When Financing That New Car, the Devil Is in the Details

It will come as no surprise to anyone that buying a new car can be a tricky enterprise in which it is important to keep your wits about you and your finances well in mind.

That is the lesson brought home by the tale of Lucille Braverman, an accountant from Woodland Hills who purchased a new 1997 Camry in October from Northridge Toyota and has regretted certain of the transaction’s details ever since.

Braverman says that toward the end of four hours of discussions--during which she negotiated the price of her new car down from about $19,000 to $17,900, plus the sales tax--she suddenly was presented new issues to consider by the dealership’s finance manager, Don McCurdy. He said that unless she paid $1,500 for an extended warranty and $400 for three years of service, he would jack up her interest rate from 8.75% to 9.9%.

Despite her professional background, Braverman did not run the numbers. Had she done so, she now asserts, she would have realized this was not such a good deal.

Braverman paid $5,000 down, and with the warranty and service, she financed through the dealer’s bank $16,820.15 on a 54-month repayment schedule.

It called for monthly payments of $377.94, and with $3,588.61 in finance charges, the total payments would be $20,408.76. With her $5,000 down, that would make the total cost of the car $25,408.76.

But, if she had not taken the extended warranty and the service, and accepted the 9.9% interest rate, the amount financed would have been $14,755.65. Her 54 monthly payments each would have been $339.78 (with a slightly different closing payment), the finance charge $3,592.12, the total payments $18,347.77. With the $5,000 down, therefore, the car would have cost her $23,347.77.

In short, she would have paid $2,060.99 less.

Besides, she said, “I don’t think I need the extended warranty, not with a Toyota.”

And, she observed, “You’re there for four hours before they bring up the financing. It’s not easy to say no and go to a bank.”

I arranged an interview with the finance manager, McCurdy, and a few days later with his boss, the dealer’s general manager, Guy Standifer.

McCurdy said Braverman got to see him last, only after negotiating much of the deal with salesman Vlad Perelman, and that when it reached him it would have been 60 months of payments at 9.9%.

He said in giving her an 8.75% rate for 54 months, upon her agreement to take the warranty and service, “I gave her a better contract.”

Besides, he added, the warranty and service were cancelable for 90 days. If Braverman chose to cancel, even now, there would be a $50 fee, but the rest would be taken off the back end of her financing package, and she would ultimately pay nearly $2,000 less.

Becoming a little exasperated, McCurdy remarked that Braverman was “old” and “not very clear” when she dealt with him.

Oh, I said, how old was she?

“Sixty-one,” McCurdy replied.

I smiled and told him I was 60, and that I don’t feel too old to arrange a car purchase.

(Asked later whether she would take it amiss if I mentioned her age, Braverman said that if it would add to the column, it was OK with her.)

Standifer too said Braverman had it wrong. It was not the dealership’s policy to threaten to increase the interest rate if the customer didn’t take the warranty.

What happened, he said, was the reverse. The rate had been lowered when she agreed on the warranty.

But not only could Braverman still cancel that part of the deal, but there would be no fee at all for doing so, he said. He had already sent her the appropriate form.

Standifer said he did not consider 61 too old to go car shopping and what McCurdy had said about that was “not our policy, either.”

Standifer expressed pride in the dealership’s ethnically diverse staff. “We try to reflect the community,” he said, and he said he believes in good customer service.

Actually, Braverman said she felt that even with the warranty she got a better deal at Northridge Toyota than she was offered at Keyes Toyota in Van Nuys, where she was originally referred by the Costco discount store.

“Keyes wouldn’t sell me a car at all,” she recalled. “They said my credit wasn’t up to a [bank] score of 700, and all they would do would be to lease me a car.

“I asked the salesman at Keyes what the credit score was based on, and he wouldn’t tell me,” she said. “He was very obnoxious.”

But Keyes’ general manager, Keith Seals, insisted this could not have happened to anyone who was prepared to put $5,000 down. “The banks do the credit score,” he said, “but we have a VIP department that handles the referrals from Costco and Triple A. We have a special salesman there.”

Warming to the subject, Seals got out a recent advertisement saying Keyes is selling a 1998 Camry for as low as $15,999, nearly $2,000 less than the base price of the 1997 car Braverman bought at Northridge.

“If they’ll take her car back, I’ll sell her a new Camry for $15,999,” he said (plus tax, I assume).

Also, Seals took out a Customer Satisfaction Index issued by Toyota that showed 82.4% of Keyes customers are satisfied, while only 72.8% of Northridge’s are.

“If this lady would like to buy her car here, fine,” he said. “They got her pretty good.”

I gave Standifer an opportunity to refute his outspoken competitor.

“I can only tell you we try to offer a good deal to our customers,” he said. “She said we offered her a better deal.”

As for Toyota’s Satisfaction Index, Standifer acknowledged the differential, but added, “We’re a new dealership. I just came in July. We’re in a huge expansion. We’re trying to improve, and those are random surveys.”

Braverman observed, “I just don’t like it when they can manipulate the numbers at these places.”

That’s true, no matter what your age.

Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com