Monday, August 03, 2020

COVID-19 FEE!

CAR DEALERS NEWEST HIDDEN FEE?
I knew it was bound to happen. It was only a question of when. In Monday’s USA Today, there’s an article on businesses using the pandemic as an excuse to secretly raise prices. One example is an airline that charged a passenger $1,150 when their customer was forced (Europe banned American travelers) to cancel because of the pandemic. A restaurant/Sports Bar in Miami, New Wave Billiards, is adding 3% to customers’’ checks, called a COVID-19 Fee. A beauty salon in Michigan is adding a 4% “safety fee”. The article didn’t mention any car dealers, but I can guarantee you that this is probably happening now and many more dealers (especially in Florida) will jump onto the bandwagon.

Some argue that if businesses incur additional costs, they’re justified in passing these costs along to their customers. Afterall, a business must make a profit, and can only do so by charging the customer more than its total expenses. The “fly in this ointment” is that these fees are HIDDEN and not included in the advertised or quoted prices.

Say your shopping for a new 2020 Honda Accord Sedan LX, and you see an advertised price of $22,994 from dealer A, $23,750 from Dealer B, and $24,249 from dealer C. To the unsuspecting car buyer this is a “no-brainer”; He’s going to buy his new Honda from Dealer A. What you don’t know from the advertisement is that Dealer A has 3,000 in hidden fees, Dealer B has 1,500 and Dealer C has only $500. Dealer C, with the highest advertised price, has the lowest out-the-door price, $24,749.

This should make you understand the biggest problem car buyers in Florida (and many other states) have…THE DEALER WITH THE HIGEST HIDDEN FEES CAN ADVERTISE THE LOWEST PRICE. In Florida there’s no cap/limit on the number or the amount dealer fees. There’s also no regulation on what car dealers canname their hidden fees. They typically choose names to trick those few who discover the fees that look like government fees…tag agency fee, Doc fee, e-filing fee. One of latest hidden fee name popular among dealers is “Taxable Fees”. A real government fee is not taxable; sales tax must be paid on phony hidden fees. Now, beware of the COVID-19 fee.

There are laws on the books in Florida that require that the added fees be included in the advertised price (Florida Statute 501.976 (18), but that law is ignored by almost every car dealer because there’s no enforcement of the law by our Attorney General, Ashley Moody or any other regulator. There are also disclosure laws which require dealers to add this language to the vehicle buyer’s order to the effect that the fees represent “costs and profit to the dealer”, but this language is hidden in the fine print and the reams of paperwork signed by car buyers in the finance office. Furthermore, dealers typically disclose only some of their hidden fees.

If there were a concerted effort to crack know on the dealers it could have a powerful effect. There are many dealers who would rather not have to resort to deceptive advertising but feel they must out of “self-defense”. If a Toyota dealer’s nearest competitor charges $1,200 in hidden fees and he doesn’t, that dealer can advertise prices substantially lower. If Florida Attorney General Ashley Moody were to enforce Florida Statute 501.976 and require dealers to include all taxable fees in the advertised and quoted prices, you the consumer would have an easy time of buying your next car at the best price.

If you agree with me, please take a few minutes to call Florida Attorney General Ashley Moody at 850 414-3300 and ask her to please enforce Florida Statute 501.976 (18) that requires car dealers to include their fees in the advertised prices. Virtually no car dealer in Florida complies with this law. You can tell Ashley Moody that all she must do to verify my allegations is click on any online car dealer advertisement and check. She’ll find that some car dealers will mention the amount of some of their dealer fees in the fine print, some will simply say plus dealer fees (or some other name) and no mention of the amount, and some will not mention the fees at all. NONE of them will actually include the amount of all their dealer fees in the advertised price.

Monday, July 27, 2020

DON’T BUY A NEW CAR Used Cars Are Better Than New Cars!


No, I’m not joking; I’m serious. This didn’t used to be the case. When I started in the auto business in 1968, buying a used car was only for folks who couldn’t afford to buy a new one.
 Back in the 20th Century, the reliability of new cars was so low (compared to today) that when their owners sold or traded them in, the used car was virtually “worn out”. Banks were reluctant to finance used cars. If a used car had been driven more than 50,000 miles, most conventional lenders wouldn’t consider it.  If they agreed to finance any used car, they limited the term to 12 or 24 months, required large down payments, and charged very high interest rates. The mileage on odometers was routinely rolled back to far less than the actual. There was no CarFax report to tell you the condition of used cars. Some of you will remember the old saying, “When you buy a used car, you’re buying somebody else’s troubles.”
Today, everything has flipflopped. New cars are extremely reliable. Manufacturers’ warranties are much longer. The quality, reliability, maintenance costs, and safety are exponentially better than before. You may have heard Honda’s slogan about their certified pre-owned vehicles, “The Best New Cars Make the Best Used”. A high-quality new car maintained according to the manufacturer’s recommendations can be driven more than 300,000 miles with low maintenance and safety, but most trade them in long before they’ve reached that mileage.  Today, many people buy new cars because of new styling, as status symbols, or because they still believe that used cars are too risky to buy. They trade in or sell their perfectly good used car and buy another new car. This affords you the opportunity to buy their trade-in at a bargain price. The new car they buy depreciates thousands of dollars the minute they drive it off the showroom floor. Used cars depreciate far slower.
If you’re looking for a better value and decide to buy a used car, just follow these basic guidelines.

  1. Research the best used cars with Consumer Reportswww.ConsumerReports.org. Their annual auto issue lists, not only the best used cars to buy, but lists the worst ones…the ones you should never buy.
  2. Consider buying your used car from CarMax, OffLease Only, or AutoNation. These are honest, transparent used car sellers that put their lowest price on every used car and their hidden fees are smaller than other dealers. The best site to look for that used car is www.AutoTrader.com.
  3. No matter where you buy your used car, insist on an out-the-door price. Do this research online and tell the salesman that your definition of an out-the-door price is “the amount you can write a check for, present it to the seller, and drive the car home.” Virtually all car dealers add hidden fees and unwanted accessories to their advertised and quoted prices. Getting an honest, out-the-door price will save you potentially THOUSANDS of dollars.
  4. Before you sign on the dotted line, take the vehicle to your independent mechanic for a complete check-over. This can cost $100 to $200 but it’s worth every penny. If the seller won’t allow you to do this…DON’T BUY THE CAR. They’ll often argue that their mechanic has rigorously inspected the car, but clearly this is not as reliable as your mechanic.
  5. Study a CarFax or AutoCheck report that should be provided to you by the seller. This prevents you from buying a car with a dangerous recall, one that’s been in a bad accident, or a flood. It also provides the maintenance record if it was service by dealer reporting to CarFax or AutoCheck. 

Monday, July 20, 2020

Maintaining and Repairing Your Car During the COVID-19 Pandemic


Virtually everything is changing during this crisis, including how you take care of required maintenance and repairs on your vehicle. If you own car that’s still under the manufacturer’s warranty, you’re required to have the recommended maintenance spelled out in your vehicle owner’s manual within certain time/mileage limits.  If not, you risk having your warranty being voided when lack of recommended maintenance is the cause. You also must be concerned about having safety items like tires and brakes inspected.  

Most manufacturers recommend maintenance every six months or 5,000 miles, whichever occurs first. Oil changes are recommended every year or 10,000 miles (synthetic oil now used in all late model cars) whichever occurs first.  

Vehicle sales are surprisingly strong when many other retail sales have fallen off.  This is because we feel safer in our cars. Your car is just about the only place to be safely outside your home, without having to wear your face mask. Most people won’t take a train, bus, Uber/taxi or fly, for fear of being infected. More and more of us are driving our cars to vacation spots. It’s natural that you want to have your car checked out before embarking on a long trip. Who wants to be stuck on the turnpike on Sunday night with a disabled vehicle? 

These are my tips on safely maintaining your vehicle. 

1. Be sure you read your owner’s manual so that you know what your responsibilities are to maintain your car under warranty. If you can’t find your owner’s manual; you can access it online.  

2. If you feel uncomfortable about bringing in your car for service, check to be sure the service department you use has taken all the proper precautions…All employees and customers must wear face masks, social distancing maintained with marks on the floor, hand sanitizer and handwashing basins quickly and easily accessible, plastic “sneeze shields separating you from those you’re dealing with, and daily deep disinfecting cleansing of all the areas you’ll be in.  

3. Check to be sure your car will be disinfected thoroughly before it’s returned to you. Some service departments offer an antimicrobial treatment which will protect your car from being re-infected for 30 days 

4. If you still feel uncomfortable about visiting an auto service department, ask if they offer pick up and delivery. A few are offering this at no charge if you’re not too far away, and most are offering this for a charge.  

5. Call the service department and explain that you feel uncomfortable about bringing your car in and ask for an extension of the time stated in your owner’s manual. Be sure you confirm in writing, email, text, or letter. Most car dealerships and manufacturers will be flexible…an extra 3 months for an oil change shouldn’t be a “big deal”.  

6. If you have a problem with your car while under warranty, report the problem to the dealer service manager immediately. Explain why you can’t bring your car in and ask that this complaint be noted in your service record. When you can bring the car in, most dealerships and manufacturers will still fix the problem under warranty at no charge. As always, be sure to confirm this in writing.  

7. Finally, remember that you are not required to have your car maintained at the dealership you bought it from, or even by a franchised car dealer. If you take it to an independent service department, be sure to keep the records proving you had the maintenance recommended in your owner’s manual done at the specified intervals.

Monday, July 13, 2020

Pandemics, Bad Credit, and Car Buying

Since the Covid-19 pandemic enveloped us, millions of Americans are either unemployed, furloughed, or working fewer hours for less pay. Banks and all lenders are raising their credit standards to buy vehicles. Lending institutions, themselves, are financially threatened by customers unable to make their car and home payments.

Almost counterintuitively, new and used car sales are surging back almost to pre-Covid times. Many car dealers have always taken advantage of buyers with bad credit. With millions more car buyers with bad credit, this danger to you is worse than ever before. People with bad credit can be desperate (and therefore careless) when buying a car. They’re more worried about having their financing approved than buying the right car at the best price. This allows car dealers to overcharge them for the car they want to sell. It also allows dealers to sell them the car that the dealer wants to sell, not the one the customer wants to buy.

Following are six rules to follow if you have low income, bad credit, or too little credit, and you need to buy a car:

  • Never assume that you have bad credit; you should check your own credit score which you can do free. Even if your credit score isn’t good, you should always check with your credit union and/or bank before you opt for dealer financing.

  • Choose the car that you want to buy and negotiate the best price before you let it be known that you have marginal credit. Almost every car dealer will try to get you to fill out a credit application before you even begin discussing the car you want to buy and the price. REFUSE to do this and tell the salesman that you have acceptable credit. By doing this you ensure that the dealer isn’t raising the price and steering you to the wrong car because you have bad credit. 

  • Car salesmen and finance managers can falsify your credit application that is sent to the bank. NEVER sign a credit application until it is completely filled out, and you’ve verified its accuracy. Be sure that you have a copy of the credit application before you accept delivery of your car. Falsifying credit is a federal crime, not to mention the fact that you’re probably paying far more for the car than you can afford. 

  • Choose the car that’s best for you, not the one the dealer “wants” to sell you. The dealer will choose a car that he “wants to get rid of”, one that he can’t sell to anybody else; and/or he’ll choose one with a higher loan value than the one you really want.

  • Verify that the car described to the lender has the same options and accessories as the one you’re buying. Dealers will sometime falsify additional optional equipment on the car that they’re asking the lender to finance. Adding fictitious options like sunroofs, navigation, sound systems, etc. tricks the lender into advancing more money than they should. This allows the dealer to sell you a higher priced car, increasing his profit. 

Lenders that specialize in people with bad credit are called “subprime lenders”. Car dealers even have separate finance people that specialize in subprime buyers. They’re called the “special finance” department. Subprime lenders often charge a fee to the dealer which can be as much as $2,500. This fee is not supposed to be paid by the buyer, because it would effectively increase the interest rate, probably above the usury law limits. Unfortunately, it’s commonly added to the price of the car. This is illegal, but it’s almost impossible to prove. By negotiating the best price on the car you want to buy BEFORE the dealer find out you have credit problems, it becomes obvious if the price is increased.

Monday, July 06, 2020

Car Dealers Have Blocked Your Right to Sue


Did you know that when you bought your last car that you agreed to waive your constitutional right to sue the car dealer who sold you the car and have your complaint heard in a court of law by a jury of your peers?

You probably did not, because an “arbitration clause” was hidden in the fine print of your contract that you signed. Even worse, you also are prohibited from even taking that car dealer to arbitration unless you write a “demand letter” first!

What is “arbitration” anyway?

The average person does not understand what arbitration is, much less know that they agreed to substitute this process for their right to sue when they bought their last car. Arbitration allows individuals that are employed by an arbitration company to decide who is right in a dispute, you or the car dealer. Professional arbiters can be retired judges or anyone that the arbitration company decides is qualified. Because car dealers use the arbitration company often and because car dealers determine the compensation to these companies, there is a good chance that the arbitrators are inclined to side with “the hand that feeds it”.

You can’t even file for arbitration unless you write a “demand letter” to the dealer which must contain specific information as prescribed by Florida statute 501.98. This is a summary of that law:

“Florida Statutes require that, at least 30 days before bringing any claim against a motor vehicle dealer for an unfair or deceptive trade practice, a consumer must provide the dealer with a written demand letter detailing the name, address, and telephone number of the consumer, the name and address of the dealer; a description of the facts that serve as the basis for the claim; the amount of damages; and copies of any documents in the possession of the consumer which relate to the claim. Such notice must be delivered by the United States Postal Service or by a nationally recognized carrier, return receipt requested, to the address where the subject vehicle was purchased or leased or where the subject transaction occurred, or an address at which the dealer regularly conducts business.” If you would like to read the detail of this law, you can access it online at https://www.flsenate.gov/Laws/Statutes/2013/501.98.

If you hire a lawyer because you believe a car dealer has taken advantage of you, you’re not eligible for reimbursement of any legal fees unless you have sent the demand letter exactly as described above. Therefore most lawyers are reluctant to assist you because they know that the fees they would normally be entitled to are at risk…both because of the arbitration requirement and the demand letter.


What I’ve described is just one more reason why you should be extremely careful when you buy or lease a car. In the back of our minds most of us believe that when we are doing business with a car dealer, or anybody else, if we are taken advantage of we have the right to sue to force the company to make things right. This is not true with 99.9% of car dealers. You should realize this and be even more careful when you purchase a car. Access my blog for articles on every facet of doing business with a car dealer. There are hundreds of articles accessible in the archives of www.EarlStewartOnCars.com. You will learn never to go car shopping alone, get all promises by the salesman in writing, spend at least two weeks researching the purchase of car, and always get at least 3 competitive bids on the car you’re buying, your trade-in, and your financing.

Monday, June 29, 2020

HOW TO BUY A CAR DURING A PANDEMIC

First, don’t buy a car now unless you must. New and used cars are in increasingly short supply, and this results in increased prices. Availability of models, options and color you prefer are limited and growing fewer. Favorable financing is increasingly difficult, because banks and credit unions are tightening due to the worsening economy. If you lease your car, the bank will probably extend your lease for a few months. Auto production is increasing, but it will be while before auto inventories rise to pre-pandemic levels.

If you feel you must buy a car, these are some rules you should follow:

Research your purchase online from the comfort and safety of your home before you venture out. The only reason to leave your home is to test drive the vehicle you’ve chosen. www.ConsumerReports.org,www.KBB.com, www.Edmunds.com, www.TrueCar.com are some very reputable sources of information for pricing, safety, reliability, and cost of maintenance. Communicate with the dealerships solely by phone, email, or text. When you select the dealership with the lowest price, (via competitive bidding) verify that this is the OUT-THE-DOOR price. The definition of an OUT-THE-DOOR price is the number you can write your check out for, get into your new car, and drive it home. DO NOT LET A CAR DEALER SURPRISE YOU BY ADDING HIDDEN FEES AND DEALER INSTALLED ACCESSORIES. 

If you’re going to finance your vehicle, pre-arrange this with your bank or credit union. Dealer financing is almost always more costly. The exception can be manufacturer’s financing, but their low rates (0% is not uncommon) requires excellent credit. Also, if you do have excellent credit, the manufacturer’s financing usually offers an alternative cash rebate which might be better than the 0%.
If you have a trade-in, get bids to buy it from several sources before you ask the dealer what he will offer.www.Carvana.com, www.WeBuyAnyCar.com, www.TrueCar.com, and www.CarMax.com are three reliable sources. Competing dealers selling the make of car you’ve chosen to buy will also make offers. Used cars are scarce now and dealers are actively buying cars directly from owners to stock their used car lots. If your dealer will match the best price you received, you should trade it in to him. Especially if your state (like Florida) allows you to reduce the sales taxed price by the trade-in allowance. 

Insist that the dealer bring the exact vehicle you’ve chosen to your home so that you can test-drive itbefore signing a finance contract or buyer’s order. The dealership should assure you that the person bringing the car to you is wearing a face mask, and that the vehicle has been RECENTLY DISINFECTED. You should make it an extensive test drive, not just “around the block”. Drive the car where and how you normally drive everyday…lower speeds and higher speeds on the same roads you normally travel on.

When you’re completely satisfied that the vehicle you’ve chosen drives the way you expected it to, arranged the best financing, received the highest price for your trade in, you’re almost reading to sign and present your check for the OUT-THE-DOOR price. The final step is to ask the dealer what the conditionsare that allow you to return the vehicle and get all of your money back, should you change your mind after you’ve signed the papers and/or given him your check? Some people believe that you have 72 hours to change your mind. THIS IS UNTRUE. Legally, when you sign on the dotted line you own the car and cannot return it for any reason. However, some dealers do offer you the right to return the vehicle for a period of days with certain CONDITIONS. More dealers have begun doing this during the pandemic, but be very sure you carefully read and understand all the CONDITIONS. Some typical conditions are “not a cash refund, but the right to exchange it for another vehicle”, mileage limitation, time limitation, and the car must be in same condition as when you took delivery. Most dealers offer no guarantee, but you should at least try to get something in writing before you take delivery. Some guarantee is better than none. The depreciation on a new car, once you’ve taken delivery, is ENORMOUS…thousands of dollars. If something happened that made it necessary for you to return a new car, it would cost you THOUSANDS.

I began this article by saying “don’t buy a car during this pandemic unless you have to. This is not something you should reveal to the dealers you’re getting prices some. You’ll always get a better price when the dealer thinks you don’t have to buy a car and could easily postpose your purchase.

Monday, June 15, 2020

CAR DEALERSHIPS ENDANGERING CUSTOMERS

MOST SALESPEOPLE ARE NOT WEARING FACE MASKS!

Regular readers of this column know that I mystery shop a South Florida car dealer every week. I’ve been doing this for over 17 years. You can access the archive of all my mystery shopping reports at www.EarlOnCars.com. I send my mystery shopper into a different car dealership each week and he or she pretends to buy or lease a new or used car. We report exactly what happened in the sales process, naming the dealership and the salespeople. From these reports we comprise two lists…” Recommended Car Dealerships” and NOT Recommended Car Dealerships.

In Florida and most states, car dealerships were ruled as “essential businesses” like grocery stores and pharmacies. They’re allowed to remain open during this pandemic. We continued the mystery shops during most of the pandemic with a brief hiatus when we quarantined ourselves, the “Earl on Cars” team, for 3 weeks. We’ve shoppednine car dealerships in just over the last two months and the salespeople in TWO THIRDS of the dealerships are NOT WEARING FACEMASKS.

The following 3 car dealership’s salespeople ARE wearing masks…Ed Morse Honda in Riviera Beach, Bev Smith Toyota in Ft. Pierce, Braman Honda in Greenacres/Lake Worth.

The following 6 car dealerships salespeople were NOT WEARING MASKS…HGreg Nissan in Delray, Sutherlin Nissan in Ft. Pierce, Advantage Ford in Stuart, Wallace Nissan in Stuart, Napleton Chrysler-Jeep-Dodge in North Palm Beach, and AutoNation Chevrolet in Greenacres/Lake Worth.
None of the 9 car dealerships we shopped required, or even asked or recommended, that their customers wear masks.

As of today, June 15, 2020, Florida is one of 5 RED STATES that has seen the Covid19 virus surge, after pandemic controls were relaxed. In Palm Beach County, today was another record day for Corona virus cases. The total grew by 391 to 8,833 as deaths reached 439.

You don’t see this lack of caring and disrespect for the lives of employees and customers in any other retail business except car dealerships. All grocery stores, pharmacies, restaurants, Walmart, Costco, Target, Apple…virtually all retailers require all employees to wear masks and many are requiring their customers too.
I know there’re those that believe they don’t need to wear masks during the Covid19 pandemic. There’re are also those that believe they don’t need to wear a motorcycle helmet when riding, abstain from drinking while driving, or quit smoking cigarettes. We cherish our freedoms in America and our laws and constitution allow us the freedom to even do stupid things if we don’t harm other Americans by our actions. We all know that the right of free speech ends when you “shout FIRE in a crowded theatre”. When you don’t wear a mask while you’re close to others during a pandemic, you’re infringing on their rights for LIFE, liberty, and the pursuit of happiness.
I strongly recommend that you not patronize a car dealership or any other retail business that doesn’t require all employees to wear facemasks and ENFORCES the rule. I also urge you to wear your facemask, even if the retailer does not require it. A boycott of car dealerships and any retail store that doesn’t require face masks will quickly get their attention and likely bring about change.