Friday, October 19, 2007

Always get an “Out the Door” Price (originally posted 4/23/06)

Many states have laws prohibiting car dealers from adding “fees” onto the prices they quote you. Unfortunately, Florida is not one of these states. The state law in Florida requires only that the dealers disclose on the buyers’ order that this additional charge is not a local, state, or federal fee, but is actually just profit to the dealer.

Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.

Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.

Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.

My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.

4 comments:

  1. Earl,

    Dealers bad reputations come from customers thinking they are not allowed to make a profit. I can tell everyone out there reading this that if you invest 30,000 in something you expect a return. Why should a dealer invest money in a vehicle and turn around and sell it to someone for no profit. Stop being unrealistic about pricing and payments and maybe you will have a better experience at a dealership. I am not saying you should pay MSRP but don't be so greedy to think the dealer should be making zero. And to add to that - how do expect the salesperson to get paid when they just got done spending hours of his or her day with you in the hot sun searching for the vehicle that is right for you. Do they not deserve to make something? Also, when you have a problem with your vehicle who is there to help you? The guy across the street or the salesperson you insulted by treating them like a counter clerk at walmart? What type of customer service do you think you can expect when you treat the employees of the dealership like third class citizens?

    Customers do not need lessons in how to buy cars - they need lessons in how to treat people. Why would you drive further from your home to save $10.00 per month when you could spend that money with your local dealer and get a salesperson who will be there for you throughout your ownership? These are the types of questions you need to ask yourselves before going to the dealer. Check prices on line and allow people to make a fair profit. With all of the information the dealers can't hide anything from you anymore.

    P.S. - If the $10.00 per month is that important to you - go look at something less expensive.

    Wake up and realize the people that are selling you a car might be working harder and longer hours then you can imagine and they have families and car payments to make just like you!

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  2. Aah. One of Earl Stewart's competitors has spoken. Trust me, the dealers are making plenty of money. If you're worried about the poor salesman making money, take a look at how his dealership is paying him - he is ceratinly not making a dime off the dealer fee.

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  3. Earl,

    I would rather not get an out the door price so I can screwed over. You are such a retard, everyone knows that or did you just come up with that yourself. By the way check on you sales staff. With the exception of the internet department you never get and out the door price. Look at your process before you slam someone elses.

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  4. Firstly, I don't have to hide behind an Anonymous comment, and more importantly, I found your post helpful more than two years later.
    I've been looking for a car for about a month, and although only one salesman has been a jerk and another one slightly unpleasant (pretty good odds), almost all have played fast and loose with terms and price quotes—I cannot imagine what I would have done without the Internet.
    I've had sales people refuse to let me drive the actual car I was about to buy, refuse to let me speak to the original salesman I worked with, just plain not get back to me and in almost every single case sneak in options that are not options at all. Getting a straight answer to the question: "What is the exact amount we'll be writing the check out for?" is like pulling teeth.
    It's been a painstaking ordeal and just because you're paying 20 or more thousand for a vehicle does not mean you are not counting every penny or on the other hand, can afford to spend more on options and packages.
    It is no wonder dealerships are in trouble. At this point, if the numbers change or don't add up, if someone is rude or if they repeatedly don't answer specific questions, or blatant tactics get in the way, they're gone.
    Can you imagine what these people would do if you had a problem with your car, new or used?

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