I just bought a used car, which required a lot of research on car-shopping sites like AutoTrader, Cars.com, CarGurus, Edmunds, and TrueCar. Before I settled on a vehicle and a dealer, though, I got excited about several promising listings. Until I read the fine print.
I discovered a deceptive advertising practice you should be aware of before you go to a dealer: the promotional “Internet Price” (after down payment), which can inflate the asking price of the car by up to $2,000.
The Price After Down Payment
Here’s how it works. A car is listed on the dealer’s site or a car shopping site with a promotional “Internet price.” Buried in the listing, or perhaps on the dealer’s website, is a caveat: “Internet Price is reflective after 1995 down payment.” In other words, the actual asking price at the dealer is whatever it was listed for online, plus another $2,000. Unless you look carefully for it, you won’t even know until you sit down to discuss pricing.
Empire Honda listing
This isn’t a typical tactic, and most online dealer prices I saw matched their asking prices. In some cases, they were declared to be “Internet prices” and the dealer asked that you print out the listing to get the price, but that was it. However, I found two dealers that tack on the $2K: Empire Honda of Manhasset, NY and Motorhub, Inc. of Inwood, NY.
Empire Honda obfuscates the extra $1,995 by mentioning it in the fine print of the listing but not putting a dollar sign or comma, so it doesn’t stand out like its declaration of a $695 dealer and documentation fee. To its dubious credit, Empire Honda at least puts this warning in its listings on sites like AutoTrader. That credit is lost when all of the listings on its own site simply say “Finance for,” with no sticker price outside of MSRP at the time of the vehicle’s production (for used vehicles; the dealer’s new vehicle listings don’t do this).
On Motorhub, Inc., I found no notification of the price being reflective after a down payment anywhere on its shopping site listings, which use the posted, post-deposit price for any on-site financing calculator estimates (which factor in down payments as part of the price). The warning isn’t even in the text of the car listings on its own site. Instead, it’s hidden near the bottom of the page as part of the site disclaimer.
Advertised Price vs. Actual Price
I contacted these dealers as a prospective shopper and confirmed that the asking prices of the vehicles I was considering were actually $1,995 more than the posted price. During these exchanges, I prodded the sales representatives I was talking to about whether the price could be talked down, and mentioned that they could be considered deceptive business practices. No go; the price was the price.
This was over the phone and via email; to be fair, it wasn’t at the over-the-desk phase of negotiating and finalizing a price. Of course, when the asking price is two grand higher than you think coming in, that puts you at a disadvantage to negotiate down.
I later again contacted Empire Honda and Motorhub, Inc. for an official statement regarding these practices. I have not received a response.
I also reached out to AutoTrader, Cars.com, Edmunds, TrueCar, and Honda for statements on this pricing tactic. A representative for Edmunds responded: “Edmunds recognizes this as a deceitful advertising practice and has a number of protocols in place to ensure that its pricing is as accurate as possible. Within 24 hours of detecting any listing with this issue, Edmunds either suppresses the pricing on the listing, or corrects it to reflect the true price.”
A representative from TrueCar also offered a statement: “The phenomenon you describe is not consistent with our values. It is also inconsistent with the values of the vast majority of dealers in our network of over 10,000 Certified Dealers. We have the ability to remove dealers from our platform if they engage in the kind of conduct you have described.”
Cars.com did not specifically identify these specific practices as deceptive, pointing to broader policies. “Dealers are required to disclose any down payment, rebate, or incentive that is factored into the selling price in the seller’s notes of the listing,” it said. “The dealers on Cars.com are trusted partners, and it is very rare when we encounter deceptive tactics. In cases of reported deception or fraud, we investigate and take appropriate action in accordance with our ad policy, including the right to remove the listings in whole or in part at any time.”
AutoTrader provided the least assuring response: “Vehicle information and prices are provided by the sellers, not by AutoTrader. The price and other terms of any sale remain subject to direct negotiation between the buyer and the seller. We have provided general pricing guidelines for advertisements and we take consumer complaints seriously. From time-to-time, pricing concerns are brought to our attention and we may investigate and address it with the seller if there is an issue.”
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Honda has not yet offered a statement.
As of this writing, listings from Empire Honda and Motorhub, Inc. have been removed from AutoTrader, Edmunds, and TrueCar. Listings from Empire Honda remain on Cars.com.
How to Avoid Getting Scammed When Buying a Car Online
To start, closely read the listing description if you’re on a car shopping site. Go to the dealer’s website and look up that listing as well, and check for any disclaimers on the site. Be wary of any listed prices that just say “Finance” or “Internet Price”; the former is a bigger red flag than the latter, especially if no cash price is listed.
Any statement that says “Price is reflective after $1,995 down,” or anything similar, is a sign you’re going to see a bump in asking price when you walk in. Call the dealer ahead to confirm if this is the case; different phrasing could mean that the price simply assumes you’ll be putting that much down if you finance. Keep your eyes open, and if the price seems too good to be true, it might be.
For the record, I bought a 2018 Honda Fit EX from a local dealership. After using all of those different car shopping sites, I actually found that CarFax was the most useful. It appears to base its listings on dealer inventories through DMV registrations and service histories that appear through the CarFax report. Late-model Fits tend to sell quickly where I am (dorky hatchbacks are incredibly useful for city driving because of their size and agility), and I got a line on the one I wanted before it went up officially because it was in the inventory listing.
Also, apart from the deceptive pricing, if a dealership doesn’t offer you a CarFax or AutoCheck report on request, consider that a red flag, too. They’re the best way to see if a used car has been in an accident or had any mechanical problems in the past. Nearly every dealer I’ve looked into has offered one of the two for free so you can check the car’s history.