APA Report on New Vehicle Financing and Leasing


Automobile Protection Association (APA)




This Automobile Protection Association (APA) survey focused on advertising and business practices related to new vehicle financing and leasing. Federal and provincial regulators are currently interested in the relationship between auto financing and consumer debt, which could potentially put consumers at risk in the event of a rise in interest rates. APA secret shoppers visited 41 car dealerships in the Greater Montreal and Calgary markets in July 2016 and January 2017 with current advertising offers in hand. APA found that automakers are using extraordinary strategies to lower payments for new vehicles. These low payments—some as low as $39 per week—are being sold at low interest rates and are spread out over long loan periods, giving the impression of affordability and incentivizing consumers to take on higher levels of debt.
APA found that automakers frequently engaged in deceptive advertising to lure customers into the show room, where shoppers encountered a wide array of more expensive deals being offered with long-term financing. APA shoppers also encountered a variety of sales tactics designed to manipulate consumers. Four dealerships offered “Cash Back” promotions which turned out to be loans disguised as discounts. Three dealerships hosted “Private Sale” events where car owners were pressured into breaking their current agreements early and signing new deals that included more years of payments. APA shoppers also frequently encountered bait and switch and lowball advertising.
Deceptive advertising and pricing strategies are creating the illusion of affordability and committing buyers to long-term payments. There is an opportunity for regulators to exercise more scrutiny around deceptive sales practices in the automotive industry, and to promote public education on these practices so consumers can make informed financial decisions.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Automobile Protection Association (APA)
292 St. Joseph Blvd. West
Montreal, Quebec  H2V 2N7
(514) 272-5555
(514) 273-0797

Source: Consumer Policy Research Database

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