We love our cars! Over 14.5 million cars were sold in 2020 - down from 2019, but still a lot considering the economic impact of the pandemic. Buying a car is something that most of us will experience at least once in our lifetime and often we say, "I got a great deal!" But did you, really? Talk Wealth to Me sits down with Sharon Glassey of Glassey | Smith (californiaconsumerattorneys.com). Sharon has more than 20 years of experience litigating auto fraud, lemon law and Fair Debt Collection Practices Act (FDCPA) cases throughout California. We cover the biggest mistakes people make when they walk on a car lot and what to avoid. If you have ever had that feeling of clammy hands, nerves, excitement or buyer's remorse, you won't want to miss this episode.
We love our cars! Over 14.5 million cars were sold in 2020 - down from 2019, but still a lot considering the economic impact of the pandemic. Buying a car is something that most of us will experience at least once in our lifetime and often we say, "I got a great deal!" But did you, really? Talk Wealth to Me sits down with Sharon Glassey of Glassey | Smith (californiaconsumerattorneys.com). Sharon has more than 20 years of experience litigating auto fraud, lemon law and Fair Debt Collection Practices Act (FDCPA) cases throughout California. We cover the biggest mistakes people make when they walk on a car lot and what to avoid. If you have ever had that feeling of clammy hands, nerves, excitement or buyer's remorse, you won't want to miss this episode.
[inaudible] Welcome To Talk Wealth To Me, a safe space podcast, where we chat about anything and everything related to personal finance. The information contained in this podcast is for educational and entertainment purposes. Only. It does not constitute as accounting, legal tax or other professional advice.
Chase Peckham:Hello, and welcome to another edition of Talk Wealth To Me, people love their cars. We love them, especially here in California, but typically we think of our car as almost an extension of us. It tends to be one of the most expensive payments that we have in our budget next to our mortgage or our rent. And we all take for granted that we'll just go buy a car, but there are so many things to purchasing a car. So many ways that you can spend more money than you actually need to. Today. We sit down with Sharon Glassy. She is the partner at Glassy and Smith law firm. She has a consumer protection law firm, and she discusses what to look for when purchasing a car, how to save money, how to protect yourself. What are your rights? Did we even know that we have rights? Do we even think about that when we go? Stick with us. Because you're going to find out all the ins and outs and how to save money and protect yourself when you buy a car. Sharon, it's so exciting that we finally get a chance to sit down with you and talk about a subject that we so Often get asked to do. Uh, it's unbelievable how many people buy cars, go through the process. I mean, we all have to do it at some point, right? And how many people feel like they really don't know what they're doing? Uh, give us a little background on how it is that you got into the type of law that you find yourself in.
Sharon Glassey:So I find that many lawyers end up practicing in the area of law of essentially the first law firm that hires them coming out of law school. You're fresh, you're wet behind the ears and you need a job and you're not that picky. So while I was in college, actually I had an interest in going into the legal field. And I got a job in a law firm through a family friend. I worked there through college. They happen to specialize in the California lemon law involving defective vehicles. So I learned that at age, 19 20, 21, working in this law firm, I headed off to law school for three years. And just before I graduated from law school, I had already started looking into employment because I knew I'd passed the bar. First time course.
Chase Peckham:California. So easy, right?
Sharon Glassey:Yeah it was a tough One. Um, so I, I get my job offer from a firm who does auto fraud regarding purchases of vehicles and lemon law. The hiring partner at that firm knew my boss, who I'd worked for in college. So he saw on my resume, who I had worked for. It comes back to, it's always who, you know, this hiring partner knew my ex employer. So he felt comfortable in hiring me. And I hit the ground running at about 25 years old, 26, practicing law.
Chase Peckham:Wow. That's very young.
Sharon Glassey:I stayed with the first firm for nine years. I learned everything. It was a great learning experience. I had my hands in everything. I was running all the litigation cases and had some attorneys working under me. I really got a lot of experience. And then around year nine, I decided it was time to go out on my own and help consumers in the same way. Auto fraud, auto purchasing and handling lemon law claims. Most people are familiar with a lemon. A lot of people we know have ended up with a lemon.
Chase Peckham:Absolutely. And it's got to feel good that the work that you do daily is helping people really in need. Right? I mean, these are people that literally could have absolutely no responsibility for what happens to their vehicle or how they, I mean, I guess we all in a sort of sense have responsibility, but a lot of people can just be flatly taken advantage of,
Sharon Glassey:Oh yeah. You know, nobody ever calls me with good news. I get contacted probably 10 to 15 times a day from consumers like you and I and your listening audience who come to me with a problem. And they need really, they need serious help with that problem. They are desperate vehicles are your second most expensive. Um, let me rephrase that. Vehicles are generally the second highest expense that you incur. Uh, usually monthly, you know, you have your rent or your mortgage, and then it's usually your vehicle. So if you don't have a functioning vehicle or you're in a really upside down contract or a, dealership's just done funny things with financing, you know, that can put people in real financial dire straights.
Chase Peckham:Absolutely. And it absolutely, you're absolutely correct. It is the second largest expense that most people have. And if you have a family that has two vehicles, uh, you're talking in some cases could be even more than their rent. Uh, and believe me Felipe and I have seen many people where their rent might be a thousand dollars and their vehicles are upwards of two grand and you go, well, there's a reason this budget is upside down.
Felipe Arevalo:Unfortunately there are cases where, where that vehicle payment, you look at it and you know, you know, what did you buy? Um, you know, maybe it wasn't time at some point down the road. Yeah. Maybe that was the right vehicle choice for you. But maybe at this time, if you're trying to put some thought into what that payment's going to look like, but it's very unfortunate that, that there is cases where, you know, people maybe do the research, maybe did everything right. And then turn up with a car that just isn't what they thought it was going to be.
Sharon Glassey:You don't want to be car poor, not everyone needs a BMW, M5 at, at a certain point in their life. You know, you need to go into it, aware of your budget, fully cognizant that this is a long term loan with a quickly depreciating asset. You drive a vehicle off of the lot and it's going to depreciate 15%, you know, by the time you get it home into your driveway. So you're not building an asset, you're not gaining any equity, it's a depreciating asset. And you need to make sure you can afford that for loans that are generally 60 months. And that's an interesting, you mentioned asset because even as even if it depreciates, when you get the loan, that's still an asset. At some point, you're going to be able to, but there are situations that people find themselves in. And this is one of the number one questions that we get is should I buy or lease?
Chase Peckham:And I know you've got a lot to say about this.
Sharon Glassey:I do very important distinction. I equate leasing to renting a car. Long-term generally two or three years. I personally have leased a vehicle. One time.
Chase Peckham:As have I.
Sharon Glassey:Chase. You've also leased a vehicle. Will you do that again?
Chase Peckham:No, never.
Sharon Glassey:Neither will I. Um, my example is I leased a vehicle. I, you have to give, uh, a security deposit generally on that vehicle. The one I leased, it was$2,500 with payments for two years of$480 a month, and then a large balloon buyout at the end of it. So basically I rented the vehicle because the difference in the price when I leased it. And then when I bought it two years later was only about three or$4,000. So I was almost still paying for a brand new car at the end of the lease.
Chase Peckham:And God forbid, if you drive too much,
Sharon Glassey:Oh, the mileage overcharge, you can purchase extra mileage, but it's going to be 25 cents a mile, a luxury vehicle. I've seen 50 cents a mile. So also depending on the brand of car, you want to drive.
Chase Peckham:A hundred percent. And then of course, they're not going to offer you typically 12,000 miles or you're going to be in the 8,000 miles. So basically if you take it from the, your garage to the supermarket or the street to the supermarket, a few times, then you might stay under your mileage, but it can be very tricky,
Sharon Glassey:Right? It is. And those excess wear and tear on the car at the end, maybe you have a stain in the back seat or a slight tear in an interior somewhere. You're going to get charged for that at the end. And it can be very, very costly,
Chase Peckham:But leases they make it look so good. And the idea that, Oh, I don't have to pay for anything if something breaks or if, you know, it seems to me that, that the marketing it from a business side, it's brilliant. Right? But for the consumer, it's, it's really not.
Sharon Glassey:leases are all about slick marketing. Most people want to look good, have the new car smell, drive around, look flashy for their friends in their neighborhood, but you are not gaining anything,
Chase Peckham:Your definitely not gaining an asset of any kind, even to depreciate it because you're going to give it back. And I mean, what even makes me even more skeptical on the whole thing is they're asking for 3,500 down. So
Sharon Glassey:You can put that 3,500 down to purchase a vehicle.
Chase Peckham:Exactly.
:Might not be the fancier vehicle that you could get with a lease. But again, you don't want to be car poor.
Chase Peckham:I love it. What you mentioned to me when, when we talked about setting up this interview, you were saying, I want to talk about leasing because leasing is.
Sharon Glassey:Fleecing.
Chase Peckham:I love it. Leasing is fleecing. So for the, you know, remember that when you're thinking, Oh my gosh, I see,$239 for BMW, Mercedes, whatever it might be. Right. Uh, because if it's Felipe and I, we talk about it all the time financially, if it's too good to be true, it probably is.
Felipe Arevalo:Yeah. That and the small, the small print usually has the important information.
Chase Peckham:Which none of us read.
Felipe Arevalo:Right.
Chase Peckham:And so that is, that's part of the equation that we get into. Um, you mentioned one other time when we talk about bloated, um, payments, and sometimes we've looked at budgets and we see this bloated car payment, and we're thinking, Oh, this must be a BMW. Or it must be a new Yukon. It might not be, it might be that they just got a really bad deal.
Sharon Glassey:Yeah. I had a consumer actually call me a week or two ago and they'd purchased a reasonably priced new Honda accord. They, uh, had negotiated the price that they wanted and the payment was going to be around$500 a month. And based on their income, they could afford that. I could see that by looking at their credit application and talking to them about their budget a little bit during the negotiation, however, the dealership often says, Oh, and you're getting an alarm and you're getting an extra warranty and you're getting window etching in case your car is stolen. Or, and you're getting low Jack and you're getting exterior paint protection, just a litany of aftermarket options. Most of which are complete waste of money. This consumer's payment because they thought they were getting them because the dealership kept saying, and you're getting, and you're getting, they didn't realize they were paying for it. When they left their car payment went from$500 to$730 a month.
Felipe Arevalo:Oh, wow.
Sharon Glassey:Yes. The dealership added in$9,600 in aftermarket items to this deal.
Felipe Arevalo:Oh wow that is a lot.
Chase Peckham:Oh my God.
Sharon Glassey:This consumer was really distressed when they called.
Chase Peckham:I would imagine the question. I mean, but when they didn't know that when they signed the documents? They just were going on in their head that it was 500 bucks that, but the reason I say that is these dealerships, they're good. And they can talk really fast. And I would imagine that a lot of those additions that they get aren't even through the dealership, right? They're probably aftermarket or third party that they have deals with.
Sharon Glassey:They are. And they're, uh, the prices are grossly inflated. For example, a dealership could offer you a service contract or an extra warranty that adds on to the warranty time of the car you're buying. So if your car is a Nissan and it comes with a three year 36,000 mile warranty, you can buy an extra warranty that covers you for maybe six years and 60,000 miles. Just as an example, the problem is the dealership marks up those extended warranties by about a hundred percent. So they can get it at their cost of$995. From that company, they will turn around and sell it to the consumer for$2,000,$2,500, whatever amount they can sneak past you, they will sell it to you.
Felipe Arevalo:It's funny. Cause when I was car shopping earlier in the, uh, pandemic hindsight, I should have waited and we could have been a one-car household for the last few months.
Sharon Glassey:Very true.
Chase Peckham:Um, that's a whole other topic. That's good.
Felipe Arevalo:Yeah. Um, yeah. I can't remember the last, I don't think my wife and I have both been driving at the same time for months.
Sharon Glassey:Good point.
Felipe Arevalo:So I should have just let that other car go and just stuck to one. But, um, it was one thing that they were really quick to offer was here's this service plan. That way you don't have to worry about oil changes. You don't have to worry about air filters. You don't have to. And I was, I was looking at what I was included. I had no intentions of getting in anyways. Uh, and I told the guy, this adds up to what I, what I'm going to pay. If I don't buy it, all you're doing is rolling it into my payment now, as opposed to me paying it in five months, six months, whatever, when I need an oil change. And then when I need the next service, I know what the schedule is for my regular maintenance. I don't need it for all three years worth of it into my car payment. Right now I could pay it over the course of the next three years.
Sharon Glassey:Yeah pay as you go.
Felipe Arevalo:When It comes up. Right.
Sharon Glassey:And you're paying interest on it when they roll it into your monthly payment. So if you have a really low interest rate, maybe you buy a brand new car and you have great credit. And it's 1.9 might not seem like a lot, but still it, why line the pocket of a dealership or a bank. You need to keep your own money and be, you know, to have responsibility for it and how you designate to spend it. There's no reason to buy one of those programs upfront. Okay.
Chase Peckham:Well, it seems to be, the warranties are really, really popular. You now you probably know, or you probably have thought about warranties being around for a long time, but the warrant to me, we're seeing third party warranties all over the place. You know, don't pay for your oil change. Just it's like almost like insurance for your oil change. Last car I bought, I still am getting robo calls about an extended warranty that I never bought. And they're saying that my warranty is about to be due. It's about to expire. And I'm like, Nope, no, it's not. So who are? And, and the, the number that comes in is from every single portion and part of our country. Like literally it comes from Billings, Montana, Coprus Christy, Texas.
Sharon Glassey:It does Billings!
Chase Peckham:It's crazy. What is it about these warranties? That when I purchased my vehicle, that they, all of a sudden are now coming after me.
Sharon Glassey:They are all only I say, harassing you, I get the same phone calls. They're only contacting you because they are making a ton of money. These third-party companies, sometimes an extra warranty is going to be beneficial. But what I say is negotiate for the best price. If a dealership says that extra warranty is going to be$2,500, offer them$1500, offer them a thousand. You have to negotiate the money should stay in your pocket and go as, and be spent. How you feel is best in your monthly income, not lining the pocket of a dealership or a bank.
Chase Peckham:And with that, these warranties, I heard from a few people that feel like they've been screwed. Like something was wrong with their car. They had the extended warranty. They couldn't get it fixed right away. It took a month because it was almost like an HMO. And I'll use that as an example, when you have to go, I have a broken shoulder that I know that a orthopedist needs to see, but I got to go to my regular doctor to get referred to him. They're saying that they have to have the mechanic at a Ford dealership, tell them that my Ford is broken and then they might take it.
Sharon Glassey:Right.
Chase Peckham:How is that considered even a warranty? I mean, that's not even a warranty to me.
Sharon Glassey:They've just taken your money. And there's a lack of customer service on the backend.
Chase Peckham:Another thing that is really, as people are always afraid to pay off their loans and, and they, and they'll worry about loan payoffs. I know that's something that you deal with on a, on a, on a daily basis. What is that like?
Sharon Glassey:Well, when we generally, when people, uh, go into a dealership, they have a trade-in vehicle. A lot of the time, that's mostly what I see at least. So let's say I walk into this dealership in San Diego and I have a vehicle that I owe$10,000 on. I'm going to give you my vehicle. The dealership's going to take it in on trade I owe,$10,000. They're giving me maybe$8,000 as the value for it. So one thing regarding payoffs, a dealership has to pay off the loan on any vehicle they acquire in a trade within 21 days, it's supposed to make it so that it's paid off before your next payment is due or before you would get a 30 day late on your credit. So that's a hard, fast rule, right? In the law. It says that a dealership has 21 days to pay off that loan.
Chase Peckham:So basically it stays within your billing cycle,
Sharon Glassey:Correct? It's within your billing cycle. That's the intent.
Felipe Arevalo:That's a good protection that I had. No clue was there.
Sharon Glassey:There you go. A lot of dealerships don't do that. They will actually take your car that you've traded in and sell it to the next buyer. Whenever that occurs, it could be 20 days. It could be 45. And then when they've sold, it they'll pay off your loan. Well, that may be two cycles of monthly loan payments that have been missed. And now you, as the consumer are looking at credit damage.
Chase Peckham:And not only that, but how does, when the bank actually has the pink slip of the vehicle, how does it go from one ownership to another ownership without getting a pay off first?
Sharon Glassey:They're just floating these loans. There it's a scam on the banks. It's a scam on the consumer dealerships. Uh,
Chase Peckham:And this is reputable, reputable dealerships. Do these kinds of practices.
Sharon Glassey:Oh yeah. Oh yeah. Large franchise dealerships.
Chase Peckham:So beyond the fact that you want to do in a trade and they're going to low ball you on the, on the trade value of the car anyway, and they'll get you on the fact that you're going to get into a new car there. You really have to be careful when you're going to go do the whole trade in thing.
Sharon Glassey:Yes, you need to be very aware. You know, of your rights. You have the trade in a loan payoff amount. The dealership would get that at the time you traded it in and they have to submit that within the 21 days so that you don't suffer credit damage. It happens day in and day out. I have a group of dealerships, kind of sister dealerships owned by the same entity Los Angeles. There's four or five of them. And they're notorious for this now.
Chase Peckham:And you would think that when you're going to a reputable dealership that says Ford, Honda, you know, whatever it might be and that, you know, national international brands that they're going to be on the up and up.
Sharon Glassey:You would think. So it kind of leads me into let's. We could talk about CarMax for a minute. Okay?
Chase Peckham:Okay. Let's do that.
Sharon Glassey:Definitely. A national brand.
Chase Peckham:See their add every five minutes.
Sharon Glassey:They are the slickest advertising company in town.
Felipe Arevalo:They put stickers on their cars.
Sharon Glassey:They do, they do.
Felipe Arevalo:I wouldn't be able to stand that. Don't put stickers on my car.
Chase Peckham:Yeah I'm a little OCD for that too.
Felipe Arevalo:I don't put stickers on my own car. I don't want someone putting stickers on my car.
Sharon Glassey:It's a bit tacky.
Chase Peckham:It really is
Sharon Glassey:So CarMax. Oh, they have the slickest marketing out there. Everyone's heard of them. They're big, bright blue and yellow mega dealerships. They're nationwide. They're selling, you know, I don't know a million cars, a year, many hundreds of thousands of cars per year. The issue I have with CarMax is people go in and they have a preconceived notion because they've seen this like advertising that when you go buy a car from CarMax, it's going to be like a brand new car that they have claimed. They go through it with a fine tooth comb and they've fixed every neck. And your windshield wipers are brand new and there's not a Creek in the, in the suspension. Nothing that couldn't be farther from the truth.
Chase Peckham:Their 12 point inspection or whatever.
Sharon Glassey:120 points.
Felipe Arevalo:Not 12.
Sharon Glassey:120. So I have seen so many consumers come in and they have a 90 day warranty that CarMax gives you day 100 car breaks down. CarMax doesn't have the time of day for that consumer their certification program, uh, leaves a lot to be desired.
Chase Peckham:Oh my goodness. So what do people have repercussions? Or they signed the paperwork? I mean, are they pretty much saying once the warranty is up, we are not liable for this vehicle.
Sharon Glassey:Yeah. That's how it works. That's how it works. I could get into a whole nother level of ways around that, but it's probably not that interesting for today's purposes of this podcast.
Chase Peckham:Well, I mean, can we try?
Sharon Glassey:Yeah, we can try.
Chase Peckham:I think that people, when they're listening to this, want to be informed and educated on what can I do if I'm going into a market such as a car max or a used car dealership in general, because you can buy a certified used vehicle from a legitimate dealership, quote, unquote, legitimate. Right. Um, and then you have your CarMax's of the world and you've got your uncle Vinny's used car dealership on the side of, you know, w you can drive down by the Naval bases all over San Diego and find the lots of those
Sharon Glassey:lots of them.
Felipe Arevalo:And don't forget the new players, the online car sellers. I know very little about them.
Sharon Glassey:I do too
Felipe Arevalo:But they're all over the place.
Sharon Glassey:Hasn't really hit my radar yet. Sure. It's coming.
Chase Peckham:At some point, it's probably going to get there. So tell us a little bit in that level, what can people do to get around that kind of.
Sharon Glassey:It's a tough battle. If that happens, you're really going to need to speak with someone who specializes in that area of law. Because like I said, let's say your engine fails at day 100. Uh, an attorney can make a strong argument that there was a latent defect, something systemic existed in the car, a serious problem from the get-go, but it hadn't manifested itself. Like the engine hadn't acted up yet within that warranty period.
Chase Peckham:Okay.
Sharon Glassey:But because of the catastrophic issue that occurred at day 100, it had to have existed days, one through 90 as well. Is that okay?
Chase Peckham:Yeah because there's no way that it's something that's healthy is going to die that quick.
Sharon Glassey:Spontaneously between days 91 and 100.
Chase Peckham:That makes sense. Would that be considered now? And for somebody who obviously is not an attorney, does that fall under lemon law?
Sharon Glassey:It can certainly. So there's an implied warranty in the vehicles that you purchase, that the vehicle will be fit for its ordinary intended use, for example, driving. And if your engine blows up, then clearly the car was not fit for its intended use.
Chase Peckham:So now I've met many people, including myself. One time that feels like we all will get a lemon at one time or another. Uh, but I'm sure that not all of us have a case. Can you kind of take us through what, what lemon law really is in when you know that you have probably a case to go for?
Sharon Glassey:Yeah. So for a vehicle to be quote unquote, a lemon, uh, the vehicle had to be sold to you with a warranty. So anything purchased as is, is not going to be a lemon. You've given up your legal rights as is means, take this car for better or worse. Those are your car vows. You either love this car. You hate it, but it is not the dealership's problem.
Chase Peckham:Some people would say that they're about as nervous when they're buying a car as they were, when they got married. So yeah,
Felipe Arevalo:It takes longer to buy a car than it does to get married.
Sharon Glassey:And you may be in the car loan longer than the marriage. Oh my goodness.
Chase Peckham:I was almost gonna say it could be more expensive, but I doubt that.
Sharon Glassey:Anyway. So you have to have a warranty for a car to even be considered for protection under the California lemon law. That's the first question I ask people.
Chase Peckham:So would you recommend very rarely buying a car as is?
Sharon Glassey:I would never, buy a car as is.
Chase Peckham:Unless you go get it checked at your local dealership or local service center?
Sharon Glassey:I would never buy a car"as is" a legitimate car dealership, even a smaller or medium-sized dealership. At least get something with a 30 day thousand miles.
Felipe Arevalo:I was going to say, so even those 30 day thousand mile warranties, that falls under having a warranty. So that would make it eligible.
Sharon Glassey:Yes. Felipe. It does. Yes. Okay. So you don't have to go buy a brand new car with a four year 50,000 mile warranty. Even if you have a 30 day or a 90 day warranty, that's enough to get you protection under the California lemon law.
Chase Peckham:I mean, will dealerships. If let's say you give them a notice that that you're coming after them with a client of some kind, how often will they just say, you know what, this isn't worth fighting. We're going to give this much, uh, versus hang onto your hats. We're going to go to court.
Sharon Glassey:I would say 99.5% of cases settle outside of going to trial in the eight years that I've had my firm. We have been to three trials in eight years.
Chase Peckham:Oh wow.
Sharon Glassey:And I've helped thousands of consumers. So I don't, I don't even know what percentage that would be, but.
Chase Peckham:It's 0.00. zero something. It is Yeah. So. I'm not a mathematician, but it ain't a high number.
Sharon Glassey:99.999% will settle. Now a case could settle quickly. A case can be drug out for a long time. If you're going up against a large manufacturer, like I have, I mean, I've had rolls Royce lemon cases. I've had a Maserati lemon case. Bentley, you know, runs the gamut. The fancy vehicles, luxury vehicles are not exempt from having these problems. You know, cars are run by computers, computers, fail, parts aren't put together, right. Things can certainly happen.
Felipe Arevalo:Backtracking just a little on the warranty thing. So lemon law doesn't apply for private sales. I would imagine because there no warranty.
Sharon Glassey:You are absolutely correct. Felipe private party sales are not covered by California lemon law. You must purchase a vehicle from a retailer, someone in the business of selling.
Chase Peckham:A license to sell you a car.
Sharon Glassey:Yes. They are licensed by the DMV. Yes.
Chase Peckham:Okay. So you're at your own risk. You buy it from somebody and I've been on that ha I've I've had to sell. I mean, the BMW story that I have with Kerri I love to tell because when she moved to California to San Diego, from DC, she had in her mind that she had to have this convertible BMW and one in her price range, which are not easy to find it at that point, when you're 25 years old and you're, you know, Newly a professional. And we found a forest green with a tan top and she, for whatever reason, she just had to have the BMW. And we bought it from the guy. I swear to you, we spent more time in the service center than we ever did, actually driving the car and then trying to sell it.
Sharon Glassey:Yes.
Chase Peckham:Was almost impossible. And that's why to this day, I will only buy white, black and silver because it seems like or red because nothing else sells.
Sharon Glassey:Oh to another buyer.
Chase Peckham:To another buyer, because those are the colors that.
Sharon Glassey:The green scheme.
Chase Peckham:Nobody wanted green.
Sharon Glassey:Wow.
Chase Peckham:It was, it made it very difficult.
Sharon Glassey:Interesting.
Felipe Arevalo:Yeah. What is funny is I painted my first car green, it was Brown. And then I got into a little bit of a fender bender. Um, and, and I ended up having to paint it and I painted it forest green by choice.
Chase Peckham:Because you were young and stupid?
Felipe Arevalo:Yeah. I was like 19.
Chase Peckham:Okay.
Sharon Glassey:Well, if you're going from Brown, I think greens might be and upgrade.
Chase Peckham:Green is an upgrade. There you go.
Felipe Arevalo:It was like a, not an I, it was like a really bad Brown too. The Car wasn't worth much at that point. Anyways, there was no, uh, resale thought at any point. I wasn't getting anything back for it.
Sharon Glassey:You wanted to look good.
Felipe Arevalo:I just wanted the green. I thought it looked cool. I wouldn't purchase a green car now.
Sharon Glassey:Well, I guess you can tell that something's difficult to resell by what you see on other lots.
Chase Peckham:Yes.
Sharon Glassey:You're hard pressed to find a green car.
Chase Peckham:You are you really are It's. The funny thing was, is in the, you know, my daughter who loves to look at Tesla for whatever reason, cause she thinks everybody has them now. And we went just literally to Costco and back, and she counted 17 different Teslas in that short drive. And literally I, 12 of them were white and she's like, I think there's only black and white Tesla. I think that's all they sell. And I know that there are other colors, but it just goes to show you that there are certain colors that tend to sell. Well.
Sharon Glassey:Yeah, very interesting. I had not considered that.
Felipe Arevalo:No, I think Tesla only have not more than a handful of colors to pick from. They may only have like three, unless you special order a different color
Chase Peckham:Not in the market for one.
Felipe Arevalo:They're really cool cars.
Chase Peckham:So I haven't really been looking, but until my daughter actually said that now I, I see them around every corner. It's it's really, really, really interesting Sharon kind of mixing directions here, but in the purchasing process, talk to us about co-signing and what you're really getting into when you do that.
Sharon Glassey:Well, first and foremost, being a co-signer or co buyer for a vehicle means you are equally responsible for that car and the loan. So there's absolutely no difference between being a buyer and a co buyer. I have gotten frequent phone calls from someone who was in a relationship and they needed the combined credit scores to finance the purchase of a vehicle. So, you know, James and Mary head down to the dealership and they both have iffy credit, but together with their income, the dealership says, yeah, we can put this deal together. Well, it's going to be James' his car. So they give, they sign the documents. James is the buyer. Mary's the co buyer. They give James the keys, James and Mary leave. They live happily for a certain amount of time.
Chase Peckham:I was going to say, Mary's really in love. And she wants to do whatever she can for her boy friend to make sure he can get to. And from work, we hear this story all the time.
Felipe Arevalo:Together forever right?
Sharon Glassey:In his BMW, which he did not need.
Chase Peckham:He did not need. And when he said, thank you very much and decided I can't afford this anymore,
Sharon Glassey:Mary, you are too expensive.
Felipe Arevalo:I give this example during our credit presentation on, you know, and then people who co-signed for their significant others. Cause you know, they're going to be together forever. And you know, I always say six months later, for whatever reason, no longer together. Now they don't want the car because it reminds them of you.
Sharon Glassey:Yeah. Or, you know, James moved, Mary moved and now you're like tied together for the term of this loan, you know, five or six years, whatever.
Chase Peckham:It's like a financial pet. You're responsible for it.
Sharon Glassey:It's like a drivable child. You can't, you don't get to walk away. Once you sign the contract, you're both liable, both responsible.
Chase Peckham:But how many times though, do you see that the, you know, the guy that has the BMW and then he decided to can't afford it and just stops paying,
Sharon Glassey:Oh yeah.
Chase Peckham:Not caring. It's crushing. She has no recourse.
Sharon Glassey:No. Mary May not have seen that car in two years. And James had been making payments, but loses his job and decides he can't make the payments anymore. Car gets repossessed.
Chase Peckham:And by the way, she went to go buy herself a new car and found out the hard way that she's got a big old black Mark.
Sharon Glassey:Big repo on her credit credit for a car she may not have ever even driven. So just know that co buyers,
Chase Peckham:I like the way you say co buyer. I mean, that's a really good way of thinking about it instead of co-signing.
Sharon Glassey:Yeah.
Chase Peckham:It's your, you are buying too.
Sharon Glassey:Yes. You are also a buyer.
Chase Peckham:Another thing that people think about people have an. They need gap insurance. You know, you hear the word gap insurance, kind of that. What is the reason for that? A lot of people don't even know what that is.
Sharon Glassey:I I'm, I'm sort of a fan of gap insurance. One. It's not cost prohibitive. Generally a car buyer can get gap insurance for around. Mostly I see it for$995. Okay. What that means and it's, I'm sorry. It's most favorable when you're not putting a large down payment on a car.
Chase Peckham:Okay.
Sharon Glassey:So let's say you go in and you're going to buy a$25,000 car and you have$2,500 to put down. You immediately owe$22,500. Well, like we talked about earlier, it's depreciate so quickly that you now own$22,500. Maybe you get in an accident in six months or a year. And your car's only worth$16,000, but you still low close to the 22. The gap insurance closes that gap between what you owe and what the current market value is so that the insurance pays off your entire loan.
Chase Peckham:So that's, if it's a total so to speak,
Sharon Glassey:that's if it's a total, that's what gap insurance is for. If you total your vehicle. So you kind of have to weigh the risk of am I really gonna total my vehicle, but it's not a bad idea for some peace of mind when you're making a small down payment on a big ticket item,
Chase Peckham:which most people, if you were to survey, most people do put as little down as possible.
Sharon Glassey:Yeah.
Chase Peckham:Think about the overall price of the vehicle. They're thinking about what can I afford monthly?
Sharon Glassey:Correct.
Chase Peckham:Right. So when you get into, and I mentioned it earlier in the podcast, you've got people that might have a let's I don't mean to throw Honda Accords under the bus, but they might buy a 2007 Honda accord and they might have a$700 a month Payment. And we look at it and we go, but you bought it 2007 Honda accord with 75,000 miles on it. How was your payment?$700. They might've bought a car at 22% interest rate.
Sharon Glassey:Oh yeah.
Chase Peckham:How are people? How Can people get away with that? Is there a law? Is there anything that says that interest rates have to be caped?
Sharon Glassey:There's not that, uh, California is a bargain for or agreement, you know, whatever the two parties bargain for are the terms. So if the dealership says, we're going to get you a loan and you're going to pay 22% annual interest on this vehicle for the next five years, you need to try to get your own loan at that point.
Chase Peckham:Yeah.
Sharon Glassey:You can one try to get the dealership to get you a lower interest rate or you can visit a credit union, which are a great option for getting your own loan for a vehicle. That's how I purchase vehicles. I go to the same credit union. I could give them a plug.
Chase Peckham:Sure.
Sharon Glassey:I go to California Coast Credit Union for every purchase.
Chase Peckham:Partner of ours by the way.
Sharon Glassey:They treat you well, they have great customer service. They have really good rates. So go ahead and uh, you know, check around with some credit unions, do anything you can not to have to pay 25% interest on a car.
Chase Peckham:So, it's very similar to when you're going to purchase a house, you don't just walk up to a house and think, especially in today's market, you're not going to walk up to a house and look at it and go, gosh, I'd really like to buy this without being pre-qualified right.
Sharon Glassey:Oh yeah.
Chase Peckham:So it's kind of the same thing. You're walking into a dealership, knowing I've got this much to spend. I know exactly what my loan is going to be. And you don't really even have to haggle with you. The haggling is, can you get the bottom line price down.
Sharon Glassey:Yeah absolutely.
Chase Peckham:Not the monthly payment, because that's let me ask you that. That's pretty much what the salesman is going to want to talk to you about, right? What do you want to afford a month?
Sharon Glassey:Yup. Salesman always comes at you. What are you looking to spend a month? Well, if you say$600, you might've blown your opportunity to get that car for$450 a month, right? So never lead or never negotiate based on your monthly payment negotiate based on the price of the car. And there's so many websites that are informative about what certain cars should cost. You can do a search online for, you know, what's the average price I can expect to pay for a 2016 Toyota Camry, just a wealth of information available. So there are tools that consumers or, or buyers can utilize before you go in to make that huge purchase. You need to have as much information as you can because the dealer has all of the information.
Chase Peckham:They have everything.
Sharon Glassey:They know everything you need to try to level the playing field.
Chase Peckham:A lot of people will say to me, and I don't know if this is your area of expertise, but maybe you've heard of it. We'll have people that come in and they'll say, I looked at my credit score. I look at it at credit karma all the time. And I know my credit score is 820, whatever it might be. But I went into the dealership and they offered me a 7% interest rate and said my car, my credit wasn't that great. I know it's good. So they must be lying. Is that the case?
Sharon Glassey:Dealerships buy loans from banks, they will purchase a$30,000 loan from, for example, CHASE Bank at 3%, they will then sell that loan to you, the car buyer for 7%. So the dealership has then just made on top of whatever they got for the car. Another 4% of the price of the car on the interest rate. So it's called a buy sell rate dealerships buy the loans or the dollars that are going to finance the car at, like I said, 3%, 4%. And then they want to make additional money because that's what they're in the business to do.
Chase Peckham:Of course.
Sharon Glassey:That's why they're big and fancy and shiny. Right?
Chase Peckham:That's why they have really great Keurig machines that you can go in and have as much, really nice coffee as you want, while you wait.
Sharon Glassey:For 11 hours while you negotiate.
Chase Peckham:Exactly and they get you really caffeine up and really super excited. Yeah, exactly. And then they go to our vending machines for$5 are right over there.
Sharon Glassey:Yeah right over there. I get a lot of calls from people. Oh, the dealership kept me there till 11:00 PM. Oh, I was so hungry. I was starving. I couldn't,
Chase Peckham:I just wanted to get out of there. So I just signed every.
Sharon Glassey:I just signed everything. One, try not to take your young children. When you buy a car, they're not g oing t o l ast. Right?
Felipe Arevalo:Left them at Grandma's.
Chase Peckham:Made that mistake.
Sharon Glassey:Get a baby sitter. Never turns out well.
Chase Peckham:It's the worst. And by the way, most of those dealerships have really, really nice children play pin areas. And in the land of COVID nobody would do that. But yeah, they're smart.
Sharon Glassey:Don't take your children. You're going to be a little distracted. Um, if you're hungry, you can leave and go get something to eat and come back. Even if they tell you, no, they are not holding you hostage. They, they want you to think they are, but they're not. We have Uber eats. You can have some food delivered. I always Feel.
Felipe Arevalo:That's start I didn't think of that.
Sharon Glassey:I always feel Terrible for people who say I had my kids and they were tired and it was nap time. And I was just so hungry. And or if it gets to be 11:00 PM or 9:00 PM, whatever your comfort zone is, just leave. They're going to work with you. You don't have to sign right that minute.
Chase Peckham:So is it in your opinion, is it good to look say, you know what I'm done with this? If you want to sell me that car, you give me a call and leave.
Sharon Glassey:Yes, absolutely. You will get a call that car won't.
Chase Peckham:They're going to do whatever they can to sell you that car.
Sharon Glassey:And you don't need to sit there. You don't need to be hungry.
Chase Peckham:You don't want to sit there at their desk. When they come back seven different times with lowering the cost of your monthly payment.
Felipe Arevalo:I was car shopping this most recent time. It was during COVID. So not being, it was early in COVID. So I'm not used to wearing a mask. I don't have to sit there. We're out now used to it. So he's like, Oh, we'll be right with you. No, no, here's, I'm going to go walk around outside. You have my number. You call me when you're ready for me to come back in here. I don't want to sit here with a mask, just staring at the lights,
Sharon Glassey:No you can negotiate over the phone. Now you can negotiate via email internet. You know, it's, there's so many tools.
Chase Peckham:It's Interesting, the marketing, I, and this is, you know, maybe, you know, maybe you don't, but I got an email the other day that said it is just the hot time. Your vehicle is really, really popular. Your car is in demand. And we are going to give you over market price for your vehicle. And we'll even get you into a new vehicle if possible. I mean, what are the chances that you're ever going to come out on? The better end of that?
Sharon Glassey:You're not the chances zero.
Chase Peckham:Yeah. That's what I figured. Dealership always wins. Unless you heed all of my warnings.
Felipe Arevalo:See, when I was car shopping, I did, you know, you can type in your trade in and then you can get an estimated offer.
Sharon Glassey:Yeah.
Felipe Arevalo:Um, so I did that at a dealership and it said, sorry, we're going to have to take a look at this car to give you a value. And I was already planning on going in. I went in, I eventually, I ended up getting the car from them. And like a week later I got a call from that same dealership saying, Hey, you know what? We really want your Honda Accord. Um, you should come bring it in. We have some great deals available. And I told the guys, you got it a week ago!
Chase Peckham:That's crazy.
Sharon Glassey:That's insulting.
Chase Peckham:You're just on the marketing list.
Felipe Arevalo:Right? Exactly. And I told the guy, I was like, you know, you've had it. If you lost it, that's on you. you really want it go look in your back lot, somewhere.
Chase Peckham:That's the funniest thing I've ever heard.
Sharon Glassey:That's kind of the best.
Chase Peckham:That that's absolutely crazy. Sharon, is there anything that we have missed that, that we should know that we haven't covered today? I know there's something you mentioned. We don't have to get into it, but please just give us, give me just a taste of what un-horsing is. I have no idea what that is.
Felipe Arevalo:No clue what that is.
Chase Peckham:And we were dying to know what that was when you brought it up.
Sharon Glassey:It's uh. So unhorsed thing is a bit complicated. It's a term used, you know, in the auto fraud umbrella world. Yes. So an horsing means that a dealership takes your vehicle in on trade. They get you into this new vehicle. They have to unwind the new vehicle deal. Cause they can't get you financed because your credit was poor. They ripped you off too bad. One of those types of things where people often get these cancellation letters in the mail, like we are exercising our right to cancel your purchase. Dealerships have 10 days to cancel your purchase.
Chase Peckham:I didn't know that well I do but most people don't. The buyer, don't, the buyer doesn't have one minute to cancel a purchase after they have signed a contract. Because there's no cooling off period.
Sharon Glassey:No cooling off period, no cooling off period. That's a hard, fast rule. You sign and drive. You own that car dealerships have 10 days to cancel. If they can't find a loan that kind of suits their parameters.
Chase Peckham:But they let you drive it off the lot.
Sharon Glassey:Immediately.
Chase Peckham:before they have actually found the loan.
Sharon Glassey:Immediately. You get this letter, they tell you to come back in and either one sign a contract for a higher payment or more down payment to you, or you have to give the car back. The un horsing comes in when you have given them your trade-in vehicle and maybe they've already sold it. So now you've given back to the new car and your trade in vehicle and you're left with no car and you're yelling and screaming at this dealership saying, give me my darn trade-in vehicle back. Oh, we're sorry. We've already sold that because it was in such high demand. So now you're looking at, well, what do I get back? I don't have anything to drive.
Chase Peckham:So here's your 2008 Honda accord.
Sharon Glassey:That you now have to buy.
Chase Peckham:that you have to purchase.
Sharon Glassey:You're trade in car is gone. You can't buy the new car. They've got you in such a pickle that you're going to have to buy some other car from them or sign this new, very unattractive contract. So the[inaudible] comes into, they've gotten rid of your trade-in vehicle.
Chase Peckham:Oh my Gosh.
Felipe Arevalo:Or they've lost it in the lot like they did with the one they took from me.
Chase Peckham:That is obscene. And that's actually within their.
Sharon Glassey:Yeah. Within their purview, they can do that within 10 days. Cancel your deal. You know, it's dealer best practices not to sell someone's trade in, obviously before the deal has been financed, but dealerships do it all the time. Just thinking that there's the chances are they're going to get it financed somehow. That's insane, Sharon, I can't thank you enough. Uh, if people want to find you, if they've, if they've got issues of any kind, where can they find you? Um, at least get a consultation to even if they have something. We have a really informative website at www.Californiaconsumerattorneys.com. And, uh, I'm Sharon Glassey. One of the partners there, and I take a lot of phone calls And I'm happy to help out.
Chase Peckham:Today was outstanding. I mean, I thought I knew just about everything. There was about purchasing a car and what our rights were. And I found out how credibly wrong. I was. Uh, it was a pleasure to have you and thank you. It was just great conversation.
Sharon Glassey:Thank you. My pleasure.
Chase Peckham:Well Phil. That was a lot of fun as always, uh, really, really insightful stuff. And one thing that we want to get out there is if you enjoyed this episode, please follow us. If you, if you're enjoying the podcast, leave a comment, follow us on wherever you find your podcast, but we love coming into your home every week.
:Yeah. Follow us on social media and send us ideas, uh, future episodes and leave us a review wherever you get your podcasts. That way it'll help others find our show as well.
Chase Peckham:Absolutely. Thanks for joining talk wealth to me,[inaudible].