December 2013
Consumer Line
If you are having problems with this message, click here to view it in your browser December 2013

CONSUMER PROTECTION

US Based Scam Again Targets Canadian Car Buyers


Once again a phoney US dealership scam is targeting online vehicle buyers. Advertising on autoTRADER the perpetrators place ads for higher-end or luxury/exotic vehicles at prices that would be nearly impossible to find in Canada. The ads appear to be private but when an interested purchaser calls they are given a story explaining the vehicle is now located at a dealership in the US. The “dealership” has an impressive website with extensive inventory listed. They also have numerous customer testimonials, and not just on the dealership website. The scam artists created an extensive online ‘profile’ with testimonials on numerous sites. Unfortunately, neither the dealership nor vehicles exist.

“In the latest version of this scam the supposed dealership calls itself Double Eagle Motors operating out of Phoenix Arizona” explained Terry O’Keefe, OMVIC Director of Communications and Education. “We’ve heard from a number of Ontarians who unfortunately sent large deposits and received nothing”. To warn consumers OMVIC issued a news release; within weeks the Double Eagle Motors website was down. “While this is a positive development” said O’Keefe, “past experience with these same criminals has shown they are very likely to reappear within a few weeks or months with a new website and a new ‘dealership’ name”.

OMVIC strongly cautions Ontarians considering buying vehicles remotely, whether privately or from a dealer in another state or province, and offers the following tips:

  • Beware of a price that is considerably lower than the average market price. If a price seems too good to be true it should be seen as a warning, not an opportunity.
  • Travel to see the vehicle – don’t rely on pictures or a convincing website. If a buyer can’t travel to see the vehicle, hire an appraiser or mechanic to inspect the vehicle. They can ensure the vehicle actually exists and the seller is who they claim to be.
  • Check with state or provincial regulators/authorities to ensure dealers are licensed.
  • Purchase a vehicle history report for the vehicle – don’t simply rely on a report provided by the seller: they can be altered.
  • Don’t wire money or provide a credit card number without first doing all homework.
  • Don’t do it - consider that the savings are probably not worth the gamble, especially in light of the rapid proliferation of these scams.

O’Keefe wants Ontarians to know “they are only protected by OMVIC and Ontario’s consumer protection laws, and only have access to the Motor Vehicle Dealers Compensation Fund, when they buy from an OMVIC-registered dealer. If consumers buy privately, or outside the province, and something goes wrong they are basically on their own. It’s simply not worth the risk.”


INDUSTRY NEWS

The Dangers of Being a Monthly Payment Junkie


There’s a growing trend amongst some consumers that may have unexpected and potentially dire consequences ‘down the road’: making their car buying decisions based solely on a low monthly payment. Known as Monthly Payment Junkies, these consumers ignore the potential consequences of financing vehicles over extended terms (e.g. 84-96 months).

So what’s so bad about low monthly payments and extended terms?

Although it may seem beneficial to have lower monthly payments, consumers should educate themselves and carefully review lease or finance agreements.

A longer loan term will mean smaller monthly payments but consumers should consider the overall cost of the loan and interest accumulated. If consumers don’t get the best deal available on the interest rate, they could end up making significant interest payments over the span of the loan.

As well, consumers who finance vehicles over extended terms often find themselves ‘up-side-down’. This term, often referred to as ‘negative equity’, means the consumer owes more for the car than it is actually worth. When one considers how quickly vehicles depreciate (especially with the high mileage many commuters put on their vehicles) and how often consumers trade-in, financing a car over 96 months often means consumers need to borrow much greater sums of money when they trade-in a vehicle that still has years owing on it. These consumers find themselves borrowing for their new car and borrowing even more money to pay off the negative equity on their trade. This is guaranteed to lead to even higher monthly payments in the future; and when one considers the snowball effect of negative equity and the risk of higher interest rates looming, the trend of 84-96 month vehicle loans could be disastrous for many family budgets.

Tips when shopping for credit:

Before signing on the dotted line, consumers should do their homework and shop around. Take into account the following tips:

Compare Lenders

Dealers can often arrange exceptional financing for their customers. The term and rates offered may be based, in part, on the actual vehicle being purchased, the buyer’s credit-worthiness, work history, etc. It should be noted however that most dealers have access to a number of different lenders. Most of these lenders pay a fee to the dealer for arranging the financing. Consumers should ensure they are getting the finance terms they want and can afford.

Just as consumers educate themselves about the vehicles they intend to buy, they should also inform themselves of the products/services available to pay for those vehicles. Before visiting the dealership, consumers should contact their bank/financial institution and inquire about the terms and interest rates they can offer (they do vary between lenders). This allows consumers to comparison shop with the financing available through the dealership.

Negotiate

Commonly, at most dealerships, the prices of vehicles are negotiable; often, so too, are the finance terms (i.e. interest rate). Don’t fall into the trap of only negotiating a monthly payment; negotiate the all-in purchase price and the interest rate and term. Remember, be an informed consumer and understand what you can afford before signing any contract.

Check Credit Worthiness

Inquire about your credit worthiness. Did you know you can find out your credit score at any time? Learn more about your credit record by contacting a credit bureau agency. Two of the most commonly-used credit bureaus are:


HAVE YOU HEARD?

OMVIC Proudly Supports the Holiday Angel Program


In the spirit of the holiday season, OMVIC staff took part in the Holiday Angel Program through New Circles Community Services. The Holiday Angel Program, which celebrates its 10 anniversary, matches donors with families within the communities of Flemingdon Park, Thorncliffe Park and Victoria Village. As part of the program, OMVIC staff delivered gifts and household necessities to a family in need.

OMVIC Proudly Supports the Holiday Angel Program
Alykhan Suleman with Farah Mohammed as she delivers gifts to Holiday Angel Program


OMVIC Sponsors Thorncliffe Soccer Club


Mr. Raees Ahmed, President of the Thorncliffe Soccer Club (T.S.C.), gratefully accepted OMVIC’s sponsorship for the 2014 season. T.S.C. is a not-for-profit organization offering indoor and outdoor soccer to players aged 6 to 18 within the community since 2009. OMVIC is proud to support the youth of Thorncliffe Park and the development of soccer within the community. 2014 will be a great soccer season!

For more information about Thorncliffe Soccer Club, visit their website: www.thorncliffesoccerclub.com

OMVIC Sponsors Thorncliffe Soccer Club
Lesley Goldthorpe presents OMVIC’s sponsorship to Mr. Raees Ahmed


Get involved!

Consumer Representative Vacancy for OMVIC’s Compensation Fund Board of Trustees


The Motor Vehicle Dealers Compensation Fund Board of Trustees is now seeking a consumer representative to serve on the board beginning June 1, 2014.

The Compensation Fund was established to compensate consumers who suffer a financial loss as a result of a transaction with a registered dealer. One of the roles of the Board of Trustees is to review the eligibility of each claim to The Compensation Fund.

Click here for eligibility requirements and deadline.

Visit http://www.omvic.on.ca/portal/Consumers/CompensationFund.aspx for more information about the Compensation Fund.


EXTRAS
- Auto Talk
Definitions

The following definitions are provided to help consumers better understand terms that are commonly used in the auto industry:

Contract: The legal agreement between two or more parties, each promising to fulfill certain obligations. Contracts for the sale or lease of motor vehicles must be in writing and are final and binding once signed.

Cost of Borrowing: The total amount of interest a purchaser is required to pay over the term of the loan.

Deposit: Money prepaid towards the purchase of a vehicle with the full amount due at a later date.

Down Payment: An initial amount paid to reduce the amount financed.

Implicit Finance Charge (IFC): The total cost of a loan, including interest, fees and additional charges.

Interest Rate: The rate at which interest is paid by a borrower (debtor) for the use of money that is borrowed from a lender (creditor).

Monthly Payment Amount: The dollar amount due each month to repay the finance agreement.

MSRP: The Manufacturer’s Suggested Retail Price is the price a vehicle manufacturer will suggest dealers sell a vehicle for. This does not include taxes, freight and pre-delivery inspection (PDI) or other dealer added charges. Typically this price is negotiable.

Check out the next edition of OMVIC’s Consumer Line to learn more about terms found on vehicle lease and financing contracts!


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OMVIC is the self-management organization of the motor vehicle dealer industry and administers the Motor Vehicle Dealers Act -- a public protection statute -- on behalf of the Ministry of Consumer Services. OMVIC's mandate is to maintain a fair and informed marketplace by ensuring registration of motor vehicle dealers and salespeople, regularly inspecting all of Ontario's 8,800 dealerships, maintaining a complaint line for consumers and conducting investigations. OMVIC also administers the Motor Vehicle Dealers Compensation Fund.