FREIGHT CHARGE It has become customary in competing markets that the advertised price of a vehicle excludes the “Freight” charged for delivery of the vehicle, which is listed on the Monroney sticker. If you are removing the “Freight” from your advertised price, dealers must remember and adhere to the following: • Clearly and conspicuously (and within reasonable proximity to the advertised price of the vehicle) disclose the amount of the freight to be charged by the model in the advertisement. • Freight cannot be advertised as a range. The exact amount of each model’s freight should be listed. Consumers should easily be able to add the freight amount for the vehicle they are looking at to the advertised price. Dealers often do this by a hyperlink so that they can easily update the hyperlink page should the freight charge change instead of changing the disclosure on every advertisement for freight charge changes. • The freight charge should be the exact amount charged to the dealer. Dealers should consider freight similar to a pass-through charge (paid by the dealer when invoiced and reimbursed by the consumer upon purchase of the vehicle). Customers should not be double charged for freight. If the dealer’s price is the vehicle’s MSRP price, that means the freight is already included and dealers should not do a pencil that has an added charge for freight. • Freight should not be charged on used vehicles. “TRIGGER TERMS” FOR SALES AND LEASES In vehicle sale advertisements, a Regulation Z “trigger term” is: • The amount or percentage of a down payment (i.e., “10% down,” “$1,000 down,” “90% financing,” “trade-in with $1,000 appraised value required”); OR • The amount or percentage of any payment (i.e., “monthly payments less than $250 on all our loan plans,” “pay $23.44 per $1,000 amount borrowed,” “$210.95 per month”); OR • The number of payments; OR • The period of repayment (i.e., “up to four years to pay,” “48 months to pay”); OR • The amount of any finance charge (i.e., “financing costs less than $300 per year,” “less than $1,200 interest”). If any Regulation Z “trigger term” is in a vehicle sales advertisement, then the following disclosures must appear “clearly and conspicuously” and in proximity to the trigger term in the advertisement. 1. The amount of the installment payment; AND 2. The amount or percentage of the down payment; AND 3. The number of installments for repayment (term); AND 4. The “annual percentage rate,” which may be abbreviated as “APR.” Dealers also must disclose if an APR can be increased after the credit transaction is complete. Dealers should not advertise “No down,” “$0 down” or the equivalent in an advertisement unless, in fact, no payments or Add-Ons For dealer-installed add-ons prior to sale, such as roof racks (i.e., hard adds), the advertised price needs to reflect those add‑ons so that the consumer is not deceived into additions to the advertised price. If there are voluntary add-on packages that the consumer may purchase at the point of sale, they can be advertised but should be disclosed as “optional” and not be a required purchase by the consumer to get the price advertised. For example, an add-on package that includes 10 oil changes, all-weather mats, unlimited car washes and rental vehicles is a voluntary package and should not be added to the vehicle’s advertised price but chosen by the consumer at point‑sale. Add‑ons are an FTC hot-button item, and dealers should be wary of preinstalling add-ons to increase the sale price of the vehicle. The FTC does not look favorable to add-ons such as paint protection and etching to vehicles to increase prices for which the consumer has no option but to purchase because they cannot be removed from the vehicle. Dealers should reconsider pre-installing add-ons to vehicles prior to purchase. Compliance Advertisements The “Dealer’s Price” is one that is available to every consumer. When someone walks through your doors and is looking at that vehicle, the customer’s price starts at the “Dealer’s Price” (whether they have seen the ad or not) and the only additions to that should be tax, tags/title, freight (if not included in the advertised price), processing fees (if not included in the advertised price) and add-ons that the consumer voluntarily purchases (at point-of-sale and separately itemized on the buyer’s order). If the consumer meets the qualifications for other incentives offered, the “Dealer’s Price” is reduced for those incentives. Dealers should not be adding qualifying incentives that buyers cannot qualify for (i.e., military or college grad) back into the price and thus increasing the “Dealer’s Price.” To view an example of a compliant advertisement, scan the QR code. vada.com/wp-content/uploads/2024/09/ Compliant-Advertisement.pdf vada.com 13
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