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Among the peeviest of my pet peeves is watching car commercials. Thankfully I don’t have to watch too many as I have largely substituted away from almost all forms of advertising. But think about all of these local car commercials that advertise amazing lease deals:

“Just $199 for a Ford F-150 Extended Cab, for 36 month lease!”

“Now get your Ford Escape for only $99”

“Drive a Kia for $149 per month”

And on and on.

And anyone who knows anything about basic financing, and cars, realizes these are about as close to being lies as you can get without actually telling lies.

In the fine print, of course you will see something like, “lease terms based on 36 month lease, with minimum $3,999 plus first month’s payment, plus taxes, title and registration due at signing.”

Well, hell … my house is valued at about $180,000. If I sold it to you, I would be willing to finance it for you personally for the measly sum of $10 per month for 5 years. I would do this so long as you paid me $179,400 today (ignore discounting and investing).

So, yeah, my house can be had for the incredible lease rate of $10 per month – but that is only true in about the most meaningless way possible.

HOW the HECK do regulators not put a stop to this? Don’t we have some new Warren-esque powers embodied in the CFPB that is supposed to do something about it? An economic puzzle is why some car company doesn’t call out the fraud on their competitors and make profits by being more honest? Are people that behaviorally crippled? My best guess is that local politics and regulation is sort of a partially owned subsidiary of the automobile dealers, so it is cronyism plain as day.

Any other thoughts?

I would definitely favor some cracking down on this – free market be damned, if damned it need be (and I do not suspect this is a “free market” phenomenon).

2 Responses to “Regulation I am in Favor Of?”

  1. sherlock says:

    I still can’t figure out why a car company doesn’t have the car tell you what’s wrong (and advertise as such), instead of having a “check engine” light come on. Is it because if people knew right away that is was just their catalytic converter, they wouldn’t bring it in to get fixed? All of them love the $20 fee to run the code reader?

    • wintercow20 says:

      Good point indeed. I suspect you are more often to go to the dealership if it says “check engine” instead of it telling you the specifics, because most issues are probably minor and you’d not bring the car in.

      Imagine humans had a “check body” light. If I had one, I’d flip out every time and see doctors immediately. But just think of what could trigger it – a slight hangover, a bloodied fingernail, running a low-grade fever, and so on.

      The problem with our theory though is why SOME car company does not exploit this?

      We do know that selling cars is not, itself, profitable – it is the selling of many cars over a lifetime, and the service that the dealers provide that makes them any money at all.

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