Offers of ultra-low interest rates don't tell the full story

Ron Loveys

TADA PRESIDENT

Car ads in newspapers and on TV are meant to grab your attention. With phrases like "zero per cent financing," "no money down" or "$6,000 in rebates," car buyers are naturally intrigued.

But astute car buyers know that low interest rates and other incentives don't tell the whole story when it comes to buying or leasing a vehicle.

Those special offers are accompanied by terms and conditions, so that consumers understand what they're getting and what's required. Those terms and conditions are known as "fine print."

Dealers and manufacturers don't include fine print, just to fill up available space on a page. In fact, it's required by law.

The Ontario Motor Vehicle Industry Council (OMVIC) ensures that dealers and manufacturers offer full disclosure for all advertising and marketing that they do. In other words, all advertised programs, incentives and claims must be clearly stated for the benefit of the consumer.

Formed in 1997, OMVIC is a self-managed body that oversees and regulates the activities and business practices of new-car dealerships throughout the province.

Zero per cent financing or cash rebates often apply only to specific models and for specified lengths of time. The precise models on which these incentives apply, and the terms of the financing arrangements, should be included in the fine print.

If a dealer or manufacturer advertises a finance rate of, say 1.9 per cent, the fine print should include the MSRP on the vehicle, the length of the financing term, the monthly payment obligation, the down payment required (or trade-in value), and the total cost of borrowing.

Other items in the fine print for new car ads include such things as freight, PDI (pre-delivery inspection), administration fees and all applicable taxes (i.e., provincial, federal, fuel conservation tax).

The details of a price point or a special offer are usually followed by the phrase "OAC" (on approved credit). This means that only buyers with good credit ratings are eligible for the advertised prices or discounted rates.

Those with poor credit ratings may still be eligible to finance a vehicle, but they could be denied the special interest rate that is advertised.

Often the fine print will contain a line that reads, "This offer cannot be combined with any other advertised offer." That simply means that a stated offer from the manufacturer (i.e., 0 per cent financing) cannot be applied to other incentives offered either by the dealership or the manufacturer.

If an advertisement makes a claim about fuel consumption ratings or that a certain vehicle earned an award, those claims should be verified in the fine print as well.

Although some consumers may regard fine print annoying, it's included for the benefit of dealers and consumers. Dealerships don't want to confuse or frighten would-be car buyers away.

For consumers, understanding the terms and conditions of an advertisement will help to compare apples to apples, so that they can make informed buying decisions. It's a win-win for everyone.

Fine print is usually much smaller than the type promoting the various offers and incentives, and buried at the bottom of an ad, so you might have to look carefully to find it.

If there is some aspect of the fine print that you don't understand, ask a salesperson or a friend to explain it to you.

If an advertisement is missing crucial information about the offer, or seems misleading, then contact the dealership or OMVIC directly. As stated earlier, dealers are required by law to outline all pertinent details of any offers and promotions.

For more information about OMVIC's marketing standards, including fine print, visit www.omovic.on.ca and look for the link, "standards of business practice."

This column represents the views of TADA. email: president@tada.ca or visit www.tada.ca.

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