In the movie “Cool Hand Luke” (1967), Paul Newman’s character gets put into solitary confinement on a prison farm in a tiny room called “the box”. You can’t lie down, or sit down in this box, it is that small. It is hot, very hot. It is no wonder, then, that car dealers have nicknamed the room where consumers meet with the finance director (who is called “the closer”) to sign final car purchase paperwork “The Box.”
I was in middle school when my mom bought a new car. I have clear memories of the sheer, unending boredom from just sitting on the curb by the dealership waiting for the grown-ups to finish talking. For my mother, the long buying process just added stress and left a sour taste in her mouth. This is a story that most Americans who have bought cars recognize.
Putting customers in the box is, quite simply, a high pressure sales tactic. The growing stress of sitting in an office, waiting for paperwork (on a very expensive item!), increases your willingness to do whatever it takes to get out of there. And while some car dealers want to distance themselves from the image of a sleazy salesman and this term, complaints in the Consumer Financial Protection Bureau’s Consumer Complaint Database show that this practice is alive and well. For our recent report “Auto Loan Complaints Rise,” with the Frontier Group, we sifted through the thousands of complaints consumers made to the CFPB on vehicle loans and leases, and high pressure sales tactics constituted almost half of the complaints.
I was recently sent someone’s car title loan agreement. Car title loans are different from auto loans and leases because you list your car as collateral to get a small-dollar loan (and they take your car if you don’t pay it back). What remains the same are the tactics that lenders use to get consumers to buy unnecessary add-ons. On the loan form, services and products like “Credit Accident and Health Insurance,” “Involuntary Unemployment Insurance,” “Credit Life Insurance” and membership to the “Towbuster/Nation Safe Motor Club” were offered. The consumer asked for a $1,500 car title loan on a Ford, but was talked into a loan for nearly double that, and despite saying he didn’t need membership to the Motor Club, that box was checked on his loan and he was charged for it.
The story that goes with this loan sounds like a headache. The consumer and his wife had gone to the lender with one of their grandchildren. While they were dealing with the loan, and unbeknownst to them, the wife’s car was listed as security for the loan. Since they were trying to entertain their grandchild during the long, drawn out process in “the box”, this all slid under the consumer’s radar. He signed the loan on a tablet (signing “paperwork” electronically on a tablet or computer screen built into a dealer’s wooden desktop is increasingly common), which makes it difficult to closely examine or read the fine print. Overwhelming or stressful situations for a consumer are perfect conditions for dealers and lenders to push unnecessary add-ons into contracts.
I wish scenarios like this were anomalous. They are not. Even the Federal Trade Commission, in a recent study published in a Staff Report titled “Buckle Up: Navigating Auto Sales and Financing,” noted that add-ons like the ones described above are common, and can be confusing, expensive, and hard to locate in the paperwork after they’ve already been purchased. The writers of the report especially mentioned that “add-ons were the single greatest area of confusion observed in the study.”
As we say in our report, “purchasing a car is a minefield for consumers even at the best of times.” High-pressure sales tactics like “the box” are only a few of the explosives lurking underneath the tiled floor of a dealership office. We can’t provide a map of their exact locations, but we can help you avoid some of the bigger mines. Our Buying a Car Consumer Guide can help prepare you by showing you what to look out for and how to avoid getting stuck in the box.