It’s a fairly bizarre story, and although you can read the whole thing at Slate, I’ll give you the rundown right here: TrueCar was the brainchild of a “professional disrupter” who specialized in founding companies that added an unnecessary level of Internet-ness to existing processes — think eToys or Pets.com. TrueCar had a lot of initial success before “going through the Swirl,” which is how TrueCar refers to the near-collapse of its business a few years back. The company’s founder had to ask the board for a raise so he could keep his Aston Martins, which emotionally damaged and triggered him to the point that he had to go to counseling.
I know, right? Just when you think that there’s nobody out there less likeable than a dealership principal, along comes a guy who needs therapy because he got a massive raise. But wait, it gets worse. After therapy, TrueCar’s founder “pivoted” towards helping dealerships make more money, because somehow that would be even more disruptive. The cynic in me thinks this 43-year-old billionaire just finally figured out what most teenagers learn with their first lemonade stand, and what pretty much all automotive journalists learn after their second press trip: if you have a choice between screwing over the people you talk to every day or screwing over some random person off the street, the smart business move is to prefer the interests of the former over the interests of the latter.
To make this as plain as possible: TrueCar is a “consumer service” that helps dealers maintain profit. So, there is absolutely no reason you should ever waste a moment of your time with TrueCar. At least, that’s how I personally saw it prior to last week, when I used TrueCar for the first time. Not that I wanted to use TrueCar, mind you. I just had no choice, because my mom made me use TrueCar.
Maybe that’s overstating the case. My mom didn’t come to my house and make me use TrueCar for the purchase of my new truck. For the purpose of keeping a tight focus on the numbers and not on the vehicle, I’m going to make up a name for my new truck, and that name will be “Canyonero Half-Ton 4×4 Bill Blass Edition.” But my mom did talk me into joining USAA several years ago, and my overall positive experience with the company led me to select them as my lender of choice for my Canyonero purchase.
I was impressed by the speed with which USAA qualified me for a rather outrageous auto loan. If I had known how easy it was to get loans like that approved at 11:45 p.m. on a Friday night via the Internet, I would have just gone ahead and bought a Viper last year when it was on my mind to do so. And the rate seemed… okay-ish. About 1 percent above what I figured I could have gotten from a plain old bank. But the convenience of dealing with USAA and my general dislike of common-carrier banks made me willing to accept that 1-percent bump. There was just one problem. In order to get the “discount” that made USAA’s rate a 1-percent bump instead of a 2–percent bump, I had to use the “USAA Car Buying Service,” which is another way of saying TrueCar.
Right there was when I should have cut bait and walked away. To begin with, there was exactly one Canyonero Half-Ton 4×4 Bill Blass Edition in central Ohio with the tow package and the Gigantor engine. I knew where it was and I’d gone to look at it already. The dealership in question was about 40 miles from my house, out near the BMX track where I met my first real girlfriend way back in 1986. The sticker price of the Canyonero was $58,500, give or take a couple of bucks. The dealership had an “Internet Sale Price” advertised: $51,800 or so. I was pretty sure I could knock a couple of bucks off that without TrueCar’s help. And looking at the USAA/TrueCar site didn’t assuage my concerns. I had to “build a vehicle” with them and give them my home ZIP code.
So I built exactly the Canyonero I wanted and gave them the zip code of my high school girlfriend, which was also the ZIP code of the one dealership in central Ohio with the right truck. Approximately three minutes later, TrueCar came back with two dealerships that didn’t have anything close to the truck I wanted, plus the correct dealership. They sent me a certificate. I was told to print out this certificate and have the dealership sign it — otherwise, I wouldn’t get my massive TrueCar discount. Which was…
wait for it…
Compared to the $6,700 the dealership was willing to offer me just for being a member of the highly select and exclusive group known as “The Internet,” $3,877 seemed a little soft. But wait! Maybe that doesn’t include rebates, which were included in the Internet Price. No such luck. The TrueCar certificate broke down my savings: $1,500 in rebates and $2,377 in Guaranteed Dealer Discount.
So what’s the point of using TrueCar? Well, from TrueCar’s perspective, the point is that the dealer will pay them if you buy the car using their certificate. But while that’s very helpful to TrueCar and its recovering Aston-addict founder, it doesn’t do much for me. You could also argue that a $3,877 bird in the hand via a “guaranteed certificate” is better than a $6,700 savings on a website. After all, the dealer can always change the deal on you. I suppose that if you are an utterly feckless individual whose tolerance for confrontation is limited to shuffling into a dealership and staring at the floor while you hold the certificate in front of you with both hands, then maybe it’s worth giving away almost three thousand dollars. As for me, however, I’m dirt-poor trash from Ohio and out here in flyover country we don’t have emotional support animals or coffee shops named after fonts or people who cuddle for money and we damn sure don’t just hand over three Gs when there’s no reason for handin’ it over, you hear?
Unfortunately for me, there was a reason for handing it over: I wanted to deal with USAA for my loan. But as I sat there and added up the cost of the extra interest plus the TrueCar “deal,” I started to feel like Lando Calrissian when he finds out that Princess Leia doesn’t get to stick around and stay with him among the clouds. This deal was getting worse all the time!
This is what I did: I took the hybrid approach. I worked my deal on the truck without discussing financing. (That’s always a good idea, even if your credit score is lower than the crank horsepower rating of a 2013 Corvette Z06.) Then I walked in and talked to the F&I guy. I explained that I wanted to get the USAA rate and that I was willing to pay him TrueCar’s markup over and above the deal I’d just worked. I was totally satisfied with this, and so was he.
There was just one dissenting voice in the room: my eight-year-old son. Since he really likes math, I’d involved him in all aspects of the purchase, along with giving him strict instructions not to tell his mother that I was just wandering into a dealership and buying a $59,000 truck on a whim. I don’t like getting the calls that start with, “Your son just told me you bought a new (PRS guitar/titanium 29er/bright-green literbike/Brioni sportcoat/extra box of fries at Burger King),” because I dimly sense they are bad for my future ability to complain about college tuition. It’s also important to get him in the habit of not telling women every little thing that comes into his mind, and I’m sorry to say that but it’s true. Anyway, he was satisfied with the deal on the truck but he couldn’t understand why I was willing to pay more money just to deal with USAA. The total cost of doing so was about $1,950 once we added it all up. “You should just do the cheapest thing,” he said.
“You have time to run a loan for me?” I asked the F&I guy. “Make sure you mark it up a bit since we just wasted twenty minutes talking about this TrueCar crap.”
“Happy to do it!” he chirped. “I can save you… twenty-six dollars a month.” Done. Just about fifty minutes after we walked into the dealership, we left with my new Canyonero Half-Ton 4×4 Bill Blass Edition. It turns out my new auto loan provider is also my mortgage bank, so I don’t even have to set up another account. On the drive home, I had to laugh a bit. I’d gone in with a plan to “use the Internet to my advantage” in the modern car-buying sense. I’d gotten my loan done up front. I’d sold my wife’s Tahoe over e-mail instead of trading it in. And I had a “guaranteed price” from an Internet disruptor. In the end, however, I wound up cutting my own deal and using the dealership’s paper, just like people did in 1995, 1975, or even 1955. The only thing that got “disrupted” was my time and effort. Maybe I should go to counseling over it.
In the meantime, however, here’s some counseling for all the buyers out there: You probably don’t need to pay TrueCar anything if you want a decent price on a new car. That advice is free — and unlike TrueCar, it might save you a few bucks.