How To Avoid Bill Of Sale Pitfalls
Published in Car Smart Eletter, Written By Omid Badie, 2017-11-10
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Automall Network reviewed well over 20,000 bills of sale and lease agreements of what people have been charged and how they've been charged for their vehicles. Here are some examples of problem items we saw:
- Double billing for chargeable options
- Freight/pdi built into the vehicle price and then again as a separate line item
- A line item called PDE (pre-delivery expense) that should already be included in the PDI (pre-delivery inspection) cost
- Severe overcharges on dealer installed and additional items such as rust/paint/fabric protection, rust modules, window etching, and administration fees.
Here are some tips and a few precautions that car buyers can take to avoid these common pitfalls:
- Do your research - Know the Manufacturer's Suggested Retail Price (MSRP) for the vehicle and options that you want. This should represent the top end of the price you pay. This can easily be found using the Build & Price tool on manufacturer websites. While most people negotiate a value below MSRP, we have seen cases where the Bill of Sale reflected a price higher than MSRP.
- Don't just focus on the bottom line - Take the time to scrutinize each and every line item on your Bill of Sale or Lease Agreement and have the salesperson or business manager go through it in detail. In many cases, people just look at the starting number and the bottom line, and as long as it fits within their monthly budget, they sign. However, there could be unexpected things built into the price that should not be there.
- Don't buy anything you don't need - Here is a list of potentials add-ons you may be offered or line items that may appear on your Bill of Sale. Some people want the peace of mind of having them, but in high pressure situations, some people end up taking them just to get out of the dealership:
- GAP Insurance/Protection - This covers the difference between the outstanding amount owing and the settlement value from your insurance company if your vehicle is stolen and not recovered or deemed a total loss
- Rustproofing and Undercoating - Today, the steel manufacturing process provides very good corrosion protection. Further, your manufacturer's warranty already covers you for rust damage for an extended period unless your paint is damaged and bare metal is exposed. In most situations, you don't need this on new cars, however it could be a good investment if you are buying something older
- VIN Etching (aka protection package or many other names) - This service scratches the VIN into the vehicle's windows and other major parts, claiming to deter theft. You may even be told that it will lower your insurance rate to have this protection. While some insurance companies may give a reduction, the cost of the etching will typically be more than the insurance savings. As for deterring theft, how many thieves do you think would walk away because they see a number engraved on the windshield, which by the way can be replaced for around $300
- ADMIN Fees - Most dealerships charge an admin fee that may range from $150-$1500 or even more. Don't be shy. Ask what this fee covers. In many instances you may find that the dealership is forcing you to buy services - like etching - by including them in this fee. Automall Network typically gets these fees waived for our clients, however some dealers will negotiate these fees
- Fabric Protection - Depending on your situation, you may find this useful (eg: coffee often spilling, rambunctious children, travelling with pets, etc). It can often be done yourself a lot less expensively with a can of Scotchguard from the local department store however if the convenience of getting it done by the dealership before taking delivery is worth the extra cost to you, then by all means, have it done
- Credit/Life/Job/Disability Protection - This pays off your outstanding amount in the event of bad life situations. However, if you own any form of other life insurance, you probably already have enough to cover the car loan in addition to other expenses. The same may be true with disability if you receive any type of disability insurance from your employer. There are coverages in case you lose your job, but there is always the possibility of selling the vehicle if you can no longer make payments. This one will be subjective based on each person's risk tolerance
- Negotiate Negative Equity, if applicable - This is typically a situation that happens when you are upgrading a currently financed or leased vehicle before the contract expiry date. Often, the trade in value is less than the amount owing so you have to pay the difference. Often times, the difference is rolled over into the new vehicle's financing or leasing so it is not very noticeable. However, this means you are paying for both vehicles over the course of the new term. Negative equity can be negotiated by negotiating a higher value for your trade-in, thereby the difference will be less
- Question everything - Question every line item and get a satisfactory answer. If you are not comfortable with the answer you are getting, then it probably is not right. The negotiation does not end when you agree to a price or monthly payment with the salesperson and sales manager - you have to continue negotiating in the business office.
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