Dealer Installed Options are a common scam used by car dealers to increase their profit margin by loading up a vehicle with overpriced equipment of often questionable value. This was a very common practice during the 1980s with many Nissan, Honda, and Toyota dealerships, when demand exceeded the supply of their wares. I once saw a Nissan Sentra with a factory sticker of about $7500 in the early 80's jacked up to over $12,000 with a combination of dealer installed options, handling fees, and additional dealer markup. At the time, nearly all Japanese car dealers did this to all of the cars they sold off the lot. This made it nearly impossible to actually buy a car for the list price. Many of the options listed on the sticker were of dubious value, such as paint sealant, and rustproofing, which if it was done at all would often aggravate a rust problem by preventing water from draining properly. At best, most of these options were nearly pure profit for the dealer.
Since it was all but impossible to buy a vehicle without dealer installed options many consumers got very angry and by a combination of actions by State Attorney Generals and by filing class action lawsuits they were able to recover some of the cost of the options foisted on them. Since then, most Japanese Cars have come into better supply, and this practice has diminished somewhat. The practice still continues especially with popular models in short supply, such as the PT Cruiser, many SUVs and Harley-Davidson Motorcycles. The scam goes like this:
So, you have finally decided its time to trade in the old jalopy and have gone down to the local car dealer to buy that new Canyonero LE SUV you have been drooling over. You have done your research, and the Canyonero fits all your requirements for safety, style, comfort, cargo space, and reliability in a new vehicle. You have read the reviews, and researched the internet to find the list price, invoice price, and any holdbacks built into the invoice price. You think you have figured out to the penny what the minimum price the car salesman will accept.
You approach the salesman, and after some back and forth negotiation of the price, it seems you are close to making a deal on your terms. Then the salesman drops the bomb, and says: "I see you have done your homework, but we don't have a Canyonero with that equipment. We can order one, but they are a real hot seller and there is a six month waiting list."
You know this is a
scam, but you look out the window at your miserable dented and rusted
jalopy leaking
antifreeze and
transmission fluid in the parking lot when the saleman says "But wait, I have the only
Canyonero LE in town, and it just came in from a special allocation. Its not quite the color you specified, but I want to show you just how nice the special two tone color scheme with accent graphics looks."
Beware my friend, you are about to enter the
Dealer Installed Options zone. (Playing
Twilight Zone music)
You walk over to the vehicle, and you notice a second window sticker on the Canyonero that lists
Dealer Installed Options as follows:
Macho Dotcho 16x10 Ralleye Wheels $800
Dura Guard Yosemite Sam Mud Flaps $399
SolarGard Paint Protector $359
LoJack Security System $999
Special Edition Graphic Stripes $499
Security Etching Package $399
Chromed Engine Accents $399
Rusty Bob Rustproofing $699
Automatic Air Freshener Dispenser $349
Total $4902
You exclaim that this vehicle cost almost $5000 more than the list price of the vehicle you negotiated for, and you won't pay it. The salesman then goes into a long spiel of the benefits of all of the listed options, and that without them your new Canyonero will likely be stolen and unrecoverable, soon turn into a faded, rusty hulk, or have absolutely no resale value at the end of the loan. He offers graciously to add the cost of the
dealer installed options to the previously negotiated price, and will throw in a free full tank of gas, but that is his
best offer.
Sadly, you walk away, and you try to figure out how to make the old jalopy go another six months.