Monday, June 18, 2018

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 11, 2018

CAR DEALERS’ DIRTY LITTLE SECRET (not so “little” anymore)

Hopefully by now, all but my newest readers know about the infamous “Dealer Fee”. If you don’t know, it’s a hidden price increase on the car you purchase disguised to look like a federal, state, or local tax or fee. It’s 100% profit to the dealer. “Dealer Fee” is the most common name for this disguised profit, but it goes by many names such as doc fee, dealer prep fee, service fee, administrative fee, electronic filing fee, e-filing fee, tag agency fee, pre-delivery fee, etc. The names are only limited by car dealers’ imaginations. Almost all car dealers in Florida charge a Dealer Fee. The dealer fees range from around $700 to as high as $2,000!

This is the Florida law that is supposed to regulate the Dealer Fee: 

“The advertised price must include all fees or charges that the customer must pay excluding state and local taxes.” The law also requires that the Dealer Fee must be disclosed to the buyer as follows: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”

This law is very weak and almost never enforced. When enforced, it isn’t enforced by the letter of the law; it is done to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fee be included in the “advertised” price. The word “advertised” is narrowly interpreted to mean a specific car shown in a newspaper, TV, radio, or online ad, but, what about when you get a price on the phone, online, or from the salesman? You don’t find out about the Dealer Fee until you’re in the business office signing a tall stack of papers spit out by the computer. The dealers get around including their dealer fees in advertisements very easily by including a “number” in the fine print. This number is their “stock number” that designates ONE specific car. When you respond to the ad, this car is no longer available (sales people are usually not paid a commission for selling the “ad car). The advertisement might say “many more identical cars are available.” It’s true that identical cars are available for sale, but they are not available for sale at the sale price because they’re not the advertised stock number car. If you buy one of those “exact same cars” you will pay from $700 to $2,000 more.

The reason I’m told that the law is rarely enforced is that the Florida Attorney General’s office is understaffed and too busy enforcing other Florida laws. I’m also told that Florida car buyers don’t file very many complaints against car dealers for violating the Dealer Fee law. I don’t believe that there can be too many other infractions of the law that take more money annually from consumers than dealer fees take from car buyers. Just one car dealer selling 1,000 cars a year and charging a $1,000 dealer fee is taking a $1 million annually from car buyers. Most car dealers in South Florida well more than 1,000 cars annually and many charge more than $1,000 dealer fee. I believe that the reason more complaints aren’t filed on the dealer fee is because most car buyers don’t know that they are being duped. They either don’t notice the fee or assume it’s an official federal or state fee. Dealer often tell their customers that all dealers charge it and that it’s required by law.

The Attorney General also “accommodates” the dealers by not interpreting the law the way it was intended. For example, the law says that the dealer fee must be included in the advertised price. The Florida Senate has ruled that the law requires that the fee be “included” rather than “specifically delineated.” But the Attorney General allows car dealers to advertise car prices without including their dealer fee in the price if they just mention that there is a dealer fee in the fine print; but they don’t state the amount. To me they are simply allowing the car dealers to break the law.

Lastly, the required disclosure of the Dealer Fee on the vehicle buyer’s order or invoice is confusing, misleading, and incorrect: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” It should not say “costs” because any cost that you pass along to the customer in the price of a product is pure profit. A dealer can pass along his utility bills, sales commissions and advertising if he wants to and call it a “dealer fee”. It should not say “inspecting, cleaning, and adjusting vehicles” because all car dealers are reimbursed by the manufacturer for “inspecting, cleaning, and adjusting vehicles”.

So, what should you do when you are confronted by a car dealer with the “Dealer Fee”? Besides “LEAVE”, here are some suggestions that may help you:

  • Make it clear from the very beginning that all prices you discuss must be “out-the-door” prices. This way you don’t care if the dealer fee added up front because you will shop and compare their bottom line price with at least 3 competing car dealers. Ideally you should require that they include tax and tag in that price. If you don’t they might try to slip in something they call the “electronic filing fee” or “e filing fee” and trick you into believing that it’s part of the license tag and registration.
  • The dealer will often tell you that all car dealers charge Dealer Fees and that they are required by law to add the dealer fee on every car they sell. Simply tell them that you know this is not true and you can cite me and other car dealers like OffLeaseOnly.com and Earl Stewart Toyota (my dealership) that do not charge a dealer fee. Print out a copy of this article, show it to them, and tell them that you know that there is no law that says he must charge you a dealer fee.
  • If you and the dealer understand that the out-the-door price is the price you will shop and compare with his competition, you don’t need to be concerned whether there is a dealer fee showing on the vehicle buyer’s order. To be competitive, the dealer can simply reduce the price by the amount of his Dealer Fee and the bottom line is what you are comparing.
  • Be aware that dealers usually do not pay their sales people a commission on the amount of their dealer fee. In fact, dealers often misinform their sales people just like they do their customers. The salesman who tells you that the all dealers charge Dealer Fees and that the law requires everyone pay a dealer fee may believe it. Sale people who understand that the Dealer Fee is simply profit to the dealer will be resentful of not being paid their 25% commission on it. A $1,000 dealer fee costs the salesman $250 in commission.
  • When you respond to an advertisement at a specific price for a specific model car, object when the dealer adds the dealer fee. Unfortunately, the law allows him the loophole of claiming that the ad car is a different stock number, but you might be able to shame him into taking off the dealer fee. If you raise a “big enough stink”, the dealer would be smart to take off the dealer fee than claim that technicality, especially if you were to advise the local TV station or newspaper.
  • There are many auto-buying services available. These third-party companies claim to get you a better price than the dealer will charge you. Some of these are quite good and I personally recommend the following: Consumer Reports, American Express, GEICO, Allstate, AAA, Sam’s Club, AARP, and USAA. Those that I just mentioned are all partnered with TrueCar and use www.TrueCar.com for their member pricing. You can also go directly through TrueCar. True Car is unique among third-party auto buying services because once they show you your TrueCar member price online, THEY DO NOT ALLOW CAR DEALERS TO ADD DEALER FEES TO THE MEMBER PRICE. They also don’t allowed DEALER INSTALLED OPTIONS to be added either. TrueCar and their partner companies allow ONLY GOVERNMENT FEES to be added to the member price…sales tax and license/registration. BEFORE USING ANY THIRD PARTY AUTO BUYING SERVICE NOT LISTED ABOVE, VERIFY THAT THEIR MEMBER PRICES ARE THE OUT-THE-DOOR PRICE PLUS GOVERNMENT FEES ONLY.
I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Pam Bondi. If enough consumers (who are also voters) let our elected officials know how they feel about the Dealer Fee, it will bring positive results.

Monday, May 21, 2018

Eight Steps to Selecting and Buying the Right New Car for You

1.  Consumer Reports 

Subscribe to Consumer Reports, go to the library and read past issues, or check out Consumer Reports online. There are other objective sources of information on cars, but this is the best. They accept no advertising from anybody and their sole goal is rigorously and objectively testing merchandise that consumers buy. You can very quickly find the best make car for the model and style you want to buy. Consumer Reports rates cars by performance, cost of operation, safety, and frequency of repair.


2. Test Drive the Car You Have Chosen 

This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.


3. Carefully Choose the Accessories You Want 

There are some accessories that enhance the value of your car and some that don’t or may even lower it. You should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.


4. Carefully Choose your Car’s Color 

This is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.


5. Arrange Your Financing 

Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.


6. Shop Your Trade-in 

If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.


7. Shop for the Best Price on the Internet 

Go to the manufacturer’s Web site. The addresses are all very intuitive. Ford is www.Ford.com, Honda iswww.Honda.com, and Toyota is is wwwToyota.com. You can type in your zip code and get the Web sites of all your local dealers. Depending on how far you are willing to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag, GOVERNMENT FEES ONLY, added. You can also check with third party sources like www.TrueCar.com. TrueCar is preferred because they prohibit their dealers from adding any dealer fees or dealer installed accessories to the TrueCar price.


8. Offer Your Favorite, or Nearest, Dealer the Right to Meet this Price 

If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.

You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section, look at car dealers’ TV or online ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.

Monday, May 07, 2018


OPEN LETTER TO AUTO MANUFACTURERS:

FROM: EARL STEWART

Dear Auto Manufacturer,

I’ve owned and operated a Toyota dealership in Lake Park (near North Palm Beach), Florida since 1975. If you wonder who I am and why I’m writing you, Google “Earl Stewart” and “dealer fee”, click on www.EarlOnCars.com, and buy a copy of Confessions of a Recovering Car Dealeron Amazon.

I have a solution to the image problem the car buying public has with most of your dealers. As you know, the way your dealers retail the vehicles you manufacture has caused them to be distrusted and disliked by most of their customers. The Gallup Company has polled U.S. vehicle buyers every year since 1977 in a survey entitled Honesty and Ethics in Professions. For all 41 of those years, car salespeople have ranked last, or near last, among all the professions. Click onhttp://news.gallup.com/poll/1654/honesty-ethics-professions.aspx.

I understand why you’ve been unable improve the honesty and ethics in the way your dealers retail your vehicles. Over many years car dealers, the National Auto Dealers Association (NADA) and their state organizations have lobbied “franchise protection” laws in all 50 states into effect that protect car dealers from their manufacturers. These state franchise laws make it difficult or impossible to terminate a franchise agreement or add another franchised dealer near an established dealer, despite “bad behavior” by the established dealer. The franchise laws require you to treat each of your dealers as an “independent businessmen” that can make their own decisions with respect to advertising and sales practices.

I’ve been a car dealer since 1968 and I know that many car dealers would rather sell cars in an honest, ethical, and transparent way; however, they hesitate for fear of losing sales to those among their competitors that employ dishonest advertising and deceptive sales practices. They see that bait and switch advertising and deceptive sales practices “work” (especially on the less educated and vulnerable members of our society). I, too, was one of those dealers I've been criticizing now for many years. However, I changed. I changed for many reasons but the best reason for me and for why other dealers might also change is this: The knowledge and sophistication of the American consumers, especially millennials, has soared since the beginning of the 21st century. Car buyers are much smarter, more demanding, and have access via the Internet, Google, and the social media to the knowledge explosion.

My proposition to you is to employ the Earl Stewart brand and way of retailing cars to the vehicles you manufacture. Check out my dealership, www.EarlStewartToyota.com. I outsell all your dealers between Orlando and Cocoanut Creek (near Ft. Lauderdale) on the East coast of Florida while maintaining extremely high customer satisfaction. I do this by posting and advertising my lowest price on every new and used car. I offer a 100% unconditional money back guarantee on every car sold. Every customer has my personal cell phone number (561 358-1474) and the cell phone numbers of all of my managers. Every department in my dealership has a red hotline phone hardwired to my cellphone which reaches me 7 days a week. I employ a rigid code of behavior for all my employees. You can read the Earl Stewart Code by clicking on www.EarlStewartCode.com. When I sell or service a car my customers return to me at a higher percentage than virtually every Toyota dealer in the Southeast and the USA... you know this as "customer retention."

Mr. Auto Manufacturer, verify my claims, call me, visit my dealership and if I speak the truth, let me do what I do for your brand of vehicle. Putting the Earl Stewart brand on your make will result in an immediate and significant increase in sales, customer satisfaction and your dealer’s image, especially in the South Florida market.

Sincerely,

Earl Stewart

561 358-1474

Monday, April 30, 2018

If You Can’t Find an Honest Service Department, Find an Honest Service Person

Servicing your car might be just as scary as it was buying it. However, buying a car is something you only do every few years. During the time between buying cars you will bring it in for service maybe a dozen times (and that doesn’t even count repairs).

Car dealers make more money servicing your car than they do selling you one. The more service they sell you, the more money they make. Today's automobiles are of far better quality than they used to be and are much less likely to need repairs. Increasingly, basic maintenance is all you really need to do for your car. Also, many manufacturers are providing free maintenance for the first two or three years. This new dynamic is a threat to the car dealers’ most profitable departments…service and parts. Many car dealers are compensating for this by selling you more service than you really need.

Did you know that virtually every employee in a service department gets a percentage of the total amount of service he sells? The guy that writes up your service order when you drive in is on commission. They are service “salesmen” but they don’t like to be called that. Their title is usually “service advisor” or “assistant service manager”. The mechanic that fixes your car is on commission. The service manager that supervises the mechanic and the service salesman is paid on commission. The dealer and service manager expect the service salesman to “up-sell” you. This is typically accomplished with a “free inspection” purportedly to find maintenance and repairs that you “didn’t know you needed” and was probably not mentioned in your owner’s manual. After the service salesman sells you as much service as he can, the mechanic’s role is to find anything that needs to be fixed on the car that the service salesman or you were unaware of. He then calls the service salesman and tells him about the additional repairs you “need” …the second “up-sell”. I recommend that you stick to what your car’s manufacturer recommends for maintenance in your owner’s manual. When your service salesman tells you what he recommends, be sure that the manufacturer recommends it too. There are some exceptions to this, based on certain local environmental conditions, but very few. Always question any service not recommended by your owner’s manual. When a repair is recommended that you were unaware of, get a second opinion from another service department, especially if it’s an expensive repair. Be especially leery of transmission and radiator flushes. They’re not recommended by auto manufacturers but very popular with car dealer service departments; their high-priced and unnecessary.

Now, don’t get me wrong; just because people are paid on commission doesn’t make them dishonest or uncaring. However, if there’s a “rotten apple in the barrel” he will take advantage of a commissioned pay plan to maximize his earnings. There are very few companies with zero “rotten apples”. A good company does its best to ferret out the rotten apples but it’s a constant battle. In fact, there are companies that have more rotten apples than not. When you have a department or company where everybody is on commission, it takes an awfully altruistic manager to fire a top-producerbecause his paycheck enhanced by that individual. The more his “rotten apple” sells the more money the supervisor earns. This applies also to the “supervisor’s supervisor, all the way up to the guy that owns the company. The higher up the ladder you go, the harder it is to identify these more passive, unseen rotten apples that “aid and abet” the front-line apples. The head guy usually has what many CEO’s insist on…DENIABILITY. You hear a lot about that in government scandals. The press always wants to know, “Who knew what and when did they know it?” Everybody remembers Watergate where the rotten apples extended from the bottom of the barrel all the way to the top. It took Bob Woodward and Carl Bernstein over several years to follow the tracks all the way to the top of the barrel.

Often, there are people in all companies that are honest and caring for their customers. The point of this article is that you’re better served to look for that good person than only a good company. There is no surefire way to do this, but I can suggest a few methods. Clearly, you’re more likely to find a good service salesman in a company that has a good reputation. You find good companies by personal experience, recommendations by friends, and ratings by various services like Google (most reliable), Yelp, Dealer Rater, and BBB. If you read the reviews, often the individuals are mentioned. If you’ve dealt with this company before, others in that company, like the salesman sold you the car, can refer you to a particularly good service salesman. All manufacturers measure the customer satisfaction index of every service salesman. Insist on seeing these scores and find out how the service salesman ranks among his peers, both in the company and the entire region. Finally, always make an appointment to see that service salesman you’ve chosen. If he’s on vacation or not available for other reasons, wait for your service until he can see you.

Finally, when you find yourself a “good apple” for a service advisor, don’t keep it a secret. Tell your friends and tell the service manager and the owner of the dealership. When you do this, you’re doing your friends, the service advisor, the service manager, and the owner a great favor. You’re also spreading the word that treating customers with honesty and compassion is good for business.

Monday, April 16, 2018

Never Go Car Shopping Alone

I receive phone calls, texts, and emails from car buyers who have usually “already bought a car”. The “horse is out of the barn” and they want me to give them advice on how to get it back. Most of these car buyers went car shopping and bought their car alone. Most of the complaints involve verbal promises by the sales person, not committed to writing. Bringing at least one other person when you’re car shopping doesn’t negate the importance of getting all promises in writing, but substantially lowers the chances of a car salesman trying to pull a fast one. The salesman and his manager know that, in court, two people’s word trumps that of one.

A woman wrote me a letter in response to one of my columns. Her husband had recently passed away and this was the first car she had bought on her own. The dealer did not have the model car with the accessories she wanted and was unable to locate one at another dealership. She did not want to decide without seeing the actual car she wanted to buy but the salesman and manger talked her into signing a buyer’s order, assuring her that she was under no obligation to buy. They also included two accessories that she did not want because they said that “the manufacturer required it”. I’ve heard of distributors ordering cars with certain accessories from the manufacturer which essentially makes them “standard”, but never “$250 floor mats” which was one of the accessories she mentioned. I get a lot of emails, phone calls, and letters from people who made a bad deal in their car purchase and want to know how they can get out of it. This is one of the less egregious, but I chose it because it was a simpler and shorter example.

There is strength in numbers when shopping and negotiating to buy a car. In fact, this applies to any serious decision in life. You might be the sharpest, shrewdest negotiator on the block, but your odds of striking a better deal and not get taken advantage of are enhanced when you have others on your side. Personally, I make a habit of always having at least one partner when I am engaged in a serious, adversarial decision-making process. When meeting with those on the other side, I make it a point to arrive with at least as many people as they have present. One reason is the psychological factor. When you are in an office by yourself with two or three others, it can be intimidating. Another reason is that you always have people on your side to corroborate what was said. If a salesman or a sales manager makes a verbal promise that can be corroborated by a friend or two, it is far less likely to be broken. It will also hold up in court, if it must come to that. Of course, the better solution is to see that all promises are committed to writing.

Buying a car, especially a new car, is more often than not, an emotional decision. Having a friend or two with you can help you make more of an analytical, logical decision. Another point of view is always useful when making an important decision. Also, having one or two friends with you slows down the process to a level more easily absorbed and understood by you. A friend will often think of a question you should have asked but forgot.

Ideally you should bring someone with you who is skilled in negotiation and experienced in buying cars. However, if you don’t know someone like that, somebody is better than nobody.

Please understand that asking a friends, family member, or associates to join you in the purchasing of a car is not a sign of weakness; on the contrary, it’s a sign of intelligence and a sign of understanding how to stack the deck in your favor in a negotiation.

By the way, most car dealers are unhappy when prospective customers bring in advisors and friends. Naturally they feel that way because they recognize their chances of making a fast, very profitable sale are diminished.

Monday, April 09, 2018

Buying a Car When You Have Bad Credit

There are fewer things more sensitive or embarrassing than having to share your personal credit problems with a stranger. Having credit problems can also put many buyers in a weakened and defensive position when buying a car. Many people with bad, or too little credit feel like the car dealer is somehow “doing them a favor” by selling them a car and getting them financed. Some car dealers will lead you to believe that your credit is worse than it is to put you on the defensive. If they can make you believe that they’re doing you a favor by getting you financed, you’re less likely to complain about the price of the car, the interest rate, and even the type of car you buy.

Make no mistake about it. A car dealer is probably making more money selling a car to a person with bad credit a car than one with good credit. If you have a credit problem, go about buying a car with the same care and due diligence as if you had the very best credit. Shop and compare your financing, your interest rate, and your trade-in allowance. Get at least three quotes on each of these.

Lenders who specialize in lending to those with bad credit are known as “special finance” lenders. Many of these lenders charge the dealer a large upfront fee, as much as $2,500. Legally, the dealer is not supposed to add this fee to the price of the car you buy but, in the real world, the price of the car is usually higher as the result of this fee. Dealer also add high priced but worthless warranties to the price of the cars with the excuse that the lender requires it. This is a lie: it’s illegal for lenders to require a warranty to finance a car. In addition to an upfront fee, the interest rates are very high from special finance lenders. Because they anticipate a much higher amount of repossession losses, they must make more on each transaction. Don’t automatically accept a dealer’s opinion that you must finance through such a lender. There are many conventional banks, credit unions and auto manufacturer lenders these days that loan to people with bad credit. Their interest rates are lower and they don’t charge large upfront fees.

There is much fraud in special finance lending. Credit applications are falsified to show more time on the job, higher incomes, etc. W-2 forms and check stubs are counterfeited. Buyer’s orders show accessories and equipment that do not really exist on the car. Hold checks or promissory notes are misrepresented as cash down payment. Co-signers signatures are forged. Confederates pose as employers, answering cell phones or pay phones to verify employment. These falsifications are performed by finance managers, salesmen, brokers for special finance lenders (who are paid on commission) and the customers themselves. If you sign a credit application, be sure that you know all the information on that application is accurate. Be sure that you understand and agree to all parts of the transaction including down payments, accessories on the car, etc. Never be a party to falsifying information to a lender to obtain a loan. This is a federal crime.

Advertisements aimed at people with bad credit usually exaggerate with claims like, “We finance everyone”, “Wanted, good people with bad credit”, “No credit, no problem”, and, my favorite, “No credit application refused” (it doesn’t say your loan won’t be refused, just your application). My advice is to ignore these kinds of ads and these kinds of dealers. Their strategy is to take advantage of people with bad credit who they believe will buy any car, pay any amount of interest, and any profit to the dealers if the dealer can get them a loan.

It is common practice in Florida to encourage the car buyer to drive the car home immediately upon signing all the papers. In some states like New York this is not permitted until all the car has been registered with the state in the new owner’s name. The reason for this immediate delivery (commonly referred to as the “spot delivery”) is to discourage and possibly even prevent the buyer from changing his mind. Taking possession of the car is a legal consideration making the purchase more binding. I recommend that you not rush the purchase or the delivery. For one thing you want to be sure that the car is exactly the way you want it…clean inside and out, all the accessories properly installed, no dings, dents or scratches, and that you have a complete understanding of how to operate all the features of the vehicle.

More important than anything above, is to be sure the car does not have an outstanding safety recall from the manufacturer. Independent used car dealers, especially those who specialize in folks with bad credit, have become the home for dangerous used cars with unfixed safety recalls. Many new car dealers, like the AutoNation stores, wholesale all cars with unfixed Takata airbag recalls. These cars are bought at auction by used car dealers like DriveTime, OffLeaseOnly.com, CarMax, and thousands of others smaller used car dealers. These cars are retailed to people with bad credit who don’t ask the right questions because they are “grateful” to find financing. ALWAYS CHECK THE VIN OF THE USED CAR YOU BUY AT WWW.SAFERCAR.GOV.

I mention the risk of the “spot delivery” in this column on buying a car with bad credit because it can be especially harmful to someone whose credit is denied after the car has been delivered. You will most likely be required to sign a “Rescission Agreement” before you drive the car home. This is a quasi-legal document which requires you to return the car if your credit is denied. You will probably be told that your credit will be approved, but sometimes the dealer is wrong. The rescission agreement will have a charge for time and mileage that you have put on the car you are driving. Usually this is a very high charge from 25 cents per mile plus $50 per day and higher. It can take weeks for a special finance lender to rule on a credit application. If your credit is denied you could owe the dealer thousands of dollars which the down payment you made might not even cover.

As frightening as all the above may sound, the one single thing you can do to prevent bad things from happening when you purchase a car is to choose your car dealer very carefully. How long has he been in business? What is his track record with the Better Business Bureau, the County Office for Consumer Affairs, and the Florida Attorney General’s Office? Ask friends, neighbors, or relatives who have dealt with this car dealer what their experiences have been like. Choosing a good dealer with integrity will resolve 95% of all your concerns.