Attorney: Educate yourself to avoid car-sales ploys
By Cindy Yurth
DILKON, Ariz., December 13, 2012
S hady car salesmen certainly aren't unique to the border towns around the Navajo Nation.
However, says a Flagstaff attorney who specializes in consumer law, questionable sales practices do have a "disproportionate impact on Navajos."
Former DNA attorney Veronika Fabian spoke at the Navajo Nation Human Rights Commission's public hearing on abusive sales practices in the border towns, held here Friday. And, after 18 years "pursuing car dealers," she has seen them all.
Fabian said Navajos are vulnerable to unethical auto sales tactics for three reasons: they need cars to get around; Arizona and New Mexico don't have great consumer protection laws; and they may not read English well ("which makes it so easy for these car dealers to put things in the contract and get away with it").
Most people assume buying a car is much like going to the store and buying anything else: You pay what the item is worth, plus a little more for overhead, commission, etc.
But car dealers, Fabian said, "work backwards": "They try to get you to say the highest monthly payment you can come up with, and then they build the contract around that," she told the 112 people who attended the hearing, many with their own questionable contracts in hand.
The main thing to remember, Fabian said, is to read your contract before signing, and if you don't know what something is, ask.
The easiest — and perfectly legal — way for car dealers to overcharge you, Fabian said, is to stick things in the contract that you won't question.
"Service contract, theft guard, point warranty — none of those things you need," she said. "Here's one: 'dealer documentary fee.' I've been dealing with car contracts a long time. I still don't know what that is."
Make sure you know what the interest rate is and how long you'll be making payments.
"You can end up in a very long payment plan," Fabian said. "I've seen them seven years long. The car's not going to be worth anything by then."
It's a good idea to get your financing somewhere besides the dealer, or at least to know what interest rate you qualify for before you get locked into something, Fabian suggested.
Sometimes a dealer will send you home with a vehicle before the financing is approved, Fabian noted.
This is called "yo-yo sales' because they'll try to reel you back in to sign a different, less favorable contract, telling you the first one fell through.
"I've had a client who signed six contracts," she said.
Unscrupulous dealers will also sometimes take months to pay off the car the customer traded in, and sometimes lead the customer to think he has traded in his car when he's not getting credit for the trade-in on his contract.
And don't think an unscrupulous dealer is beyond falsifying your credit score to get you to pay a higher interest rate. Make sure you've run a credit report on yourself before you ever walk into a car dealership, she advised, and ask the dealer for a copy of your credit application.
What it boils down to, said Calvin Lee Jr., staff attorney for the HRC, is keeping your wits about you.
"They are there to manipulate," Lee said of car dealers. "Once you're on the lot, their training is to make sure you go home with a car — not necessarily the car you wanted."
While high-pressure salesmen are good at intimidating customers, added Fabian, shoppers need to remember the ultimate power is theirs.
"Any time you feel like you're not in control," she advised, "get up and walk away."
Mickey Menapace, the third-generation owner of Rico Motors in Gallup, agreed.
"I spend half my day trying to get my customers out of some shady contract they signed with another dealer," he said in a phone interview from the dealership.
Menapace said reputable dealers get tired of having their reputations ruined by tactics used by some of their competitors.
"I could tell you some stories you wouldn't believe," he said. "It's not us local guys doing it, it's these coyote dealers coming in from the big city."
Menapace said the Gallup dealerships called a meeting last week to address questionable sales tactics, "but of course none of the coyotes showed up."
He said the dealerships are following closely the HRC's proceedings.
"I'm glad they're doing it," he stated. "Somebody needs to look out for the grandmas. People are getting their credit ruined through no fault of their own."
Twenty-six people signed up to testify at the meeting, which started at 10 a.m. and ended at 5 p.m.
DNA attorneys were also on hand to go over contracts people had brought and hand out brochures on consumers' rights. The brochures, along with free consultation, are available at DNA offices.
The recently established Consumer Financial Protection Bureau has also committed to working with DNA on consumer issues.
The HRC will investigate any complaints filed with it concerning questionable sales tactics targeted at Navajos.