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The Truth About Auto Loan Ads


Are Car Ads Taking You For a Ride?

Whether you’re buying or leasing, shopping for a car can be fun and exciting. But wading through ads and promotions offered by car dealers also can be stressful. Some advertise unusually low prices, low or no up-front payments, low- or no-interest loans, or low monthly payments. Others promise high trade-in allowances, free or low-cost options, or rebates. And if you’re looking to lease a vehicle, ads for very low — or no payment — at signing may be especially enticing.

But the Federal Trade Commission, the nation’s consumer protection agency, says beware: Not all dealers play by the rules. Details about special offers and promotions may be buried in the fine print, clicks away from online claims, may not be disclosed at all, or may not be disclosed until you get to the showroom or the finance office. But the law requires that if a dealer advertises discounts, prices, or special low payments, the ads must clearly explain the important details of the offers and how a buyer may qualify for them.

To find your best deal, shop around and compare offers from different dealers and financing sources like banks or credit unions. Ask the right questions, and make sure all promises and terms are in writing before you sign on any dotted lines.


Deceptive Car Ads

Here are some claims that may be deceptive — and why:


Vehicles are available at a specific low price or for a specific discount

What may be missing: The low price is after a down payment, often thousands of dollars, plus other fees, like taxes, licensing and document fees, on approved credit. Other pitches: The discount is only for a pricey, fully-loaded model; or the reduced price or discount offered might depend on qualifications like the buyer being a recent college graduate or having an account at a particular bank.


“Only $99/Month”

What may be missing: The advertised payments are temporary “teaser” payments. Payments for the rest of the loan term are much higher. A variation on this pitch: You will owe a balloon payment — usually thousands of dollars — at the end of the term.


Zero or Low Rate Loans

What may be missing: The low advertised annual percentage rate (APR) may apply only to loans up to a certain amount — which may be a lot less than the purchase price. You will pay a higher APR for loans financing higher amounts. A variation on this pitch: rates may not be stated as “APR,” meaning the advertised rate may not reflect the true “annual” cost of financing, and may exclude certain costs required to be included in the APR.


“$0 Due at Lease Signing”

What may be missing: The fine print indicates that additional fees — sometimes several thousand dollars — are due at lease signing.


You’ve won!

What may be missing: The prize. This is just a tactic to get you into the showroom.


Questions to Ask About Discounts, Low Prices and Special Offers

To find your best deal, ask the right questions. The answers should help you determine whether the special promotions offer genuine value — or are simply smoke and mirrors.   

  • Do you have to pay sizeable amounts — say, a down payment or taxes –— that aren’t included in the advertised low price? 
  • Does the advertised discount apply only to certain models of the vehicle? Is it available if you order a car instead of buying one off the lot?
  • Do you need to have certain qualifications to get the advertised discount, low price, or credit terms?
  •  To get the advertised low rate financing:
  • Do you have to repay the loan in a short time period, say 36 months
  • Does the loan need to be for a certain amount? If so, what are the financing terms for loans with higher amounts?
  • Do you have to buy special merchandise, like an extended warranty, a service contract or rustproofing?
  • Will you be charged a higher vehicle price? The price may be lower if you paid cash or supplied your own financing from a bank or credit union.
  • Do the advertised low monthly payments apply for the entire term of the loan? Do they instead increase after only a few months? Is a balloon payment — possibly thousands of dollars — due at the end of the loan?
  • If the ad offers $0 due at lease signing, do you still have to pay something before you drive off the lot — say, fees, taxes, a security deposit, or the first month’s payment?
  • Does the dealer’s prize promotion mean you’ve won something substantial? What is it?

Before You Sign

Once you decide which dealer offers the car you want, be sure all the terms, including the price — and the financing if you get credit through the dealer — are what you agreed to. If you lease from the dealer, check that the terms are what you negotiated, too. Read the documents you get very carefully, especially the credit or lease contract. Be sure you understand the terms before you sign. If the deal isn’t what you negotiated, ask questions. Don’t sign, and don’t leave the dealership with a new vehicle until the terms you and the dealer negotiated are on the contract, and you are clear about your obligation, including all your payments. 


Download our free Auto Buyer's Guide here to learn more before you buy!



*APR (Annual Percentage Rate) is effective as of 7/23/14, is based on creditworthiness, is our best rate and includes a 0.25% rate discount for automatic payments. Based on a 48-month term and 80% financing of retail Kelley Blue Book Value for pre-owned cars and 80% loan-to-value for new car purchase. To qualify for this rate discount, an automatic loan payment to this loan is required and must be maintained throughout the life of the loan. Other Loan-to-Value requirements may apply. Proof of income is required at the time of loan funding. Monthly payment per $1,000 for 48 months at 1.74% APR is $21.58. This payment example is for illustration purposes only. Your actual payment may vary. Minimum loan amounts include $8,000 for a 60-month term loan and a minimum loan amount of $15,000 for a 72-month term and $25,000 for 84-month term loan. Membership eligibility requirements and membership fees may apply. This promotional rate is available for a limited time and rates and terms are subject to change without notice.
**90-day deferred payment option for qualified borrowers. Interest accrues immediately.
1Up to 120% financing available based on credit worthiness and model year. New: Manufacturer's Suggested Retail Price (MSRP) and Used: Retail Kelley Blue Book (RKBB), both including tax, license fees and optional products such as Guaranteed Asset Protection (GAP) or Mechanical Repair Coverage (MRC) and is subject to approval. A valid driver’s license and current insurance information are required at time of financing.

Offer expires July 31, 2014. Loan must fund by July 31, 2014 to receive this special offer.

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