Stop Advertising Price-Minus-Down-Payment or Trade-In

Read more to learn why you shouldn't advertise this way and alternatives to this method.

There is an oft-repeated rule in marketing that you must repeat your message seven times before it sticks. Apparently, it is the same for advertising warnings from NHADA.

Despite several "heads up" warnings from NHADA, several dealers are still advertising a vehicle price-minus-the-down-payment or trade-in.

I will now repeat much of what has been previously said. There has been a growing trend in advertising to list the price of a vehicle with a disclaimer found elsewhere in the ad that the price assumes a down payment or a trade-in worth a certain dollar amount. The NH Attorney General's office has notified NHADA that such a practice constitutes an unfair or deceptive act or practice under the NH Consumer Protection Act. Each violation of the act includes an administrative fine of up to $10,000 by the way.

The NHADA strongly urges all dealers to cease this practice regardless of the advertising medium (print, TV, internet or radio).

The Attorney General letter gave this specific example:

Illustrative of this practice is where a dealer lists the price of a vehicle in an advertising box as being $1,095.00. A small asterisk appears next to the price, which links to a box on the back page of the advertisement. The box contains fine-print disclosures which, among other things, inform the consumer that the advertised price of the vehicle includes a down payment of $3,000, thereby making the actual selling price of the vehicle $4,095.00, or $3,000 greater than is shown in the ad box.

When advertising a price that factors in a down payment or trade-in, "the dealer has no intention of selling the vehicles for the price that appears in the ad box" according to the letter. The letter continues, "[t]his practice also creates a likelihood of confusion, as even after the consumer diligently searches the entire advertisement for the effective disclosures, the consumer is likely to be confused about the actual selling price of the vehicle."

The NHADA strongly recommends that dealers cease such advertising, regardless of medium, as soon as possible. Failure to do so may result in stiff sanctions for an individual business and, more significantly, increased industry scrutiny by the Attorney General and a blow to the general reputation of automobile dealers.

It is appropriate to advertise a payment with an assumed down payment, however, several other Truth-in-Lending criteria must be satisfied.

When advertising retail installment sale terms, the ad must generally include four separate disclosures:

  • The amount of or percentage of any down payment
  • The number of or periods of repayment
  • The amount of the monthly payment; and
  • The annual percentage rate (APR).

If any of the first three disclosures is advertised alone, then that "triggers" the disclosure of the remaining three. Note, however, that the fourth term, the annual percentage rate (APR) may be advertised without triggering the other three.