The Expert Podcast

Okay, so you have a big bunch of negative equity on your vehicle where you owe a lot more than the trade-in value or the selling value and you want to know where that came from. How did that get tacked on to my vehicle? What can you do about it? How can you reduce it? And what are the details in the fine print of when you buy a car of how these add-ons are done to you? and what may not be legal, what things might have been improper by the dealer. We're going to look at an actual example of a car short sale we are working on for a client and go into the details of how these add-ons are put on and how you remove them, how do you cancel them.

So, let's jump right into it. Here's an actual retail agreement from a purchase of a vehicle. Well, this vehicle was purchased in August of 22, so about 3 years ago. We're recording this in August of 25. So, whenever you're watching it, reference that. So, about 3 years ago. The vehicle was a used 2018 BMW and it was purchased for $43,000 at the time. Now, we looked at the book value of the vehicle then. It was a little high. That vehicle was probably worth about $40,000 at the time. Um, so they purchased it for $43,000.

However, once they purchased it, there were many add-ons tacked on to the purchase price. There was an appearance package of $1,000. There was a windshield protection package of $1,100. There was a BMW tire and wheel protection for $2,600. There was dent protection of $939. There was a vehicle care protection and we'll go into all these in detail. Don't have to get hung up about them right now. Um vehicle care protection 595. There was a Veritoss global protection and we'll look at what that is. Almost $5,000 and a key protection of $499. That brought the total of this vehicle up to almost $60,000.

So now you have a vehicle that started out as a $40,000 vehicle that's going out the door at $60,000. almost 20,000 was added. Now, in reality, there is one add-on that's legitimate. Sales tax 2,800, right? But still, you're going from 40 to 60,000, and this person put down a down payment of 4,100. So, if you add up all of these add-ons, $9.95 1161, we itemized them in this box over here. This is adding on $11,000 worth of add-ons on a $43,000 vehicle. So, if you take 11,570 divided by $40,000 on a calculator, that's 28 almost 30% added on to the price of the vehicle because of these add-ons. It's it's amazingly tragic that this was added on.

So, this person, had they not had these tacked onto their vehicle, instead of having a loan for 55,000, would have had a loan for about $40,000. Their payment would have been $300 less per month. Their payment on this vehicle is about $1,100 a month. Had they not had these add-ons slapped onto their vehicle, their payment would have been about $800 a month. 750,800. And the reason for us working with them is their payment is now unaffordable. Their lifestyle changed, their income changed, they have to move, and they can't really afford this vehicle. Plus, uh, the style of vehicle doesn't work for them anymore because of the gas mileage, but they can't sell it because they owe too much on it.

So, what do you do in a case like this? First of all, if you have your original purchase agreement, go ahead and email it to us. Go ahead and send it to us. If you want you want to black out the name, you know, we've we've um pixelated the details on this one so you don't have personal information. If you want to black it out, you can. Um but let us go through and itemize all these add-ons to see which ones are legitimate. The Veraritoss Global Protection is basically an extended warranty. But if you look at all the exclusions and exceptions, it doesn't cover that much. The BM BMW tire and wheel protection, same thing.

Here's the problem. A lot of these add-ons are duplicate coverage. For example, the appearance protection and the vehicle care protection basically cover the same thing. Things like dent protection and vehicle care protection and key protection are all covered on your car insurance. The Oh, I didn't highlight this one here. Gap insurance. I forgot to highlight one more. Your video will be back in 8 seconds. In the meantime, remember you have access to live one- on-one consultation, undivided attention of a licensed, certified expert in this subject and many others. We want to listen to your story. We want to hear your questions and give you expert advisement of your options. We want to tell you what we know about your situation and what options you have. Now, back to your video or this gap insurance. So this is really 125 gap insurance um is covered on this person's insurance policy.

So a lot of these they didn't need to pay for they already had them which is reflected in the federal government's rule. The FTC, Federal Trade Commission has what's called a CARS rule that targets automotive transactions which says no bogus add-ons. The rule prohibits dealers from charging add-ons that do not provide a benefit to consumers. Examples: warranty programs on a vehicle that already has a warranty, right? GAP agreements do not cover the car. Um, services that do not support the subscription.
So, here's the problem. The car, which is a 2018, was purchased in 2022. It's a four-year-old car. has a 5-year warranty and you don't need this extended warranty for a couple years. These add-ons in many cases are not allowed. Now, to be fair, this cars rule is being challenged. However, most states still have a rule that says you can't mislead customers.

Regardless of that, each one of these add-ons, care protection, global protection, tire and wheel protection, all these add-ons have a cancellation clause. It's hidden in the fine prints. Each one of them has a separate cancellation clause and you can cancel it. We found all the cancellation clauses. It tells you how to cancel the addendum. You must provide this and all the details. And everyone's going to be different. This happens to be specific for this BMW tire and wheel protection. But each one of these protection plans has a very specific cancellation clause. It tells you exactly how to cancel it.

It'll tell you how much money you're going to get back. In this case, out of 12,500. It's 11,000 plus the gap. I forgot to add the gap insurance. The customer is probably going to get back about $4,000, maybe 4,500 depending on how the cancellations are done. In addition, we're going to contact the dealer, which we've we've pixelated out to not, you know, um, call them out because every dealer does this. And we're going to let them know these are added on improperly. And we want the dealer, in addition to canceling them, to kick in some money because this person had to pay interest on all this money. Interest on 12,000 for three years is probably going to be $1,1500.

Uh, the additional losses that they're not going to get back from cancellation. We're going to ask the dealer under the uh pretense that guess what? They weren't supposed to sell these things or under the premise, I should say, not pretense, uh they weren't supposed to sell these things that they should be refunding some of this money to the owner. And by doing that, it's going to get their payoff lower. It's going to get their um account balance lower so they can get closer to a equity situation so they can trade in their car. Um, in addition, we've also obtained a higher tradein value by shopping it around to a couple different resale locations.

But the purpose of this video is to show you how these add-ons look. And you won't see this when you're originally doing your deal. They're going to say, "Yep, you're buying the car for $43,000." They're not going to show you all these add-ons. They're not going to give you the outdoor price until the very end. You're going to be sitting in a finance office signing 20 or 30 documents, some of them on a on an iPad, not even on paper. And the iPad won't show you the whole document. You have to scroll up or down to see it. So, they're going to hide these things from you. And that's where all these charges all going to be itemized are going to be hidden in the document.

So, you want to make sure that if you have a vehicle with a payoff, you don't just pay it off because once you pay it, you can't cancel them now. Now it's done deal. So you want to do all these cancellations and eliminations before you pay off your car, before you trade in your car. Even if you're thinking about voluntarily surrendering your car to the lender, to the bank, don't do it until you cancel these. Because if you don't cancel them, the bank is now going to collect them from you out of a deficiency judgment. meaning that once they sell your car that you turned into them, they're going to sell it for less than your loan anyways, and they're going to come after you for a judgment for the difference. If you reduce that by canceling these, your judgment will be less money.

So, if you want more information on a car short sale on eliminating negative equity, click the link below. This is a breakdown of an example, very common of what we see. Uh, we've seen some that are 20 30,000 worth of ads, 5 or 6,000 worth of ads. Either way, you want to get rid of these add-ons so you reduce your loan balance and you can get closer to equity and get out of your upside down tradein.

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