Car Dealership Advertising in Relation to your Credit Score. The $199 a Month Ad
We have all heard the ads on the radio… “$199 a month” followed by a “good through Sunday only” and ending with a guy talking softer and faster than the old Micro Machine commercial blabbering on all the legal details of the ad.
I have to ask, do these ads really work? Of course they do, that’s why dealers continue to use them over and over again. My main question is whether or not I should stoop to that level?
If my add for a $400 payment plays immediately after a $199 add where do you think the customer is going to go first?
Before we even get into the credit score aspect of these commercials I would like to explain to you ways that these advertisements are possible. A dealer cannot legally advertise something that is not achievable. The problem is that more than the one person that qualifies for this deal is hearing the ad. A typical low payment add combines several factors besides credit score.
First, this “deal” will require a substantial down payment. Did you know that you can get a $199 payment on every car that is made? Even a Bentley. As long as you only finance $10,000 and put the other $90,000 down you will be good to go.
Second, this “blowout extravaganza” may not even be a purchase. It could be a lease. I am not going to get into the advantages and disadvantages of leasing right now but the basic principal is that you make your payment for a set term and at the end you can either give the car back to the finance company or purchase the vehicle for the pre-determined price that is set at the time of initial purchase.
Third, the limited time “saleabration” may only be good on one vehicle on the lot. When you arrive at the dealership if you choose a car with more or less options, a different color, or the same car just a different vin number, this deal will not apply. Assuming that the vehicle has not been sold by the time you get there.
Fourth, the end of the year “inventory reduction” could be the dealer applying a discount to the first few months of the payments only. So $199 a month for 4 months and then back up to your regular payment.
Finally, your credit score. When they are working up the quote for the advertising deal they are assuming that you have above a 740+ credit score. I consider myself to have perfect credit, however, my score is a 720. In this case, I would not qualify. The dealership now has the opportunity to re-negotiate the deal to apply to my specific situation. “Mr. Metzger, we were unable to secure the necessary financing required to obtain the $199 payment based on your information. We did receive a similar approval that results in a $221 payment.” I guarantee that the dealership built in extra profit into the new payment since I did not qualify for the advertised price.
There could be a multitude of other ways the dealers are offering this price but it basically comes down to the fact that if you want to purchase a car, finance it for 5 years, put $0 money down, have perfect credit, and want a $200 payment then you had better find a $10,000 car. When it comes down to the question of whether or not I will partake in the same advertising campaigns the answer is “No”. I have spent many years in the automotive industry, I have done things that I am not proud of but they have all led me to this point in my career. I am in a position where I feel that I don’t have to mislead anyone. I may sell less cars because of it but the monetary aspect is no longer as important as the gratification that I no longer fit the car salesman stereotype. I will continue to educate consumers, through social media, of the knowledge I have accrued over the years behind the scenes. Providing this free service will be my best advertising. I will also continue running advertising campaigns that the majority of people will qualify for despite it not “sounding” like the best option in the beginning. As always contact me for any questions or concerns.