PURCHASING A NEW CAR
by NM Attorney General Patricia Madrid
The purchase of a car is a major purchase, typically involving a considerable amount of money. The contracts you sign tend to be complex and numerous items you may or may not understand. You should be aware that many automobile dealers engage in a practice of adding extra fees and costs to the price of automobiles, a practice know as "auto-packing" and it almost always violates our Unfair Trade Practices Act as well as New Mexico regulations.
The practice of auto-packing may occur with new and used vehicles sales, as well as when the vehicle is sold for cash or financed. It is important that you know that once you have negotiated a price for a vehicle, the dealer's contract may contain additional charges that may be unlawful.
A dealer is entitled to charge you for the following:
A dealer may charge you a "transfer fee" to transfer the title to you as the new owner. But that fee must be reasonable. This fee essentially serves to save you a trip to the Motor Vehicle Division. If you are purchasing the vehicle for cash, the dealer must inform you that you may register the vehicle yourself without paying a transfer fee.
- Excise Tax - both federal and state,
- Title Fee
- License Fee
Unless you have agreed, the following charges may not be lawful added to your sales contract:
A dealer cannot require you to purchase credit insurance or extended warranties. My office receives numerous complaints about dealers telling consumers that they must purchase these items to obtain financing. That is not the case.
- Extended Warranties,
- Credit Disability Insurance,
- Credit Life Insurance,
- Security Systems.
You may find other fees listed on your contract. Some may be pre-printed line items. Examples you may see include preparation fees, inventory adjustment fees, handling fees. These fees cover a dealer's overhead or increase the profit and they violate state law and regulations. For example, any preparation fees required by the manufacturer may not be passed on to the consumer under the New Mexico regulations. This is because state law requires manufacturers to reimburse dealers for costs incurred in vehicle preparation.
One of the worst aspects of these extra fees comes when you are financing a vehicle. Depending on the total amount of the fees, you could be increasing your monthly payments by as much as $100 a month! Read the contract carefully and ask questions. Refuse to pay for any items you do not need, such as credit insurance or extended warranties.
If you believe a dealer has violated regulations, you have a private right of action and may take the dealer to court. You may also contact my office and we will attempt to mediate your claim with the dealership. You may reach my Consumer Protection Division at (800) 678-1508, or in Santa Fe at 827-6060. You may file a consumer complaint on-line at www.ago.state.nm.us. Or you may write the office at P.O. Drawer 1508, Santa Fe 87504-1508.
Patricia Madrid is the Attorney General of New Mexico.
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