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General Motors 60-day return program -- watch your wallet -- it may not be all that it appears to be!

Any time the government and a car dealer combine to provide a marketing incentive to an ordinary consumer – watch your wallet.

The GM (Government Motors) deal sounds almost too good to be true …

See it for yourself …

What he said … 

“I’m Ed Whitacre , Chairman of General Motors.

Before I started this job, I admit I had some doubts. Probably a lot like you.

But I like what I found and think you will too.

Car for car, when compared with the competition, we win. Simple as that.  I just know if you get in to one of our cars you’re going to like what you see.

So we’re putting our money where our mouth is. Buy a new Chevy, Buick, GMC or Cadillac and if you’re not a hundred percent happy, return it. We’ll take it back. That’s our new sixty day satisfaction guarantee.

And as always, you’ll get our 100,000 mile, five-year powertrain warranty on every vehicle. That’s how strongly we feel about our cars and how committed we are to you.

So put us to the test. Put us up against anyone. And may the best car win. 

The devil is in the details …

Unless you own a big-screen television, the cautionary disclaimers that appear in white at the end of the commercial may be hard to see.

Not available with some other offers. Other restrictions apply. Must take delivery by 11/30/09.”

And of course, you still need to deal with aggressive sales personnel, hyper-aggressive sales managers and finance people at the dealership.

All is not what it appears to be: protecting your assets …

1.  Know what comparable cars are selling for; especially those equipped with your desired extras. Know what the invoice price of the vehicle is and the amount of money that the dealer may receive as a “dealer holdback.” Negotiate from the bottom up -- from the dealer's price, not from the top down using the phony "manufacturer's suggested retail price." Don't forget to check your credit and arrange financing prior to visiting the dealership. They often make more money on the financing, extras and service contracts than they do on the sale of the vehicle.

2.  Know that some options are manufacturer-installed and some may be installed by the dealer from after-market sources. It is always best to obtain manufacturer-installed options which are listed on the vehicle’s “build list.”

3.  Never believe a salesman or a sales manager. Get every promise in writing signed by the general manager if possible. Watch the other restrictions and try to get the terms and conditions of incentive offers in written form. Here is the link to the official GM Satisfaction Guarantee site.

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The website is designed to break the long, fine-print into easy-to-read sections.

A. Definitions

B.  In Order for You to Qualify for the Repurchase of Your Vehicle

C.  Benefit(s)

D.  What is Not Covered Under This Agreement

E.  How to File a Request for Benefit(s)

F. Other Provisions Applicable to This Agreement

What you might find interesting …

“This Agreement is available, at no cost to You, as part of Your new Chevrolet, Buick, GMC or Cadillac Eligible Vehicle purchase. Subject to the definitions, qualifications, limitations and requirements set forth in this Agreement, if You return Your Eligible Vehicle to a Participating Dealership from which You purchased the Eligible Vehicle between day thirty one (31) and day sixty (60) of the Agreement Period, the Participating Dealership will purchase the Eligible Vehicle from You for the Buyback Price.”

It is highly debatable that this agreement is available at NO COST to you if you decide to exercize your options under this program. According to the agreement's fine print, you need to wait at least 31 days before taking action, giving you a much shorter window of opportunity than you might think to return the car.

Buyback price? I thought you simply return the car and got your money back in full …

Buyback Price means the actual price you paid to the Participating Dealer for the Eligible Vehicle itself (after any rebates, discounts, employee discounts, or supplier discounts) plus applicable sales taxes you actually paid. For vehicles purchased under the terms of the GM New Vehicle Purchase Program (GMS) or the GM Supplier Vehicle Purchase Program (GSU), the Buyback Price is the GMS or GSU price listed on the Customer-Dealer Agreement Sheet (after any rebates or incentives), plus sales taxes You actually paid. Vehicles purchased under the GM Company Owned Vehicle Purchase Program or the GM Dealership Employee Purchase Program (GDS) are not eligible. Nothing else is included in the Buyback Price. The Buyback Price does not include the costs of any taxes (other than sales taxes), licensing, titling or registration fees, insurance, dealer installed accessories, aftermarket products or add-on equipment (other than factory options ordered with the vehicle), dealer fees of any kind, ancillary products including without limitation extended warranties or service contracts, finance charges, any negative equity (the amount by which a loan on a trade-in vehicle exceeds the dealer’s purchase price for the trade-in) or any other expenses incurred by the Buyer in relation to taking delivery of the Eligible Vehicle. The Buyback price cannot exceed the Manufacturer's Suggested Retail Price ("MSRP") of the vehicle plus sales tax.”

Wrong O Stupid One … did you really believe that they would give you ALL your money back?

You are not being reimbursed for those dealer-added accessories or after-market add-ons which will remain with the car.

You will not be reimbursed for that expensive “extended warranty” that you purchased at the urging of the finance guy.

You are not getting back the money you paid to the state for titling, licenses or other government fees.

You are not getting any money you may have paid to the dealer for services … possibly things like new car prep, undercoat, advertising contribution, etc.

If you owed money on your previous car and that amount was financed, you are out of luck. Your trade-in is gone and you still owe someone for the negative equity you had in your old vehicle (assuming that it was not fully paid off.)

And if you were given $500 or more as a purchase incentive, you certainly will not be getting that money back.

You engaged in a third-party finance contract and have a pre-payment penalty or no way to cancel the contract without payment of some specified amount.

Some other restrictions …

While it is unlikely that you will drive more than 4,000 miles in just under sixty days, you must return the vehicle with no more than 4,000 miles on the odometer.

“Your Eligible Vehicle's odometer must not have more than 4,000 miles since the Delivery Date.”

Your vehicle must have been continually insured and returned with no more than $200 in damage per the dealer’s assessment.

“Your Eligible Vehicle must have been registered and insured in the Buyer's name since the Delivery Date.”

“Your Eligible Vehicle must have no more than $200 of damage as determined by GM or GM's agent. Such damage may include, without limitation, internal or external scratches, scrapes, dents, odors, rips, burns, etc.”

You are always cautioned to inspect the vehicle you are provided. Look under the hood, in the trunk, do a walk-around, sit in the car and check the front area. Get in the back and check the back area. Ask to have the vehicle placed on a lift while you check the bottom for leaks and pre-existing scrapes and scratches.

Being of a cynical nature, I wonder if the 31-day mandatory use period was actuarially determined as being the period in which people might get into accidents driving an unfamiliar vehicle or be subject to shopping market dings and scrapes?

By the way, you can’t just return the vehicle to the dealership …

Be prepared for a real treat: jumping through “red tape” hoops as noted in the Agreement.

Call the Administrator at 1-888-778-9043 if You have decided to return Your Eligible Vehicle. You may also go to www.cynosurefinancial.com or contact the Administrator by email.

The Administrator will fax, email or mail to You a "Request for Benefit" form. To qualify for the purchase of your Eligible Vehicle, the following required items must be faxed, emailed or provided to the Administrator. The "Request for Benefit" form will provide You with the fax number, email address or mailing address to use.

In addition to the fully completed Request for Benefit form. You need to provide:

  1. A copy of the Bill of Sale, Retail Installment Sale Contract or other transaction documentation showing:
    1. a) You as the top line signer;
    2. b) Your Eligible Vehicle Delivery Date;
    3. c) The Make, Model, Model Year and Vehicle Identification Number of the Eligible Vehicle; and
    4. d) The Creditor/Lien holder (if any) of Your Eligible Vehicle.
  2. A copy of Your current Driver’s License verifying You are the Buyer.
  3. A copy of the Registration showing the vehicle is registered in Your name.
  4. A copy of Your Proof of Insurance verifying Your Eligible Vehicle was insured since the Delivery Date.
  5. Any other documentation GM or the Administrator may reasonably request.

Once the Administrator has reviewed and verified Your documentation, You will be contacted to set up a date and time for You to take Your Eligible Vehicle back to Your original selling GM Dealership to be inspected and to verify all of the conditions in Section B have been met.

After jumping through all of the hoops, then you wait for your money. How long is not mentioned.

And you are denied the protection of the courts and must engage in binding arbitration.

But most offensive of all is a little clause that says that the Agreement will not be honored if “YOU DIE.”

Of course you should remember that you will be dealing with hyper-aggressive sales people at the dealership and they will do anything and everything to convince you to keep the vehicle.

Caution: you need to assess the impact of a voluntary reposession (turnback) of the vehicle on your credit report. YOU MUST FIND OUT HOW IT WILL BE REPORTED … BEFORE THE FACT. Just adding an “after-the-fact” fifty-word explanation to your credit report does not affect your scoring or impress creditors. In some cases, voluntary turnbacks and repossessions incur the same credit scoring penalty. <<According to a reader: The transaction will not be reported to a credit bureau as a voluntary repossession because the loan will be paid off by an insurance policy. I cannot verify this, but am passing it along in the spirit of an open discussion.>>

About Ed “I don’t know anything about cars” Whitacre …

When he was appointed to the Chairmanship of General Motors, now colloquially known as Government Motors, I had my doubts. Like the government car czar who knew nothing about nothing – especially cars – here is Big Ed’s credentials to run a car company.

June 10 (Bloomberg) -- Edward E. Whitacre Jr. built AT&T Inc. into the biggest U.S. provider of telephone service over a 43-year-career. By his own admission, he becomes chairman of General Motors Corp. knowing nothing about the auto industry.

The 6-foot-4-inch Texan nicknamed “Big Ed” said steering the nation’s largest automaker after bankruptcy is “a public service.” People who know him say he can meet GM’s need for the type of transformation he orchestrated at Dallas-based AT&T.

I don’t know anything about cars,” Whitacre, 67, said yesterday in an interview after his appointment. “A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”

And I take him at his word, the business principles of dealing with consumers at  AT&T and Government Motors are the same. They both compete on confusion, chaos and the fine-print. Just consider the phone company's plans, special offers and multiple-pricing schemes for exactly the same connectivity.

This is just another example of a government who wants to provide consumer protection by way of full disclosure – where they tell you they are going to screw you in the fine print.

About Obama’s car czar …

In March, Steven Rattner, the leader of the Obama administration's auto task force, was the man who sat face to face with General Motors CEO Rick Wagoner at a Treasury Department meeting and fired him.   

Now it's Rattner's turn in the hot seat.  The Wall Street Journal reported Thursday night that Rattner was involved with payments at the center of an investigation into an alleged kickback scheme at New York state's pension fund.

Sourcing their information to a "person familiar with the matter," Journal reporters Craig Karmin and Peter Lattman reported that Rattner, who was then an executive at Quadrangle Group, an investment firm he co-founded, met with a "politically connected" consultant to discuss a finder's fee. Quadrangle later paid a $1.1 million fee, and received a $100 million investment from the New York State Common Retirement Fund. <Source>

Bottom line: This is a deal crafted by laywers, act accordingly ...

As with all things government, watch your assets. Be careful about accepting a $500 credit or accepting the dealer’s offer to make your first payment. Watch those after-market accessories. It’s money that is lost forever if you return the vehicle. And if you plan to trade-in your old car or make a substantial down-payment, you may never get this money back.

I like my GM Buick Le Sabre Limited (200,000+ miles and still going) and my service advisor at the dealership is a great guy. Other than that, you should view this offer as just another “fine print” offer from a dealership which truly does consider you a one-time customer – no matter what they say. That’s is often the reasoning that justifies aggressive sales people who know if they let you out of the dealership without a deal … the probability is that you will not come back.

Three cautionary sayings come to mind …

  • Caveat Emptor (Let the Buyer Beware)
  • Investigate before you Invest (from the Better Business Bureau)
  • Forewarned is forearmed.

And, if you really think about it, this deal may create a buying opportunity for a select few. Consider the purchase of a returned GM vehicle which is now used. Subtract the cost of the first year's depreciation, the cost of all of the non-eligible accessories and dealer services and make a bid. It might work out for the lucky people in the right place at the right time. Unfortunately, the deal may be only available to friends of the dealership. And, of course, it is always wise to ask a competent lawyer to check the agreement before you buy the vehicle.

Be well, be safe and take care of yourself and your family first.

-- steve

_______________________________________________

OneCitizenSpeaking: Saying out loud what you may be thinking … 


“Nullius in verba.”-- take nobody's word for it!

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“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

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