being submerged in water and mud usually cause, think about the mold, smell, and environmental health hazards that are probably waiting for the new owners. Use CarFax and AutoCheck to research the background of the vehicle BEFORE you buy it. “Title washing” does not get rid of computer records of title transfers.

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Did you know that sellers on eBay aren’t required to sell an item that has been listed? Often vehicle sellers troll the sites, advertising low-ball prices and then try to jack up the price. If they’re not successful, they refuse to sell the vehicle. You can waste a lot of time on a scam like this and either get taken to the cleaners or come up with nothing. Don’t EVER accept a PayPal payment for a vehicle, or accept payments from PayPal when selling a car through eBay Motors. PayPal does not cover eBay Motors vehicle purchases in any way.

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ONE MORE LITTLE UNSAVORY TIDBIT: If a used car has engine problems, putting diesel fuel or diesel oil in the engine can mask the problems temporarily. Diesel oil is thicker than regular oil. Mechanics say they see this ruse frequently.

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IMPORTANT FINAL THOUGHTS: In this area we are lucky to have a large number of very honest car dealerships. In 10 months, I have had only one complaint involving a local dealer. That complaint turned out to be a misunderstanding and was immediately resolved. It costs millions of dollars to buy, equip and run a car dealership. The dealerships provide great value and great service to the residents of this area. They also provide many, many high-paying jobs to the people in the Inland Empire. The owners and employees are our friends and families. The dealerships must make a profit to stay in business — and they do it honestly. Please support this local industry. But only buy what you can afford. Use your head — not your heart.

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REMEMBER: I’m in your corner.

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I have many more tips and interesting cases that I’m working on as The CDA Press Consumer Guy. Call me at 208-699-0506, or email me at BillBrooksRealEstate@gmail.com or fax me at 866-362-9266. Please include your name and a phone number. I am available to speak about consumerism to schools, and local and civic groups.

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Bill Brooks is the CDA Press Consumer Guy and the Broker and Owner of Bill Brooks Real Estate in Coeur d’Alene.

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