Monday, November 16, 2020

Legal Advice When Buying a Car

I’m not a lawyer and I don’t even play one on TV, but I’ve learned a lot from my lawyers, the plaintiff’s lawyers, and my customers in the last 52 years I’ve been a car dealer. I don’t get sued much anymore, but back before I became a “Recovering Car Dealer” I did. There’s something to be said for “The Law School of Hard Knocks”. One thing is that you tend to learn your lessons well and rarely forget. Here are five tips which, if followed by you, can make your car buying experience a lot safer.

  • Get all promises in writing. Car salesman love to talk, and most of what they have to say is targeted to induce you to buy the car. Be sure that all relevant promises and comments are written on your vehicle buyer’s order. Not quite as good, but better than verbal, is a confirming email or text from the salesman. Some examples are, “after you buy this car, I’ll be sure you get a free service loaner whenever you bring it in for service”, “Bring your new car back next Friday and I’ll give you a free set of floor mats” and “the blind-side warning sensor is standard on the car we ordered for you”. Probably the most promise by the salesman to get in writing is “this is the out-the-door price plus government fees only.”
  • Always bring a friend (witness) when buying. When I have an important meeting or negotiation, I always make sure I have at least one more person in the meeting than the other party. You’ve heard the expression, “He said-she said”. This means that a judge won’t find for one party or the other when both claim something different was said. Furthermore, a car salesman is less likely to make false promises in front of a witness. 
  • Get a signed copy of all documents you’re asked to sign. Be sure you get thesebefore you drive the car home. Ideally, you should read these documents, but in reality, no one does, including me. It’s virtually impossible to read and/or understand all the documents (especially with fine print), that you’re asked to sign. I believe that lawyers created these lengthy, voluminous documents unnecessarily and on purpose so that we require their services. Remember that you won’t see any legal documents until after you think you’ve bought the car. You probably signed another document called a “worksheet”, and the salesman and manager might have shaken your hand and thanked you for buying the car, but it’s not official or legal until you sign a lot more documents in the F&I or business office (also called “the box”). There is one very important document you’ll see before you go into “the box” and that’s your credit application. Be sure that you get a copy of that. 
  • Get the cell phone numbers of the salesman and key managers. I’ll guarantee that the salesman will almost insist that you give him your cell phone number. Before, you do that, insist that he give you his number, and tell him you want his manager’s cell phone number too. While you’re at it ask for the cell phone numbers for the service manager and general manager. You’d be amazed at how hard it can be to contact anyone in a car dealership AFTER you’ve bought and paid for your car. Even if they don’t answer the phone, you can text your message. This is a matter of record and legally binding. Also, when they know you do have their cell phone number, their likely to be more careful about making promises they can’t keep.
  • Ask the F&I/Business manager to delete the Arbitration Clause on the Vehicle Buyer’s Order. Almost every car dealer includes an “arbitration agreement clause” in their purchase contract. You may have bought lots of cars and never seen, but it’s there in the fine, voluminous print. This clause says that you agree not to sue the car dealer for any reason. In other words, it says that you want to waive your right to a judge and jury of your peers, one of your most precious rights as an American.

Whether you want to “stick to your guns” on all these recommendations or not, just using some of them is better than none. Also, by merely asking you’re signaling that dealer that you’re alert and aware. Too many car-buyers are too timid and afraid they’ll offend the nice car salesman or his manager. These are the customers that are most likely to be taken advantage of.

Monday, November 09, 2020

Open Letter to all Florida Car Dealers


Dear fellow Florida car dealer,

I started in the retail auto business in 1968, about 52 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.

Virtually every car dealer in Florida adds several charges to the price of the cars he sells, variously referred to as a “tag agency fee”, “do fee”, “dealer prep fee”, electronic filing fee etc. These extra charges are printed on your buyer’s orders and programmed into your computers. It’s regulated in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to several thousand. Florida law requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You rarely, if ever, do this.

The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But most car buyers are totally unaware that they are paying this. Who reads all the voluminous paperwork associated with buying a car? The few who notice it assume it’s an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car which is not true. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not. When my dealership is mentioned, many of your salesmen say that “Earl Stewart hides his fees in the price of the car he advertises”. Of course, we charge no such fees but, if we did, they would be included in our advertised and quoted prices. This gives our customers the ability to shop and compare our honest, total, out-the-door price. You sneak your dealer hidden fees in after the your customer buys the car.

The reason you charge these fees is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations, and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $999 in profit that the customer is not aware of or believes is an “official fee”, you can quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.

This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the right thing to do would be to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.

If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But I’ve evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscious, mislead my customers. Just because everybody else was doing the same thing did not make it right.

Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!

Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I’m aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me and not you. And, I am also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this. My cell phone number is 561 358-1474. (Do you have the courage to give your personal cell phone number to your customers and the public?)


Earl Stewart

Wednesday, October 28, 2020

Nominate Your Favorite Car Dealership: "Best Of" 2021 Awards

What better way to find out the best and safest place to buy or service your next car than to find out what others’ experiences has been? What better way to help others, than by sharing your own experience?

Your nominations for Best Of 2021 will be accepted up until November 11. Just click on this website, You can nominate candidates in these categories: Best Auto Dealer Service Department, Best New Car Dealer, and Best Used Car Dealer. Please be sure to nominate a dealership for each of these.

The most reliable measure of any company are the rankings given it by its customers. This is especially true of car dealerships because no other retail business can match car dealers for deceptive advertising and unfair and deceptive sales practices. If you have experienced a car dealer that you can trust to buy or service a car from, it’s your “civic duty” to share his name with others.

After all the nominations have been made (deadline November 11), voting will begin in December. Be sure that your favorite car dealer is nominated.

Tuesday, October 27, 2020

How Can I Learn the Dealer’s Cost on a Car?

It’s almost impossible for you to determine the true cost of a new car. This might sound crazy, but many dealers don’t know the true cost of their cars. The manufacturers and distributors invoice their dealers for an amount when they ship them a car that is almost always several thousands of dollars more than the true cost. It’s fair to say that in virtually every case the “invoice” for a new car is much higher than the true cost. By true cost, I am referring to cost as defined by GAAP, generally accepted accounting principals.

You probably have heard about “holdback”. That is an amount of money added into the invoice of a car ranging from 1% to 3% of the MSRP which is kicked back to the dealer after he has paid the invoice. In some cases there are two holdbacks…one from the manufacturer and one from a distributor. Some manufacturers include the cost of regional advertising in the invoice which offsets the dealer’s advertising costs. Another common charge included in invoices is “floor plan assistance”. This goes to offset the dealer’s cost of financing the new cars in his inventory. Another is “PDI” or pre-delivery inspection expense which reimburses the dealer for preparing the car for delivery to you. I could name several more, depending on the manufacturer or distributor. Some of these monies that are returned to the dealer are not shown as profit on dealers’ financial statement and some are. Technically a dealer could say that the cost he showed you reflected all the profit (by definition of his financial statement), but the fact would remain that more money would come to back to him after he sold you the car. To me (and the IRS) that’s called profit.

Besides holdbacks and reimbursements for expenses, you must contend with customer and dealer incentives (usually referred to as customer cash or dealer cash) when trying to figure out the cost of that new car. You will probably be aware of the customer incentives, but not the dealer incentives. Most dealers prefer and lobby the manufacturers for dealer rather than customer incentives just for that reason. Also, performance incentives are paid to dealers for selling a certain number of cars during a given time frame. These usually expire at the end of a month and are one reason why it really is smart to buy a new car on the last day of the month.

Last but not least, remember the “dealer fee”, “dealer prep fee”, “doc fee”, “dealer inspection fee”, electronic filing fee, tag agency fee, etc. which is added to the price you were quoted by the salesman.. It is printed on the buyer’s order and is lumped into the real fees such as Florida sales tax and tag and registration fees. Most dealers in Florida (it is illegal in many states) charge this fee which ranges from $500 to $3,000. If you are making your buying decision on your perceived cost of the car, even if you were right, here is up to $3,000 more in profit to the dealer.

Hopefully you can now understand why it is virtually impossible to precisely know the cost of the new car you are contemplating buying. Most often the salesman and sales manager is not completely versed on the cost either. Checking the cost on a good Internet site like or is about the best you can do. Consumer Reports is another good source. One reason that Internet sites don’t always have the right invoice price is that different distributors for cars invoice their dealers at different prices.

Do not decide to buy a car because the dealer has agreed to sell it to you for “X dollars above his cost/invoice”. This statement is virtually meaningless. You are playing into the dealer’s hands when you offer to buy or he offers to sell his car at a certain amount above his cost. As I have advised you in an earlier column, you can only be assured of getting the best price by shopping several dealers for the exact same car and getting an “out the door” price plus tax and tag only.

Monday, October 19, 2020


Back in the day when I was an evil car dealer, I had a monthly “Slam Dunk Club” for my salespeople. To join the club, you had to make at least a $4,000 profit on a customer. This is about three times the normal profit. The salesman got a $500 bonus on top of his 25% commission of $1,000. He also got a gift certificate to Ruth’s Chris steakhouse with his significant other for a free dinner. Some of my salesmen would “score” slam dunks every month and some several. Others rarely did.

You should know that no two customers pay the same price for the same car in the same car dealership in the same time frame. Each customer pays the highest price his or her salesperson can “extract”. When a Toyota dealer looks at his financial statement at the end of the month and sees his profit per new Camry was $1,500, it doesn’t tell the full story. That $1,500 is the average of all the Camrys he sold with profits per car sold ranging from as much as $10,000 to as little as $100.

You’d think that a car dealer would want all his salespeople to sell all his cars for very high profits like $4,000 or higher. You’d be wrong. The reason is that all people aren’t equal when it comes to education, intelligence, experience in car buying, and negotiating skills. A smart, highly skilled negotiator would never pay a car dealer a $4,000 profit; if the salesman wouldn’t budge on the price, the car dealer would lose a sale. He would rather have a lesser profit than no sale at all…” a half a loaf is better than none”. Dealers study each salesman’s profits on all the cars he sells each month to be sure that he has some very high profits and some very low ones. This is a “healthy pattern” because it ensures the dealer that this salesman is making as much money on each customer as that customer as that customer’s negotiating/buying skills will tolerate. If a dealer sees that a salesman’s monthly profit pattern is in too narrow a range, he’s “not asking for all the money” and/or “he’s walking customers at too high a profit”. Car dealers all believe that you can’t ask for too high a profit on a car because you can always reduce the price before the customer leaves. Most car dealerships instruct their sales people to “start the asking price at above MSRP”.

Those readers of this column who’re familiar with my weekly radio show, EarlOnCars, Saturday mornings 8-10, know about my weekly mystery shopping report. [Tru Oldies 95.9 FM & 106.9 FM WIRK-HD3] My undercover shopper visits a different car dealership each week and goes through the motions of buying or leasing a car. I report everything that happens, naming names and dealerships, and we add that dealer to our “Recommended List” or “Don’t Buy from this Dealer List”. You can read all the mystery shopping reports in my archive at The latest shopping report was my inspiration for this column. You can click on this link to read the entire report.

The salesman who greeted the mystery shopper made every attempt to get my shopper to BUY TODAY, even to the extent of taking the new Camry home to show her husband and even to the husband’s workplace. This, of course, is to be sure that the buyer doesn’t have time to shop and compare the price he quoted. He quoted her an out-the-door price of $28,804. The salesman and the manager assured her that this was a very low price and guaranteed that it was lower than any of the competitive Toyota dealers would offer.

When my shopper refused to listen to them and wouldn’t make a buying decision that same day, they asked her to wait a minute and they’d be back with a lower their words “an even sweeter deal”. They came back with an out-the-door price on the same new Camry of $23,254! THIS PRICE IS $5,550 LESS than the first price they gave her. My mystery shopper left the dealership at that point.

This was, tactically, a very poor way to “sales manage the deal”. A savvier sales manager would have negotiated the price down slower, in small increments. When you drop your price too fast, you can scare the prospective customer away. The customer will think, “if he can drop the price $5,500 this fast, how much more can he drop the price?” The price was a very low price, only about $100 profit to the dealership…a GREAT price. The dealers only hope of increasing his profit was to charge her a high interest rate in the finance office and/or sell her warranties, GAP insurance, and maintenance plans. Or, sneak in some hidden fees on the real papers she signs, because all she’s been shown so far were “worksheets”, not legal documents.

Of course, the best protection against being “slam dunked” is to never buy a car on the first day you begin shopping and always get competitive out-the-door prices from at least three different car dealers.

Monday, October 12, 2020


I’m very excited to announce a major enhancement to our Earl on Cars weekly radio show andwww.EarlOnCars blog. Effective immediately, we’re forming a cadre of volunteers, an army of educated, informed listeners to Earl On Cars radio show and readers of www.EarlOnCars blog to assist car buyers who need help avoiding being taken advantage of (ripped off) by car dealers.

I’ve often said on our radio show that I know, to a great extent, “we’re preaching to the choir” by offering advice to our listeners. Many have been listening to “Earl on Cars” radio and reading blog for years. They often call and text the show with great advice and suggestions. We’re going ask this vast, untapped, new source of wisdom and expertise in car-buying to volunteer to help the less. We’re asking those informed and educated listeners and readers to volunteer to help those “less informed” in car buying skills.

If you consider yourself an educated consumer when it comes to buying a car, and are willing to volunteer your services, please text us at 772 497-6530 or call us any Saturday morning between 8 and 10 at 877 960-9960. We’ll screen those that we don’t know as to their ability to help others in car-buying. You can choose your level of commitment by being accessible via only email, text, phone calls, or in person accompanying those in need to the car dealership.

We’ll post the names and contact information of all qualified volunteers online at, and announce them regularly on our Saturday radio show. Of course, I and all members of our Earl on Cars team will be readily available to our volunteers for advice. Since we’ve expanded our radio snow online to Facebook, YouTube, Twitter, Periscope and Instagram, we’re reaching all over the United States (and beyond). We’d love to have volunteers from as many locations as possible.

Monday, October 05, 2020

Competition is Car Dealer’s Kryptonite

Every week, for approximately the last 20 years, I’ve been writing a blog like this to help my readers buy a car without being ripped off by car dealers. I’ve also written a book on the subject (Confessions of a Recovering Car Dealer, available on Amazon) and I have a two-hour, weekly radio show on the same subject.

This morning, as I sat down, brainstorming this week’s topic, I began to think that I’m “over-complicating” things for my readers. This column will follow the KISS principle of communications…KEEP IT SIMPLE, STUPID! Car dealers are very powerful and smart at what they do, but they have a weakness, just like the one Superman had…KRYPTONITE! Kryptonite saps all the strength from Superman. COMPETITION saps all the strength from Car Dealers.

All new car dealers, selling the same make of car, pay the same price to the manufacturer as all other dealers. A dealer selling 1,000 cars per month pays the same price per car as the dealer selling 10 cars per month. All new Hondas are the same, as are all new Fords, Chevy’s, Toyotas, etc., and all with identical costs. They’re like the commodities gold, silver, and copper…an ounce of pure gold should cost the same no matter where you buy it. The only difference between new cars and other commodities like gold and silver, are that other commodity prices are readily available to buyers while CAR DEALERS WON’T TELL YOU THEIR TRUE PRICES until you’ve bought the car.

But you can render a car dealer helpless and unable to resist giving you an honest price with CAR DEALER KRYPTONITE…aka COMPETTION. When a car dealer knows that you’ll be getting out-the-door prices from at least two other car dealers for the exact same new car you plan to buy, YOU LEAVE HIM NO CHOICE BUT TO GIVE YOU HIS LOWEST PRICE.

It’s truly that simple, but it’s not easy because the car dealer will try every trick in his bag to avoid giving you his lowest price. I always recommend buying your car online and avoiding face-to-face contact during the buying process. Car dealer are pros and masters of intimidation and manipulation. They can’t practice this as effectively via email or text. I’d also minimize the use of the telephone. Make it crystal clear in all your communications with the dealer that you want their out-the-door price which is the amount you can write your check for and drive the new car home.