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July 7, 2006

The Devil's in the Details

Chrysler is currently offering a 30-day return program on all their new vehicles and advertising the hell out of it: if you try one of their vehicles and decide you don't like it, hey, bring it back!

The fine print pretty much kills it, though.

Right out of the block, you don't qualify if you're trading in. That should skim half the potential customers off the top easily.

Beyond that, though, you get to pay a restocking fee of 5% of the MSRP (not what you paid, but the sticker price—and consider that some models are selling for $10,000 below MSRP right now!) and 50 cents per mile driven.

Just for giggles and to provide numbers, I configured a 2006 Jeep Grand Cherokee Laredo to reflect what I would buy. The MSRP came out to $34,227. My restocking fee alone would be $1,711.35, regardless of the fact I could probably buy that vehicle for $25,000.

This being the Valley, let's assume I commute to and from central Phoenix every day, at a round-trip distance of 40 miles. Again, being Phoenix, let's assume there's a Jeep dealership within 5 miles of me (in my case, there actually is).

Simply by driving off the dealer's lot to my home, I already owe $2.50. After a week of commuting, I owe $105 if I choose to return the vehicle (a total of $1806.35 in return fees). And that's assuming I do nothing but drive straight to work and straight home. But we've got 30 days to make up our mind... what do we owe if we keep it for a month?

Taking this month as our example, we've got 20 weekdays and 8 weekends, ignoring partial weeks. 20 days * 40 miles * $0.50 = $400. Let's say that since it's July, I drive up north one weekend, netting me 250 miles round trip—conservative, yes, but I don't want to overinflate the numbers. 250 * $0.50 = $125. We're now at $525 in mileage fees without ever having done groceries, or gone out to dinner, or grabbed a burger, or stopped at Home Depot... To simulate that, I'll throw an an additional 18 miles for each of the remaining weekend days. 18 miles * 6 days * $0.50 = $54.

In our completely plausible simulation, we're now at $569 in mileage fees, for a total return cost of $2,280.35.

For comparison, it costs $250 to rent a Grand Cherokee for a week at Enterprise. To rent it for a whole month is $1254. Maybe it's just me, but that seems like a much more effective way to try out a vehicle than Chrysler's legalized rape approach.

Posted by Colin at July 7, 2006 12:35 PM

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