Our Method: How we went under cover

An associate producer at Marketplace found herself in a similar situation as many young Canadians: searching for her first car. With many options available to her, Marketplace decided to send her into dealerships wearing hidden cameras to document the financing advice salespeople would provide. It’s a critical issue because more new cars will be sold in 2017 than ever before and 90% will be sold with the assistance of loans.

We chose 10 dealership locations in southern Ontario. It was a random selection of businesses that sold popular small cars. Our research with industry and consumer experts, along with consumer comments, suggested that people were signing up for long term car loans based on the sales pitch of “affordability”, without understanding the inherent risks.

Given that more than half of new car purchases are financed with loans of 7 years or longer, we wanted to test how salespeople explain car loans - whether they encouraged consumers to sign up for those longer loans and if they explained the risks.

The associate producer spoke with the first salesperson to approach her at each location.

The associate producer gave the same information to each dealership. She presented herself authentically as a young Canadian who graduated a few years ago and has an unsteady work situation. At the beginning of the visit, the only information given to salespeople was that she was looking for a subcompact car, possibly a hatchback, and that she didn’t know if she wanted new or used. When asked about leasing, the producer said that she was not interested.

When asked about budget and affordability, the associate producer said she wanted a basic model that was automatic. She did not indicate an interest in long term loans nor emphasise a desired monthly payment. If pressed on monthly payments, she gave her budget as $300 to $500. When offered an extended term loan (6 years or longer), she expressed honest reservation about her future, saying she did not know her vehicle needs or financial situation in the next few years. If asked about a down payment, the associate producer would ask the salesperson’s recommendation, and offer to put down that amount.