Monday, January 20, 2020

Florida Car Dealers BOGUS Option to Purchase Your Leased Car

As a consumer advocate for auto buyers and Lessees, one of my most frequent complaints is that the car dealer added their hidden fees (aka dealer fees) to the lessee’s option to purchase price granted by the lessor in the lease contract. Below is the verbiage in a typical auto lease contract:

"PURCHASE OPTION AT END OF LEASE TERM. You have the option to purchase the Vehicle “AS IS” at the scheduled termination of this Lease, provided all sums due under this Lease have been paid by you and you notify us 15 days prior to the scheduled termination of this Lease. The price you pay will be the Residual Value (see Section 10) PLUS a purchase option fee in the amount set forth in Section 23. You will owe any official fees and taxes, documentary fees, tag or title transfer charge or fees, or other amounts charged in connection with the purchase of the Vehicle."

When you lease your new car, the salesman tells you that you have the option to purchase that car at the end of the lease. This option price is the “residual value” which is the estimated WHOLESALE value of the car at the end of the lease. Leasing companies also add a fee to this amount, typically about $350, which they say is to cover their costs of allowing you the option. It’s just more profit to the leasing company like their “lease inception fee” and “lease disposition fee”. But the good news is that this phony fee is disclosed (albeit in the fine print).

What is NOT disclosed is the added profit to the car dealer when you turn in your leased car and purchase it back from the leasing company. All car dealers in Florida (except my dealership) add as much as they want to your contractually guaranteed purchase option price. Dealers will tell you that they are adding their dealer fees, which Florida law allows; But they don’t tell you that Florida law requires this added dealer profit be INCLUDED IN THE ADVERTISED PRICE. The only indication of the price of your purchase option is shown in your lease contract and there is no mention of hidden dealer fees. In Florida, there is no limit to the size of a dealer fee, the number of dealer fees, or what the car dealer chooses to NAME his dealer fees. I know car dealers in Florida that charge more than $2,000 in dealer fees and they will add that to your lease purchase option.

I’m not an attorney, but I do have a Juris Doctor degree (JD) from the “Legal School of Hard Knocks”. I know that car dealers are agents for the leasing companies, especially when the leasing companies are owned by the car’s manufacturer. As an agent for the leasing company, dealers have a responsibility to fulfill the intended terms of the lease contract. I also know that under Common Law, all contracts must be entered in GOOD FAITH. It isn’t good faith to surprise the lessee with a $1,000+ added profit to the car dealer.

My advice to you if you’re anticipating buying your leased car, is to check with other dealers of your make to find out if one might consider waiving their dealer fees. Speak to the “higher ups” in the dealership and the leasing companies. They know what they’re doing is wrong and might waive the dealer fees. As a last resort, consult with a real attorney and ask his opinion. I believe that this practice represents a great opportunity for a class action suit against Florida car dealers and leasing companies. If you’re planning on leasing a car, make it part of the “deal” that, should you desire to exercise your lease option, you will not be charged dealer fees. The dealership will agree to that “in a heart-beat” to lease you a new car.

Tuesday, January 14, 2020

Car Dealers Can Fool Some of the People All of the Time

Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.

However, it doesn’t work that way with unethical car dealers and uninformed car buyers. It’s always been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or act with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.

I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about 17 years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you must do is read some of the car ads online, direct mail, or the newspapers. To the educated, sophisticated buyer, these ads are actually funny, if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.

There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor” …let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they must go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car salesman.

My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.



Monday, January 06, 2020

Auto Manufacturers Mandate Dealers to Advertise Higher Prices

Honda was the first auto manufacturer to require their dealers to advertise prices above dealer invoice; in fact, they’ve been requiring this for over thirty years. The industry name for this is Minimum Advertised Price (MAP). This might sound like a good idea if you don’t understand what a car dealer’s invoice truly is and is not. It is NOT the true cost of the vehicle sold to the dealer by the manufacturer. The dealer invoice contains up to several thousands of dollars in profit to the dealer. The manufacturer intentionally hides various sums of money in the dealer invoice that are kicked back to the car dealer at the end of the month, quarter, or year. These amounts go by various names like holdback (typically 2% or 3% of MSRP), advertising, dealer incentives, floorplan interest incentive, and monthly-quarterly-annual incentive bonuses.

Brands with voluntary MAP pricing policies include Subaru, Honda, Acura, Nissan, Infiniti, Toyota, Mazda, and Mercedes-Benz. Interestingly, GM has a MAP pricing policy for its Chevy Performance Parts line, but not its car brands, which are Chevrolet, Buick, Cadillac, and GMC. Historically, for most car dealers, more than half of the vehicles they sell are sold for below invoice. This fact is based on supply and demand. Having a rule that a vehicle must be advertised for more than the average expected markup, simply means that the dealer cannot advertise a competitive price.

When, for many years, Honda was the only manufacturer that required their dealers to advertise higher prices, Honda dealers were the envy of the industry. Dealers of all other makes wished that their manufacturers would invoke the same rule. The reason was that setting a floor on how low advertised prices could be raised their profit margins on Hondas far above the average profit margins on almost all other makes (except luxury cars like Mercedes and BMW).

The manufacturers’ official reason for this rule is to prevent their dealers from advertising prices lower than they will sell the car for. In other words, bait and switch advertising. This sounds like a good and noble reason, but the facts are that bait, and switch advertising exists as prevalently today as it did before the rules for Minimum Advertised Price (MAP) advertised were established. What this rule accomplishes is to decrease price competition between car dealers which has the predictable consequence of increasing the price paid by the consumer.

All the manufacturers have data available to them which compares the advertised prices with the actual transaction prices. They used this data as their reason for MAP; I don’t have access to this data, but I’d bet that there has been no narrowing in the discrepancy between the advertised prices and actual transaction prices since MAP was introduced.

What this all means to you, the car buyer, is that you cannot trust advertising by either the auto manufacturers or dealers. My advice to you is to totally ignore all car dealer and auto manufacturer price advertising. They both are stacking the deck against you in their advertising. The best way to get the lowest price on a new vehicle is by shopping and comparing several dealers’ OUT-THE-DOOR price. An out-the-door price is the price you can write a check for and drive the car home…no hidden fees and no extra charges for dealer installed accessories.

Friday, December 20, 2019

2020 New Year’s Resolutions for Florida Car Dealers

This blog is addressed to Florida’s car dealers, as well as those in the other 49 states. I don’t expect most of you to take these suggested resolutions in the spirit in which they’re intended, but I hope some of you will.

I’m a car dealer and I’ve been in business longer that most of you, since 1968. I began as a Pontiac dealer in West Palm Beach, and I did business back then just about the same way you do business today. I advertised cars for less than I knew I could, or would, sell them for. I added hidden fees to the prices I quoted my customers. I added overpriced accessories to my cars like undercoating and paint sealant. I negotiated the highest prices I could with those least capable of understanding how to get the best price. I even rewarded my salesmen when they made a profit of $4,000 or more on some unsuspecting, defenseless customer…a $500 bonus in addition to a $1,000 commission and his name on our revered SLAM DUNK BOARD. Bear in mind that I would also sell cars to smart, sophisticated negotiators for $100 profit of even less. This way of selling cars is unfair, immoral, and unethical. It took me a long time to figure this out.

When the Internet and World Wide Web became a reality in 1990, who could have guessed that it would change the world more than any invention in the past. What has transpired from this spark at the end of the 20th century, is the KNOWLEDGE EXPL0SION of the 21st century. With Big Data, Artificial Intelligence, and Quantum Computing giving us tools like Google, Apple, Facebook, Amazon and Netflix, the sum-total of human knowledge is doubling in less than every 12 hours. I was born in 1940 when human knowledge was estimated to be doubling every 12 years. The bottom line is that everybody is getting a lot smarter, especially the consumer. If car dealers want to survive, you must begin dealing intelligently with their customers. Before you know it, you won’t have any more customers you can deceive into buying cars they don’t want and paying higher prices than they should. 

1. Display your lowest price on every new and used vehicle you sell.

2. Add no hidden, bogus fees to your quoted or advertised price.

3. Never pre-install dealer accessories to your vehicles, especially if they’re not included in the advertised or quoted price.

4. Don’t deprive your prospective customers of their American, inalienable right to shop and compare your lowest price with the competition. Capitalism, competition, and the free market place are American attributes which make our country the greatest on the Planet.

5. Do not switch a customer that wants to buy a car to leasing because you can make a lot more money leasing. If leasing is the best alternative for your customer, your profit should be equal on the buy or the lease.

6. If your customer wants to finance his car with you, offer him a fair, competitive interest rate. Offer to sell him “products” like extended warranties, maintenance contracts, GAP insurance, road hazard insurance, and emergency road service only with thorough disclosure of real cost and benefits. Never add anything to the finance contract that the customer does not know about or understand. Never say or imply that the lender requires that he buy an extended warranty or any other product.

7. Never sell a used vehicle with an unfixed dangerous recall. Most car dealers are doing this today, wantonly, and in most cases not even disclosing the recall. Some of these recalls have no fix available.

8. Never display conditions that increase the real price of the advertised vehicle in the unreadable fine print of your advertisements. All car dealers do this and so do their manufacturers. Where is the honesty and transparency in advertising a new car that you can supposedly lease for $299 per month when the unreadable fine print requires a $5,000 down payment?

9. Don’t falsely give hope to prospective customers with bad credit by understating the conditions that they must meet to obtain financing. For example: “ANY CREDIT APPLICATION ACCEPTED” or “WE FINANCE GOOD PEOPLE WITH BAD CREDIT”.

10. Don’t trick customers into believing that you will pay off all the money owed on their current purchased or leased car and sell or lease them a new one…” WE’LL PAY OFF THE MONEY YOU OWE ON YOUR PRESENT CAR, NO MATTER HOW MUCH IT IS”. More and more car drivers owe more on their cars than they’re worth…often many thousands of dollars. You’re tricking them into thinking you are paying off their old loans, when the truth is, you’re adding what you paid the bank to the price of the new car you sell or lease them.

Monday, December 16, 2019

Open Letter To: Governor Ron Desantis, Florida House Speaker Jose Oliva, Florida Senate President Bill Galvano, Attorney General Ashley Moody

Subject: Enforce Florida Statute 501.976 (16);

Dear Ron, Jose, Bill, and Ashley,

You may know of me, I’ve been an auto dealer in Palm Beach County for over half a century. I currently own a Toyota dealership in North Palm Beach/Lake Park, but I’m more known for my activities as a consumer advocate for car buyers. You can Google me and learn about my platforms…radio show, blog, newspaper columns, book, and public speaking.

I’ve been mystery shopping car dealers weekly for more than 17 years. I’ve learned that very few car dealers in Florida are abiding by the Florida law requiring them to include all profits and costs to the dealers in their advertised prices. Last week, for example, I mystery shopped H Greg in West Palm Beach, part of a 20-dealership chain. Their online advertised price excluded $1,298 in hidden fees. You can access this shopping report and hundreds more just like it by going to my I estimate that the dealers in Florida that abide by this law to be less than 1%.

Because of the lack of enforcement of this law, dealers have been emboldened, and they have become more aggressive and ingenious in their ways to profit by deceiving the car-buyers in their advertising. You should know that Florida has the least regulated hidden fee laws in the USA. No other state allows car dealers to charge as much as they want, NO CAP, in hidden fees, name the hidden fee anything they want (tag agency fee, electronic filing fee, doc fee), and Florida dealers can charge as many different hidden fees as they like. Two or three fees is common place.

Governor Desantis, Speaker Oliva, President Galvano, and General Moody, you were elected by the voters (who are also the car-buyers) of Florida because they believed that you would uphold your oath of office and enforce our laws. When they voted you in office, they believed that you would be concerned about their ability and right to respond to car dealers’ advertising without fear of being tricked into paying car dealers thousands of dollars more than the advertised price.

I’m very much aware that car dealers are an important part of Florida’s economy and employ thousands of Floridians. Dealers’ profitability is a valid concern and I know that the Florida Auto Dealers Association and most individual car dealers supported your elections. However, the good things that car dealers do for Florida’s economy and providing jobs don’t grant them immunity from its laws.

I’m inviting each of you to appear on, or call into my radio show, Earl on Cars, any Saturday morning, 8-10 am. You may call me anytime on my persona cell phone 561 358-1474 to set up a date and time.


Earl Stewart

Recovering Car Dealer

Monday, December 09, 2019

How to Get the Lowest Price on Any New Toyota from Any Toyota Dealer

My Toyota dealership in North Palm Beach, Florida may be the only car dealership on the Planet that posts online its lowest out-the-door price, on all new and used cars.

If you doubt my word on this, ask yourself when a car dealer has quoted you a price that you can take home and shop and compare with other car dealers’ prices that represents the total out-the-door price of the car you want to buy . By the way, the definition of an out the door price is one that you can write a check for, hand it to the salesman, and get in your car and drive home. There can be no extra charges for dealer installed accessories or hidden fees, also known as Dealer Fee‘s. My guess is that your answer to this question is you’ve never had an out the door price quoted you by a car dealer (that he would honor).

FYI, this article is not an advertisement or commercial to try to sell you a new reaches readers all over the United States and the world, as do my newspaper columns, podcasts, Twitter and YouTubes. The odds that you live close enough to my dealership to be able to buy a car from me are very slim.

What I’m giving you in this article is the way to find a very low, out-the-door price on any new Toyota that you might want to purchase from any Toyota dealer anywhere. Here’s a link to the out-the-door price on a new Toyota RAV4, The out-the-door price is $27,927. You write me a check for that price and take the car home. There are no hidden fees and dealer installed accessories (like nitrogen in tires and paint sealant). You can click on my website,, and get out the door prices on every new Toyota model (and all used cars too).

Remember, I’M NOT TRYING TO SELL YOU A TOYOTA. This article is to empower you with something you already have for buying all other retail products, except cars. By showing another Toyota dealership my lowest price on the new Toyota of your choice, he has no honest choice (if he wants your business) but to match or beat my price. However, he has lots of dishonest choices and PLEASE EXPECT THE DEALER TO TRY THEM. The most obvious choice is to lie about matching my out-the-door price and add hidden fees and dealer installed accessories. The dealer can also attempt to undervalue your trade-in allowance. If you’re financing the car with the dealer (usually a bad idea), he’ll make over $1,000 in the financing. If none of these tricks work, he’ll try desperately to switch you to a different vehicle so that you can’t compare prices. If all the above fails, he may, in total frustration, tell you that “Earl Stewart won’t really sell you the car at that price”. Or, another favorite is “Earl Stewart really charges hidden fees, but he hides them in the price of the car!”. I laugh every time I hear that one. 😊

I’ll not only sell you any car at my out-the-door price, but I’ll sell everyone (even the dealer that’s saying I won’t) at that price. The most important thing is that the prices are my lowest prices and I will not sell any car for 1 penny less to anybody…not the Governor of Florida, President of the USA, or Queen of England. If did cut my price for certain people, I wouldn’t be true to my word that my prices are my LOWEST prices. Just because the prices are my lowest prices doesn’t mean another dealer can’t sell you the same car for less. They can, but they just don’t want to. I’ve never advertised (like most other dealers) “Nobody will sell you a new Toyota for less!”. Of course, they will! If you force them to, they don’t have a choice. All car dealers are insanely competitive and they’d rather make a small profit (or even no profit) instead of lose a deal to Earl Stewart or any other Toyota dealer.

If the Toyota dealership that you’re buying from doubts my claim, please ask the dealer (or salesman) to feel free to call me on my personal cell phone, 561 358-1474. I’m sure I’ll be able to convince them; if not, I’ll put it in writing and have it notarized.

Good luck and I’d love to hear back from any Toyota buyers in the USA* that give this a try.

*If you’re buying a new Toyota outside of the Southeast USA (Florida, Georgia, Alabama, North Carolina, South Carolina), take into consideration that all other Toyotas have an average cost of about $775 less. This is because Toyotas in the Southeast USA have an average of $775 added to the cost by the independent Toyota Distributor that resells new Toyotas to me and all other Southeast Toyota dealerships.

Monday, December 02, 2019

COMPETITION: Car Dealers’ Achilles’ Heal

The retail and wholesale auto industries are highly competitive. Toyota desperately wants to outsell Honda, Chevy desperately wants to outsell Ford, and Mercedes desperately wants to outsell BMW. The auto manufacturers “live and die on the 30-day sales cycle, month to month. This desperation is passed along to the retailers of their products, the car dealers. Car dealers have short term contracts (franchises) with their manufacturers, typically 6 years. If a car dealer doesn’t meet his performance goal in the number of new vehicle sales, his franchise can be canceled. This literally puts him out of business and the millions of dollars he has invested in his buildings, land, equipment, and inventories can virtually vanish.

The auto manufactures assign quotas to their dealers. These quotas are based on intensive market studies of the geographic areas surrounding each of their dealers. The manufacturer tells each of their dealers the minimum number of new cars he must sell each month. If he falls short, his existence as a car dealer is in danger. The dealer must sell his assigned number and percent of vehicles sold within his market area. These market areas vary but are typically about a 20-mile radius from the dealership. Within that radius are representatives of most other makes of cars and the same make as the dealer’s, because markets usually overlap.

The major competition to the auto manufacturer is different from the major competition to the auto dealer. A Mercedes dealer is far more likely to lose a sale to another Mercedes dealer than to a BMW dealer. The Mercedes manufacturer doesn’t care which Mercedes dealer sells the customer; the manufacturer is worried about BMW, Infinity, and Audi dealers. Thanks to the Internet and the information explosion, most car buyers today have decided which make car they’re going to buy before they enter a car dealership. When the customer visits Mercedes dealership A and leaves without buying, that customer is probably going to buy a Mercedes from Mercedes dealership B or C.

Now you’re beginning to understand why car dealers’ desperate competitiveness is your friend when buying a new vehicle. Car dealers pass along the quota assigned to him to his sales managers and salespeople. A manager that doesn’t hit his quota loses his job just as does a salesman that doesn’t sell a certain minimum number of cars per month. Adding to this desperation is that EVERYBODY in the auto industry is paid on commission. Mercedes management, from the CEO all the way down is paid on performance. The car dealer is paid by profits, not salary, and sales managers and salespeople are paid a commission based on profit on each car.

As hard as this may be to understand or believe, car dealers will sometimes sell cars at a loss in order to not lose a sale. Your awareness of this desperation is your “ace in the hole” when buying a new vehicle. By “working” at least 3 car dealerships against each other, you can buy your new car at the lowest possible price. Unfortunately, this is easier said than done. It’s not for the timid or faint of heart. You’re going up against seasoned professional salespeople and their managers. You’re playing in their “game” that they play day in and day out.

Here are a few simple rules that, if followed to the letter, will result in your buying your next new vehicles at the lowest price possible:
  1. Choose the exact make-year-model vehicle you will buy and the exact accessories. Do not change your mind after you begin gathering competivive prices. Car dealers’ favorite tactic is to “switch” you to a different vehicle from the one you initially planned to buy.                           
  2. Make your lease or buy decision before you begin shopping and stick with your choice. Car dealers’ second favorite tactic is to switch buyers to leasing. This greatly enhances their profits and makes it more difficult to be compared to their competition.                                                   
  3. Insist on an out-the-door price from each dealership. This will be your most difficult task. An out-the-door price, strictly speaking, is the amount of money you pay the dealer permitting you to drive the new vehicle home. It’s acceptable to be quoted the full price with only government fees of sales tax and license and registration added. Be clear that you will not pay for any dealer installed accessories not installed and included in the current price. Also you will not pay for non-government fees aka “taxable fees”. Here are links to my two blogs that will assist you in this most difficult task. and