A Dealer addendum is a sticker an auto dealer will put on the vehicle to inflate the price. Usually placed right next the manufacturer sticker, they edit them to look very similar so you don’t notice that it came from the dealer. The charges usually include items like nitrogen filled tires, paint and fabric protector, full tank of gas, dealer prep, roadside assistance, etc. These items are usually difficult to verify, so you have to trust that the dealer actually put them on.
“I don’t if you know this, but dealers don’t have the best track record for honesty.”
What is a Dealer Add-on in Automotive industry?
A dealer add-on is similar to the addendum however, often times but not always, you actually get something in return for the price they charge you, such as wheel locks, pin striping, tinted windows, etc. They are easier to justify because you can actual see if the vehicle has the item described. If it doesn’t, turn around and walk straight out of there before they suck you in. A dealer that wants to charge several thousands of dollars for an item it doesn’t even have, is the biggest slap in a face to you, the buyer.
Why do dealers put addendums on vehicles?
When you try to buy a car from a dealer you may find that it is beyond difficult to get a straight answer on what it costs to buy one. Why?
If you want to buy a new kayak, the price is clearly listed. If you want to get a bid to install new floors, the contractor tells you how much he will need for a shiny new floor. Same with the doctors office (although this can be frustrating sometimes too) you will either pay a co-pay, or for the full visit out of pocket.
However, the car business preys on the ignorance of unsavvy buyers. By artificially inflating the price of the vehicle, they can then give you a “bigger” discount. This way, when you go talk to another dealer, you’ll wonder why the price is the same, but you’re getting a bigger discount from one dealer over the other.
The car business can be tricky, but if you know what to look for, it will be as easy floating down the river with the birds singing sweet melodies in your ear. I like the outdoors. If I reference it, it only serves as a motivator for me to finish writing so I can get back to the peace and tranquility of, “living a life worth examining.” There’s a little Socrates for you.
What does a Dealer Addendum Look like in automotive industry?
“Dealers will say anything to get you through the doors!”
I’ve been selling cars in the middle Tennessee area since 2012. I’ve worked in the internet department for over half those years. I’ve seen all the tricks dealers use to get buyers to their lot. Dealers will say anything to get you through the doors! Once there, they then act like your best friend, showing you cars, laughing, and having a good time. Until the time comes to sit down and go over numbers.
Sometimes, things go smoothly. You agree upon terms, and then you go into, “The Box” to see the finance manager. This is where they hit you with all the, “Required” items for purchase. All the stuff they added to the vehicle. By the way, a full tank of gas is included with nearly every manufacturer on a new vehicle, or at least with Nissan it is. And you will also receive Roadside Assistance for 3 Years or 36,000 miles whichever comes first with most Nissan models past 2016.
After agreeing upon terms and figures with the nice salesman earlier, the finance guy is now telling you they had to add several thousands of dollars to it because of the added benefits the vehicle comes with. This is where you need to walk away, right away. They will of course try to calm you down, telling you about all the benefits this car comes with opposed to the competing dealers’ vehicles, and even try to discount the inflated prices of their services to make you think you’re getting something for nothing. Or if you’re like most people, you either wont realize it’s even happening to you and unknowingly pay for it because you agreed to a monthly payment without looking at the out the door figure, or you will pay it because you’re tired of shopping, just to get out of there. Yes, this happens more than your friends and co-workers like to admit. This is why dealers keep doing it. Why stop making lots of money, if people are going to continue to pay for it?
Now I want to take a moment to make sure you know the difference between Dealer Addendums, “required products and services,” and Dealer offered optional products and services. Both the good and the bad dealers will OFFER these same products for an additional charge. Some are actually good products worth considering depending on your needs.
The paint protector would be great for anyone who wants to ensure that their vehicle stays looking like it did the day they drove it off the lot, 5 years later. The fabric protector package would give a busy mom one less thing to worry about. And anyone who has ever lost a key, dropped it in water, or had the dog chew it up would see the value in the Key Replacement package. Key fobs these days are minimum $150, with the average costing $300.
And then there is the big two, Extended Service Contracts, and GAP protection. An extended service contract is the legal term for, “Extended Warranty.” Technically, only manufacturers can offer a warranty on their product. If you decide to purchase additional coverage it would take effect after the manufacturer’s warranty has expired. Personally, I wouldn’t drive a vehicle these days without one, and that is the truth. I currently own 2 vehicles and both have service contracts on them. The way I see it, is that something is bound to go wrong (these are machines after all). Would you rather pay for it now for only $30-$40/month extra, or pay it out of pocket when you don’t have the money? It’s hard to drop $1800 on a new AC compressor when you’re not expecting it. Heck, it’s hard to drop $1000 on new tires, when you are expecting it! I’d rather be prepared for the unexpected.
And GAP Protection is well worth it if the worst should happen. GAP Protection will protect your loan in the event you total your vehicle and you owe more than it’s worth. I once had a customer who was upside down $8000 when they drove off the lot. This buyer was involved in an accident where the insurance company totaled the vehicle and they didn’t have GAP. This customer had to pay $8000 out of pocket, and didn’t have a vehicle. Thank God they were not seriously injured, but talk about a bad day. That can ruin your life for several years before bouncing back. It’s always a good idea to put money down when buying a vehicle. Roughly 20-30% down will ensure that you don’t find yourself in a sticky situation. This is the only coverage that some banks will actually require you to add this to your loan in order for you to buy.
Take a look at this addendum below. For $1900 you get Lifetime Nitrogen (overkill for vehicle tires), an accent stripe (what if you don’t want this), full tank of gas (should be free), Dealer Prep (another unnecessary fee. This is in addition to their Doc fee), and the Mountain View Care Package (What is included in this? Who knows).
Here’s another Dealer addendum. For $2600 you get Rain Repellant (Let that one soak in for just a minute), Door edge protectors (Amazon has 16ft of door edge guards for $12 and free shipping), paint sealant (I think they mean Paint Protector which is a real product, and actually works against bird droppings, sap, and UV Damage. We sell it too, we don’t require you to buy it), Nitrogen (This is a easy money maker for dealers. Charge for air. Brilliant! I bet that guy got a promotion), and 12 months roadside assistance (once again this is free for 3 years on Nissan).
I love this one. ADM, $1495. They don’t even care anymore. They know people aren’t even reading these things. They just go ahead and call it what it is, addendum. “Pay us $1500, because we want more.”
$499, not optional. We offer a Lifetime warranty too, but we don’t charge anything for it.
$2000 for Window Tint, Nitrogen, Wheel Locks, Pin Stripe, and the famous Paint Protector.
What have we learned?
- Dealerships will do and say anything to get you through the door
- Dealers sell real products to protect your vehicle that are worth researching
- Buyers pay addendums more often then they like to admit. Don’t be fooled!
- Ask for a Price Disclosure form (Breakdown of charges) before signing or even committing to anything, and before going into the Finance Office
Bogus fees and charges are everywhere. Try to find a dealer that doesn’t have addendums, or “Require” you to purchase them. There are dealers out there that try to do business the right way, by offering the best price, up front. Please do the rest of us a favor by seeking them out and not supporting those dealers who are constantly trying to get one over on everyone. If you keep shopping there, you’re only enabling their behavior.
“The best way to ensure that a company sticks around is by voting, and you’re voting with your dollar.”