Are you being taken for a ride.

African American buyers spend more than anyone for new or used cars. Why are we getting "shafted"? Here's how to fight back.

IN THE MARKET FOR A NEW OR USED CAR?

You'd better be prepared. It seems most African American consumers are not getting the best deal when they go into a dealership to buy a car. And you're most likely to get ripped off if you have no idea how much a vehicle is really worth.

In fact, African Americans pay more for their cars than Caucasians, warns Ian Ayers, a professor at Yale Law School. In two separate controlled studies in 1991 and 1995 in the Chicago area of more than 150 auto dealers and more than 300 new cars, Ayers found that both black men and women "testers" were offered higher prices for cars than whites.

"There is some evidence that suggests dealers may have acted as if they disliked black men more than black women," says Ayers. "Dealers are primarily interested in making money. In their effort to make more, they will prey on consumers they think will pay more," he explains. The studies didn't suggest that car dealers refused black patronage, but rather, in a sardonic twist, may have derived a certain pleasure out of getting a higher price from a black consumer than a white one. "It's a different, more subtle kind of racism," he adds.

Often the discrimination isn't even recognized until a pattern emerges and someone happens to stumble across it. That was the case for attorney Edward D. Buckley III when he happened to file a class action suit against Atlanta-area car dealer, George Sutherlin, for misappropriating and defrauding customers of a manufacturer's rebate. Of the 31 plaintiffs, seven were African American men and 21 were African American women. In the evidentiary and discovery phase of his suit, Buckley found that the prices set for cars sold to African Americans "generated two to three times more profit" for the dealer than those sold to whites.

According to the brief filed in Federal District Court August 30, 1996, the plaintiffs charged that "the Sutherlin Mazda dealership made twice as much profit on sales to African Americans (6.3%) than to whites (2.4%) in dealer-financed transactions." When buyers had their own financing, the dealership made seven times more profit on black buyers than it did on whites (7.7% vs. 1.1%). In total profit on dealer-financed transactions, the dealership earned, on average, 14.9% on cars sold to African Americans, while making just 6.9% on cars sold to whites. Buckley has built the case based upon sales commission reports matched with buyers' orders made available by former salesmen. Based on deposition testimony filed in court, "the dealer was not willing to do the same deal for African Americans that he was for whites," says Buckley.

Research suggests that preconceived notions about who's buying a car weigh into the purchase price. According to a survey by the Consumer Federation of America, 37% believed car prices were not negotiable, with that number jumping to 61% among African Americans. Only 31% of whites believed prices couldn't be haggled. More interestingly, however, test shoppers in Ayers' Chicago survey found that dealers were more likely to volunteer information about the real price of a car to white males because they believed they already knew.

But African American consumers share some of the blame. Oscar Smith, a former car salesman in Nashville, says that "psychologically, it's easier to sell a car to someone who is easily convinced that the monthly payments should be the basis of the buying decision. Most black customers are very forthcoming and want a car to drive home that day. Based on this, a key negotiating edge has been compromised within minutes."

"Dealers are not used to African Americans coming in knowing what the car buying process is. The fact is we don't do as much research as we should, or would, if we were buying something else, like a house," says Randi Payton, publisher and editor-in-chief of African Americans On Wheels, an automotive magazine. "Buying a car is an emotional experience," he adds.

Race aside, buying a car must involve consumer strategy and preparedness. The "mind game" played by hustling, fast-talking salespeople is not the only way to buy a car these days. Now consumers can access a barrage of information, from guidebooks to Internet Web sites. And there are a host of ways to buy a car, from auto brokers to wholesale buying clubs to matching services that pair dealers with customers looking for a fair price.

CHANGING THE WAY CARS ARE SOLD

Traditionally, May, June and August are the best months for car sales; February, the slowest month. But that too may be shifting as buyers no longer exclusively go to the dealer to shop for or buy a car. Now you can shop online by logging onto Internet buying services, where you can check out models and prices and make purchases from subscribing dealers.

Auto-By-Tel (http://www.autobytel. com), an automotive purchase-lease site on the Internet, reports that over 30,000 potential buyers fill out a form in order to be contacted by subscribing dealers each month. According to spokesperson Cassandra Cavanah, about 60% follow through and buy a car. "They're not your typical car buyer, however. They don't want to deal with the hassle of looking for a car, and they don't want the headache of haggling," she explains.

While dealers pay an annual and monthly fee to Auto-By-Tel to be a part of its dealer network, consumers pay nothing for the service. When a browser fills out the online purchase request form, one of the 1,400 dealers in the company's nationwide network--usually within that area--follows up with a price within 48 hours. Meanwhile, you might also try your local warehouse buying club, like Wal-Mart's Sam's Club or PriceCostco Inc.'s Price Club, for referrals to cut-rate dealers. Buoyed by the thousands of members in their areas, these warehouse clubs have enlisted local car dealers to offer club members price breaks on new and used cars, from Chevys to Mercedes.

Even if you don't belong to membership purchasing clubs, you can seek out research organizations for pricing information. traditional guidebooks such as Edmund's Buyers Guide and the Kelley Blue Book have added Web sites to their information portfolio, complete with car specifications and buying guide information that browsers can scan. Not to be left out, software giant Microsoft has its own auto Web site, CarPoint (www.carpoint.com). Call Consumer Reports New Car Price Service (800-933-7700) for information on new cars; to get the price on used ones, call the service at 900-446-0500 (the cost is $1.75 per minute).

Some consumers are turning to credit unions when buying a car, not just for financing, but for one-stop shopping--from negotiating the best price to vehicle delivery. When Rose Pitt of Floral Park, New York, went shopping for a new car a few years ago, she sent her son to look for a 1992 Nissan Maxima or Stanza at three Long Island area dealers. "Every dealer was approximately the same, within $200-$250 of each other," recalls Pitt. Her husband had a copy of the National Automobile Dealers Association's (NADA) "blue book." The publication, which is actually yellow-colored, appraises what vehicles are worth. All prices quoted were below sticker price.

Pitt had decided to buy a Stanza when she happened to get a newsletter in the mail from her credit union, highlighting a new service it offered called AutoAccess. "It was cited as a great way for women to buy a car because they had a trained person who would do the research for you," says Pitt, who called the service and was assigned to a broker.

After she explained which cars she was interested in, the broker called back two days later with a price quote for a Stanza. "The price she quoted was a few hundred dollars over dealer cost," remembers Pitt. The glitch was that the car was at a Nissan dealer in Peekskill, New York, about an hour's drive north of New York City. But that didn't matter. After she called in her insurance information to the broker, the car was delivered to her home in Long Island, complete with registration and license plates. "I did everything over the phone; I never left my house," she adds.

FINDING THE BEST DEAL

Whether you're buying new, used or leasing, doing your homework is key to getting the best deal possible. But then how can you afford not to do your homework, considering that the average price of a car is $21,582, according to NADA. Payton suggests that you start your preparation at least six months ahead of when you plan to buy: "We should save thousands of dollars, if we just did our research first." Here's a step-by-step approach.

* Set a budget. Before wasting your time and everyone else's, determine how much you can afford to spend. Creditworthiness is a major factor when purchasing a car. Generally, auto dealers assume African Americans are not as credit-worthy as white buyers. If you plan to finance your purchase, decide how much of a down payment and monthly car note you can afford. As a rule of thumb: your total debt shouldn't exceed 38% of your gross monthly income, or 33% if you have a mortgage. Then add in the cost of insurance, maintenance and repairs. Even if you're leasing, these elements determine what kind of car you can afford--you just don't have as much of a down payment (generally 20% of the price).

Now's also a good time to get a preapproved loan by your bank or credit union. Even if you opt for dealer financing, you still have the flexibility and room to negotiate a "cash" deal price. The dealer makes its money on financing the car purchase.

* Narrow your options to a few makes or models. Warning: Decide with your head, not just your heart, unless you're flush with cash. "It's not wrong to buy a vehicle that makes you happy. Just be able to put a value on that ownership satisfaction," cautions BE automotive writer Jay Koblenz. Ask yourself what size and type of vehicle best suits your needs. Consider several different makes and models, then narrow your choices to three or four.

* Get the 411 on your selections before setting foot in the showroom. Start gathering information on your selections first. Check out car-buying guides, buff books and magazines for reviews of the vehicle. Consumer Reports does its annual auto issue every April; it includes sticker price, style and a depreciation ranking. In general, however, cars lose up to $5,000 of their value as soon as they're driven off the lot!

* Establish the "real" cost of the vehicle. Shop for the dealer invoice. On average, dealers pay 90% of the sticker price, also known as the manufacturer's suggested retail price. Some of the buyers guides, a.k.a. blue books, will give you this price and/or the used car resale value of that particular make and model. Set up a pricing worksheet for each make you're considering. Decide on the basic elements you need or want your car to have, such as manual vs. automatic; four-cylinder engine vs. a more powerful six-cylinder. Then make a list of the options you want: AM/FM stereo, air conditioning, power windows, moonroof and even the color. But a word to the wise: some options have no "residual value." Translation: you may like them--the gold trim package or CD player--but someone else buying the car used might not. They'll do nothing to help the care retain its value, and you'll probably pay a higher car note--adding them into the purchase price instead of adding them later. Experts also suggest that you bargain $300-$500 over the dealer invoice.

Another good way to find out how a model retains its value is to go shopping for a used one, whether through a dealer, guidebook or online. That way, you'll know what your model could fetch in a few years. It's also a way to avoid getting into an "upside down" deal, where you owe more on the car than it is worth.

* Establish a trade-in value for your old car before heading to the dealer. "Books don't buy cars, people do," says Smith. "Supply and demand is the best way to establish a true value for your vehicle. The used car marketplace is dynamic. Your goal is to get your vehicle appraised and get the salesperson to give you the 'actual cash value' of the car. The goal of the dealership is to buy the car for as little as possible, and sell it for as much as possible," explains Smith. So, drive your car around to a few new and used car dealers and find out what price you'd get.

You can also check out NADA's Official Used Car Guide or some of the other guidebooks to see what's generally offered for cars of that specific make and model. However, they can't factor in the condition of your vehicle.

* Go for a test-drive elsewhere. "Don't test-drive the car from the dealer you want to buy from," suggests Payton. "Buying a car is an emotional experience and you'll be influenced getting into it."

* Make notes of your driving experience. You can even make note cards ahead of time with specific items that you want to check out when you go driving.

* You choose the dealer and the deal. Negotiate for your dealer and deal. Comparison-shop the car, its options and price. Negotiate your price from the "dealer invoice" up, not the sticker price down. Remember: The dealer invoice is about 90% of the manufacturer's suggested retail price. Check the inside driver's side door to see when the dealer accepted delivery. The longer that car is on the lot, the more it costs the dealer.

* Sleep on it. The chances of someone buying that car overnight after you've negotiated for the best price is highly remote. Ask for a quote in writing. But be careful: If they've offered to let you take the car home overnight, be sure that you don't give out anything other than your driver's license information. What you sign may turn out to be a purchase or lease agreement, and you'll end up without any options.

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