The Truth Behind Earning a Free Car with Monat

Multi-level marketing (MLM) companies are businesses in which distributors make money selling a product, but they also make money recruiting new distributors. In order to recruit new members, current distributors make posts about the “business opportunity” and tout claims about the potential that one can reach if they choose to join.

It’s basic marketing: show the value and the people will come. However, unlike a standard job, due to FTC regulation members of these businesses are prohibited from making direct income claims. Nonetheless, the dreams of luxury and success are sold in other ways.

There are many markers people use to judge the financial success of others: if someone is wearing a fancy watch or purse, if they always have the latest phone or tech accessory. You don’t know how much money these people make, but based on their lifestyle, you can often make a guess.

For the MLM company Monat, a tool in their luxury playbook is the ability for distributors to “earn a free car” through the Monat Motor Club. Distributors at their highest levels drive Cadillacs that are “paid for by Monat”. By searching the #monatmotorclub on Instagram, you can see posts of distributors who have earned their car, or are dreaming about earning the car, boasting about the Monat opportunity. The message is clear: if you join, you too can reach financial success and drive your own luxury car.

Let’s dissect this program and discuss what is required to earn the car and whether or not this is achievable or even financially smart for the qualifying distributors.

In order to qualify for the Monat Motor Club, a distributor has to reach the level of Market Mentor or higher. As of 2020, the level of Market Mentor accounted for .27% of all distributors with only .14% of all distributors in ranks above.

This means that less than half of a percent of distributors are eligible to receive the car bonus.

Let’s assume you beat the odds. After you reach the level, does Monat give you a car? Not exactly. In fact, Monat isn’t a part of the legal car buying process. Individual distributors seek out a dealership and must be approved for and sign a lease or purchase agreement with a dealership or financial institution. After meeting the rank qualifications and showing proof of the purchase or lease of a vehicle that meets Monat’s guidelines, Monat will give the distributor a monthly bonus based on their rank to assist in paying for the car.

If the distributor drops rank they are permitted two non-consecutive grace months within the calendar year but must regain their Market Mentor rank to be paid again. However, the car is in their name and they are still responsible for the payment according to their lender’s terms.

Monat is not personally giving or loaning a car out. Monat is providing an incentive to purchase a luxury vehicle through a monthly bonus dependent on the distributor remaining in the company and keeping their rank.

We’ve established that few distributors are eligible to receive the car and the car is actually a personal financial risk and responsibility, not a free handout. But there’s another question.

Once a distributor achieves this level, should they buy the car?

Even at the level of Market Mentor, some distributors likely aren’t making enough to qualify for the car loan on their own or at least with just their Monat income. According to CarsDirect, subprime auto lenders require signers to make at least $1,500 to $2,000 a month. That’s $18,000 to $24,000 a year. The minimum amount a Market Mentor in Monat made in 2020 was less than $10,000 and the average was $38,000. The median is less than the average, at $33,000, meaning that more than half of distributors at this level make below the average of $38,000.

These income numbers don’t take into account fees, the purchase of the product, or other expenses the distributor may have and their car bonus doesn’t include maintenance, insurance, or other costly parts of owning a car.

For distributors, this financial risk is something that should be heavily considered. Monat does provide options for distributors to choose to purchase used cars or lease a car. There are also no restrictions on what model the car must be. This provides distributors some financial flexibility, but the purchase is nonetheless expensive and Monat acknowledges that it shouldn’t be taken lightly.

If you see a post from a Monat distributor boasting about their new car, here are three things that as a consumer, or another Monat distributor, you should be aware of.

1. A minimum wage job in the US, $7.25 an hour, would earn someone $15,000 dollars annually. The proposed minimum wage of $15 dollars would still only yield $31,000 annually, only $2,000 less than the median earnings of a Market Mentor. This means that the Monat distributor that drives the Cadillac may be making less money through Monat than someone working the lowest hourly paying job at Target.

2. According to the Consumer Awareness Institute, 99 percent of MLM sellers lose money. The likelihood for you to reach the rank of these high-level distributors is minimal, but the chance that you will lose money trying is high.

3. Nothing is guaranteed. The car lease or loan is in the name of the distributor and they alone are responsible for the payment. If a distributor loses rank (which happens often in MLM companies), the company shuts down, or Monat decides to change the terms of their car program, the individual distributor is still accountable for the car payment.

This article was originally posted on Medium. https://medium.com/@murialbezanson/the-truth-behind-earning-a-free-car-with-monat-fa3e0fec15a