Consumer Reports: The Christmas gift that might keep on taking

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We've all seen those TV ads where happy couples wow each other with the holiday gift of a 5,000-pound, $50,000, red ribbon-wrapped luxury vehicle, notes Consumer Reports.

To be sure, a brand-new set of wheels is the holiday fantasy gift for some Americans. But does it ever really make sense to gift a car?

"These holiday sales events are not really about people buying cars for loved ones," says Ian Beavis, chief strategy officer at automotive marketing consultants AMCI. "The bows or gift imagery are all devices to aid memorability in a very cluttered TV environment."

If you're thinking of giving a gift that goes "vroom," December is the month for it. That's when consumers have the most bargaining leverage at the dealership, according to TrueCar data. Among 2012 to 2014 sales transactions, December had the largest average discount off the manufacturer's suggested retail price, at 7.5 percent, according to TrueCar.

"Last December was absolutely the best month of the year for deals," says TrueCar spokesman Alan Ohnsman.

Think first

With that in mind, let's say you have your heart set on giving a car as a holiday gift. How will that gift go over? First, consider who is on the receiving end. As the snowflake-sprinkled commercials might suggest, the most common gift is most likely from one spouse to another, or from a parent to a child. Give outside of the immediate family, and, in most states, the recipient will have to pay sales tax on it — anywhere from 2 to 12 percent.

"If it's between in-laws or friends, it might be easier to just give them a check," says Seung Min Yu, an automotive analyst for Consumer Reports.

Then, of course, you need to make sure that it is the car of their dreams — not yours. Returning a gift of this size — if that's even possible — is more trouble than thinking of another gift. Choose wrong, and you and your loved one will be dealing with a very costly, long-term misunderstanding.

"A woman told me her husband gave her a car with a big bow on top for Christmas, just like the ads you see on TV," says Kit Yarrow, a consumer psychologist who teaches at Golden Gate University in San Francisco. "But unlike the scenes in the ads, she wasn't delighted by it. She felt cheated because she'd had no say in picking out the car, and it was really a family purchase, rather than a gift specifically for her."

The more practical, if less romantic, move is to take Yu's advice. Write a check to help with the down payment, promise to ride shotgun during the test drives and point your loved one in the direction of a good deal.

Incentives

Certain brands, including Hyundai, offer matching incentives to those with "social spending" dollars gifted from friends and relatives. And if you have a college kid on your gifting list, you can urge him or her to enroll in the GM College Discount program. Details on the General Motors program are at gmcollegediscount.com. Other brands have student discounts as well.

Like depositing a puppy on a doorstep, leaving a car in the driveway really can be a gift that keeps on taking. In the case of the woman mentioned, "They also have shared family finances, so they are now making monthly payments on a car that they both drive," Yarrow says. "Some Christmas gift!"

In addition to monthly payments, Consumer Reports points out, considerations include insurance and registration -- not to mention gas. So perhaps the first step is to make sure the recipient's pockets are deep enough to fit more than just keys. That way, you'll avoid giving them a December to remember -- for the wrong reasons.

For more information, visit ConsumerReports.org.


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