TOP 10 WAYS TO GET SHAFTED BY A CAR DEALER

(1)   Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t”. Astoundingly, the general manager of this dealership had the gall to say on TV, “This is not a gimmick”!

(2)   Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.

(3)   Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) andEdumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.

(4)   Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.

(5)   Believe this, “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.

(6)   Fall for this, “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.

(7)   Follow this advice, “Take this new car home and see how you like it.” This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?

(8)   Agree to this, “I’ll buy the car if you can get my monthly payments below $___.__”Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.

(9)   Believe the salesman when he says, “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.

(10)                       Fall for this, “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.

Holdback or Holdup?

Back in 1968 when I first went into the retail car business with my father, I can remember asking him, “What is holdback?” I was learning the business and had been studying the invoices on new Pontiacs that General Motors sent us when they shipped a new car that we had ordered. We had to pay the invoice immediately when it was issued, sometimes even before the car arrived at our dealership. Actually, in most cases, it was our bank or GMAC who paid GM and we borrowed the money from them to pay for the car.  

My father’s answer to my question about holdback was that it was an increase in the amount of the invoice that we paid General Motors which was not really part of the price of the car. It was just an extra amount added to the real price of the car and included in the invoice. At that time it was 2% of the MSRP [suggested retail], so if a new Pontiac Bonneville had an MSRP of $10,000 and a true cost of $9,000, the factory invoice would be $9,200. I asked my father, “When do we get the $200 back?” He said, “At the end of the year”. I asked him if they paid us interest on our money and I can remember him laughing loudly and saying no.

Of course my next question was why they do that. He told me that the reason they gave him was to be help dealers sell their cars for more money so that they didn’t go broke. He said that because they didn’t get their holdback money for such a long period of time, they began to think of their invoice as being the actual cost of the car. General Motors felt that many dealers were such poor businessmen that they might sell their cars so cheaply that they would go out of business. Now, because GM was kind enough to hold back hundreds of thousands of dollars of the dealers’ money [and pay them no interest on it] but return the money to them once a year, they could help the dealers make a bigger profit and maintain adequate working capital.

At that time I thought this was the biggest bunch of boloney I had ever heard and I was sure that this was a scheme by the manufacturers to keep a free float of millions of dollars of their dealers’ money under the guise of helping the dealers. I asked my father why the dealers didn’t strongly object to this and he said that most dealers actually “liked” the idea of holdback. When I heard that, I thought that maybe GM and the manufacturers were right about the dealers not being smart enough to sell their cars for a reasonable profit.

It took me a few more years in the business before I understood what was really going on with holdback. It was a “no brainer” as to why the manufacturers liked it but at last I understood its attraction to us dealers. Because we had to pay an extra amount over the true price of the car and not see that money for up to a year, we began to think of the invoice as the true price, even though it was actually inflated by hundreds of dollars. Because all manufacturers added holdback to all dealers invoices, the net effect was to raise the price of all cars to all buyers by the amount of this holdback. I know this is a dirty word, but it is price fixing on the grandest of scales. This might have been something that Henry Ford, Alfred Sloan, and Walter Chrysler concocted while playing golf at Bloomfield Hills Country Club outside of Detroit.

Another neat thing about holdback for us dealers is being able to tell our customers that we are only charging them “X dollars” over invoice. Or, we can tell them that we will sell them this car at invoice with no profit to us at all! [There’s a sucker born every minute] Dealers often have “invoice sales” with copies of the invoice pasted on the car windows. Who doesn’t believe that an invoice is the cost of the car? The truth is in the semantic skullduggery …”Mr. Customer, I solemnly swear to you that this the exact price that I paid the factory for this car. In fact, here’s a copy of the invoice.” That’s what the dealer “paid” the factory all right, but it’s not what the he paid the factory after he got his holdback check in the mail.

You might be thinking, so we’re talking about $200 more or less on a $10,000 car. Who cares? Don’t forget, that was over 40 years ago. Holdbacks have expanded considerably and now instead of several hundred dollars we’re talking several thousand.  Also, dealers no longer have to wait a year to get their hold back money back. Now they get it back monthly. Manufacturers even changed the names of these monies they hold back. These are innocuous names so that, if you see them on the invoice, you will have no suspicion…names like floorplan assistance, advertising, PDI, Administrative or DAP. Of course there are also cash rebates to dealers that don’t even show on the invoice. I estimate the average car invoice today includes $3,000 to $4,000 in hidden holdbacks to the dealer. Holdbacks are also applied to factory or distributor accessories like “protection packages” [wax, undercoat, window etch, roadside assistance], floor mats, window tint, etc.

The bottom line is that you don’t rely on the dealer’s factory invoice to determine the price you are willing to pay for a car. And be especially suspicions when the dealer quotes you a price of “X dollars over invoice” or actually shows you the invoice. You’ve heard the old joke, “How can you tell when a politician is lying?” Answer: When his lips are moving. “How can you tell when a car dealer is lying?” Answer: When he shows you the invoice.

Cadillac Service and Repairs at Chevy Prices

This article is directed at luxury car owners. If you drive an Acura, Cadillac, Lexus, Lincoln, or Infiniti and you’re taking your car to the dealer of that same make you drive, you’re paying as much as twice as much as you have to for maintenance and repairs.

Most people know that General Motors manufacturers Cadillac as well as Buick, Chevrolet, and GMC trucks. Most of the models of each of these makes share in the engineering and design. This also holds true for Acura and Honda, Lexus and Toyota, Lincoln and Ford, and Infiniti and Nissan. Some models are almost totally identical “under the skin”. The manufacturers make their luxury version look fancier and add luxury options and accessories, but the underneath it all, they are mostly the same vehicles.

The reason that many people don’t know that their Infiniti is built by Nissan and Lexus is built by Toyota is “marketing”. The manufacturers don’t want you to know that that the Lexus ES you’re driving is really a Toyota Camry, “all dolled up” or that the Acura ILX is really a fancy Honda Civic. Volkswagen, Mazda and Hyundai all made big marketing mistakes when they introduced their luxury models, Phaeton, Amati, and Equus. The VW Phaeton which cost over $100,000 bombed badly and is no longer sold in the USA. The Mazda Amati was announced in the early 90’s but Mazda canceled their plans when they suddenly “saw the light”.  The Hyundai Equus, over $60,000, is not selling well either and I predict it won’t be able to compete in the USA luxury car market either.  

The reason these three models failed is that Volkswagen, Mazda and Hyundai made the fatal marketing mistake in expecting a luxury car buyer to spend $100,000+ for a car sold in a Volkswagen dealership or $60,000+ for one sold in a Hyundai dealership. To compete with established luxury brands like Mercedes and BMW, manufacturers must offer buyers a car that they feel confident is not only a luxury car, but perceived by their friends, neighbors, relatives, and business associates to be a luxury car. When a luxury owner is leaving a fancy restaurant or his country club and gives his ticket to the valet, he doesn’t want to be asking for a Volkswagen or Hyundai, albeit the most expensive one. When he brings his car in for service, he wants to mingle with other luxury car owners with all of the luxury amenities offered…it’s like first class vs. coach. I know Lexus dealers who offer massages and manicures to their service customers. JM Lexus, the world’s largest Lexus dealer, has a putting green on their roof for their waiting service customers.

Luxury owners expect to pay more for service and luxury car dealers are happy to accommodate them. If you’re willing to pay twice as much for an oil change because you can play golf while you wait or have a manicure, that’s up to you. But you can save a whole lot of money and have technicians that are totally qualified to maintain your luxury car by bringing it to the same manufacturer’s dealer for the lower price make…Acura to Honda, Cadillac to Chevrolet, Lexus to Toyota, Lincoln to Ford, and Infiniti to Nissan. 

There is one caveat and that is the manufacturers require that you have your factory warranty repairs done by the luxury car dealer. You may also experience some problem with parts availability. Although most parts are the same, there are some parts like a cabin air filter which the dealer may have to buy from the luxury car dealer. My suggestion would be to make an appointment for your service in advance and tell the Honda dealer what you would like done. He then can be sure to already have all the necessary parts on hand when you arrive. You will be shocked at how much money you can save and, measured over the total time you own your car, this can amount to thousands of dollars.

I know that a lot of luxury car owners will read this and continue to bring their luxury car to the luxury car dealer just like there are diamond jewelry buyers who will pay Tiffany’s twice as much for the exact same caret, color, and clarity diamond as Costco sells, when the only tangible difference is the “little blue box”. Brand image is a powerful marketing tool. 

Always Get It in Writing

Many readers of this column call me for advice and to tell me horror stories about their dealing with unethical car dealers. Of course it would be much better had these readers called me before they bought the car.

I have written hundreds of columns for Hometown News and given advice on a variety of subjects which should make your car buying, or servicing, experience safer and more pleasant. There is one piece of advice which, if strictly followed, would eliminate over 90% of the problems car buyers have with car dealers. That advice is “always insist that all promises and commitments made by the car sales person or sales manager are put in writing”. The written commitments should be signed by the sales person/manager and you and you should retain a copy.

These are just some examples of promises made by sales people and sales managers that  were not kept: (1) Sign the contract, drive the car home, and if you change your mind within three days you can bring the car back and we will refund all of your money. [When the customer brought the car back, the salesman claimed he never said any such thing] (2) After signing a 36 month lease, the salesman assured this customer that, if she got tired of this car in less than 36 months, she could just bring it back anytime. [Of course the leasing company didn’t agree with the salesman on this]. A customer was promised that she would be able to get free loaner cars anytime she brought her car in for service. [The service department didn’t know anything about this. They don’t offer free loaners]. The business manager, also known as the F&I manager, told the customer that the warranty/extended service contract he was selling her covered 100% of anything that went wrong with her car. [When she came in for a brake job, the service manager showed her the fine print in the warranty contract that said maintenance items were not covered]. The salesman told the customer not to trade his car in on the new car because he owed way more on the car than it was worth. He told him to just let the bank take her old car back and because she was making her payments on time on her new car it wouldn’t harm her credit rating. [I don’t think this requires any explanation]. Customers are promised that they can bring their car back after they buy it and have CD players, leather, running boards, and floor mats, and other accessories installed as part of the deal. When they come back, none of the managers knows about this and the salesman can’t be found or doesn’t “remember”. I could list dozens more of these anecdotes.

You have very little chance when it’s your word against the salesman’s or sales manager’s. You have even less of a chance if it’s two against one. Do not be timid about asking that everything you are promised is put into writing. If the salesman objects to this or hesitates, you have to ask yourself why? Another reason for having all promises committed to writing is that the salesman or sales manager may not work at that dealership anymore when you come back to collect on his promise. He may have actually been sincere, but now he’s gone. Will his replacement believe you?

It’s a good idea to carry a note pad with you when you are negotiating to buy a car. I wrote a previous column entitled “Never Go Car Shopping Alone”. When you have an ally with you, she can take notes while you are negotiating. Also, if you do forget to commit a promise to writing, your credibility is enhanced when it’s two against one instead of “he said/she said”. When you are signing the final documents, you have your complete set of notes detailing promises, assurances, and commitments by the salesman. Then, all you have to do is have these signed by both parties and be sure that you get a copy.

Earl Stewart on Cars: A Look at a Deceptive Dealer TV Ad: Napelton Kia

In this segment of the Earl Stewart on Cars radio program, Earl discusses dissects a deceptive television ad from Napelton Kia, and talks about what happened when his mystery shopper attempted to purchase the sale priced vehicle.

Listen to Earl Stewart on Cars every Saturday, from 9am to 10am Eastern, on Seaview Radio, (seaviewradio.com), AM 960 and FM 95.9 & 106.9. You can phone in your car question during the show using the listener line at 1-877-960-9960.

Pick up a copy of Earl's new book, "Confessions of a Recovering Car Dealer". Go to earlsbook.com or on Amazon http://www.amazon.com/Confessions-Recovering-Dealer-Earl-Stewart/dp/0985729511/ref=sr_sp-atf_title_1_1?ie=UTF8&qid=1373116154&sr=8-1&keywords=confessions+of+a+recovering+car+dealer All proceeds will go to charity.

You can also learn more at earlstewartoncars.com and twiiter.com/earloncars.

Should I Buy a Car or Have a Colonoscopy?

I wrote this column 6 years ago, but my doctor just told me I’m scheduled for another colonoscopy at the end of this year and it reminded me that, if I were you, I would probably rather do this than buy a car from a typical car dealer. J 

If you are over 55, you should have had a colonoscopy.  If you haven’t, call your doctor because this could save your life. It did mine, but that’s another story. I had another colonoscopy yesterday and I have to tell you that it’s a very unpleasant experience, mainly from the mental anguish anticipation and the discomfort of the preparation the previous day. I had a lot of time to think about my procedure and I started thinking about how this experience parallels that of buying a car. It’s something you must do and has a very good benefit, but you dread the process.  

This column, my 39^th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.  

Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.  

One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business. 

Earl Stewart on Cars: Defeating the "Highball" and "Lowball"

In this segment of the Earl Stewart on Cars radio program, Earl explains "highball" and "lowball" sales tactics and how to defeat them using smart consumer practices.

Listen to Earl Stewart on Cars every Saturday, from 9am to 10am Eastern, on Seaview Radio, (seaviewradio.com), AM 960 and FM 95.9 & 106.9. You can phone in your car question during the show using the listener line at 1-877-960-9960.

Pick up a copy of Earl's new book, "Confessions of a Recovering Car Dealer". Go to earlsbook.com. All proceeds will go to charity.

You can also learn more at earlstewartoncars.com and facebook.com/EarlStewartToyota

Should You Finance Your Car With a Car Dealer or Bank?

As with most complicated issues, there’s no simple answer. The very fact that this question is complicated is exactly why you need to be very careful before you choose to finance the next car you purchase with the car dealer who sold it.

So, let me start by giving you a hard and fast rule. Never finance your car with the car dealer unless you have checked the interest rate and terms with at least two banks and/or credit unions. When you’ve completed the process of choosing the car you want to buy, the dealer who offers you the best price on that car, and the dealer who offers you the best price on your trade-in, you should be armed with quotes from at least two banks and/or credit unions on the lowest interest and best terms. Your own bank may even be the same bank that your dealer uses. If you have good credit, you can borrow the money directly from your bank for as little or even less than the rate the bank offers the car dealer. When you borrow money from the bank it’s called direct lending and when borrow through the dealer it’s called indirect lending. Just because the dealer says that he “does business” with your bank doesn’t mean that he’s giving you as good an interest rate that you can get from your bank; in fact, he’s probably not.

Did you know that the average car dealer makes more money on the car finance contract than he does on the sale of the car? A car dealer’s finance department is a separate profit center in a car dealership, just like the new car, used car, service, and parts departments. AutoNation, the largest retailer of cars in world, averages about $1,600 on finance contracts for every car they sell. This includes cars that they don’t finance because some buyers pay cash or finance through their banks or credit unions. If you factor those out, the average profit per car actually financed by the dealer can soar to well over $2,000 to $3,000 or higher. I’m often asked the question, “If I pay cash for my car can I get a better deal”? Counter intuitively, the answer is no! In fact, there’s a good chance you will end up paying more for your car if the dealer knows you’re a cash buyer because he knows he is forgoing his better opportunity to make money from that purchase.

The code word for interest rate profit for car dealers is “reserve”. Dealer reserve is what the banks kick back to the car dealer when they assign the finance contract that you sign to that bank. Dealers have reserve agreements with certain banks, including the manufacturers’ banking subsidiaries. Examples of manufacturer lenders are Honda Credit, Ally Bank (Chrysler and General Motors), and Toyota Financial Services. Manufacturer lenders are referred to as “captive lenders”.

The car dealer is, in effect, borrowing the money from his bank, marking up the interest rate as high as is allowed by the bank, usury laws, and you. The name for the markup is the “spread”. The dealer might be able to borrow money from a bank for 2.69% and the bank might allow him to mark it up to 4.69%, a “2 point spread”. Marking up 2.69% to 4.69% is a 75% markup above the dealer’s cost (dealer retention) from the bank. A customer with good credit, say a 740 Beacon score or better, could borrow the money directly from the bank at 2.69% if that customer knew to ask. A customer who doesn’t know, and assumes the dealer is trying to get him the lowest rate will pay the dealer an extra $1,004 profit if he finances $20,000 for 72 months. The dealer usually will sell various “products” which are added to the finance contract and included in the payments such as extended warranties, GAP, maintenance, road hazard insurance, emergency road assistance, etc. These products can add up to $1,000 or much more. With interest rates at historic lows, many people who haven’t financed a car in many years don’t know that, with good credit, interest rates on new car loans can go below 2%. If they financed their last car at 5% and are quoted 4.69% by the dealer, they might think that’s a very good rate when it’s really very high.

There are times when it definitely pays to finance with the dealer and the biggest one is when the dealer’s manufacturer captive lender offers special low interest rate incentives such as 0%. When you read an advertisement for 0% financing, be sure that the lender is the dealer’s manufacturer’s captive lender, like Honda Credit. If the dealer is offering 0% through a bank not affiliated with his manufacturer, it’s not a valid offer. The dealer is simply adding additional markup to the car he’s selling you so that he can “buy down” the real interest rate the bank is charging. When captive lenders offer 0%, be sure you ask if there is an alternative cash rebate. Typically the captive lender offers something like 0% financing for 60 months or a $1,000 cash rebate. You need to do the math to find out which is the better deal. This is calculated by knowing how much you can borrow the money for from your bank or credit union and how much you’re financing. Unfortunately it’s common for dealers to advertise the car price including the $1,000 rebate and also advertise 0% financing. In the fine print they say “no two offers can be combined”.

Today, the federal government is going after banks, including captive lenders, for discriminating against minorities by charging higher interest rate without regard to the customers’ credit scores. They should be going after the car dealers instead of the banks, since it’s the car dealers who raise the interest rates. But the car dealers are hiding behind a loophole which names the bank as the primary lender, even though the dealer decides the interest rate and signs the customer to the installment sales contract.  This is because the dealer immediately sells that contract to the bank. The federal government is saying that all customers with the same credit score should be offered the same interest rate. Since the dealer is the one who determines the interest rate, why isn’t he held responsible?

 

 

Modern Complex Accessories Make for Unsafe Driving

Ford Motor Company just announced that they are going back to “buttons and knobs” instead of their high tech touch-screen and voice recognition multimedia systems in their cars. They made this decision because of too many complaints, although, they said that the features were a motivation for customers to buy the car in the first place. This means that the high tech gadgets seemed like a great idea until you tried to use them while driving. They were too complicated, sometimes didn’t function the way the driver expected, and required too much focus which detracted from keeping their eyes on the road.

In case you haven’t noticed, technical advancements in cars are progressing at warp speed. We have far more computer power in a car today than in the rocket that took the first to the moon. Most of this is hidden under the hood and requires very little driver knowledge or participation. But car manufacturers have also started loading up the “cockpit” with high tech gadgetry like multimedia equipped with Bluetooth, touch-screens, and voice recognition. Your smart phone is automatically connected to your multimedia system when you start your car. Some cars have “micro radar” that detects cars approaching alongside in your blind spots or coming toward you as you back out of your parking spot. There’s even a camera mounted on the front of some cars that will tell you when you begin to move out of your lane and actually correct the steering wheel if you don’t hear the audio warning. This camera will sound a warning and automatically apply the brakes if you approach an object too fast.

To qualify for a driver’s license today, you have to learn all of the traffic rules and prove that you can drive a car on the road and park it. The driver’s test today is no different than it was 50 years ago when cars were far simpler to operate. Fifty years ago cars didn’t have cruise controls, navigation systems, front and rear video cameras, radar, Bluetooth, touch-screens, multiple warning lights and sounds, integration with smartphones, automatic braking and ability to keep the car tracking between the two white lines in the road.

Where we find ourselves today is on the verge of a driverless car. In fact, driverless cars are allowed on the road today and legal in several states including Florida.  Five or ten years from now when driverless cars become a reality, there will be virtually no accidents on the road. Computers are far smarter and coordinated than we and, even taking into consideration the occasional computer failure, they are safer. Computers don’t ever lose their focus. They don’t get mad at other drivers, look at pretty girls on the side of the road, drink too much, or fall asleep at the wheel. Car insurance premiums will go down drastically when driverless cars become a standard.

Until all the complicated high tech gadgetry on today’s car is completely taken over by the computer, we need to think about being sure humans are capable of safely focusing on their driving while they operate their navigation systems, touch-screens, Bluetooth, and multimedia sound systems integrated with their smart phone. Car buyers should be thoroughly trained on the operation on all of the high tech gear on their cars. They should be tested on its operation while demonstrating that they can drive safely at the same time they are operating it. A human being cannot focus on driving safely at the same time they are trying to figure out how to disconnect their iPhone from their Bluetooth when a call comes in that they want to keep private. It can be distracting just to change the station on a radio that has satellite, AM, FM, and interfaces with your smartphone. A driver should be so well trained that it’s almost reflex with no conscious thought required.

 When I’m using my navigation system, guided by the woman’s voice,  and I reach the point where I know the rest of the way and don’t require guidance, I can never remember how to “make her stop talking”. I get irritated with her reminding me to turn at the next intersection when I already know to do so, but I can’t remember the procedure to mute her out. I take my eyes off the road while I try to figure it out. I know I should pull over to the side to do this, but if it’s rush hour on I-95 this can also be dangerous.

When a person takes a driver’s test, he or she should have to prove that they can easily and quickly operate the cars’ high tech accessories while safely driving. When a person buys a car with new gadgetry, the dealer should be required to train that buyer in the fast, efficient operation of all accessories and the buyer should complete a test to demonstrate that they did in fact learn what was taught. If the test wasn’t passed, the particular accessories that the buyer couldn’t demonstrate competence in would be disabled until that time that they can demonstrate proficiency.  

Currently, all a car salesman does for a new buyer is give her or him an owner’s manual which nobody reads. Even if a buyer was inclined to study the owner’s manual, they are way too lengthy and written in a boring,  non-user friendly style. The navigation systems are so complex that they have their own owner’s manual at least a couple of inches thick.

Governor Rick Scott recently signed a bill into law making it illegal to text while driving. Actually, texting with voice recognition is no more unsafe than talking on a hands free cell phone while driving. If a driver can demonstrate that they can text safely while driving, they should be able to do so. But they should also be required to demonstrate that they can safely operate all other accessories on their car while driving safely. 

I WRECKED MY CAR…NOW WHAT?

The article below was written by Alan Napier, the manager of my body shop, for my Toyota customers. However, the advice Alan gives applies to any make of car.

This Is Supposed To Be Easy  

Dealing with your insurance company has never been as difficult as it is right now. 2008 was a disaster for most insurance companies. Falling revenues, catastrophic disasters, poor investments and last years financial meltdown led to losses for most major carriers. Why should you care? Because now that the horse is out, they’ve slammed the barn door. This means that they are utilizing more aftermarket, remanufactured and junk yard parts to repair your vehicle. It means that insurance companies are applying discounts to their estimates that were not there prior to the collapse of Wall Street. It means that they are not negotiating in good faith with your repair facility to bring your vehicle back to its pre-accident condition.

What Can I Do?     

              

Most importantly, insist that your damaged parts be replaced with new genuine Toyota replacement parts. Toyota only provides warranties on new OEM parts. If necessary, involve your agent. Remember, your agent works for you and should be your advocate when dealing with claims staff. 

Second, insist that the insurance appraiser explain the estimate they are providing to you. Many times the estimate will not come close to paying for all of the vehicle damages. It’s not a mistake when this occurs, but a calculated tactic. Many people don’t repair their vehicles and have no idea that their insurance company did not provide enough funds to repair the car properly. Point out any damage that the appraiser doesn’t acknowledge on the estimate and insist that it be added to the appraisal right away. Often the appraiser will tell you he has already written the check, so he cannot change the estimate until the vehicle is at a repair facility. This is not true. The appraiser is obligated to pay for all of the visible damage regardless of how many estimates and checks he has to write. As with any negotiation, be polite, but firm.

I Don’t Have Time for This!! Somebody Help Me!!

If you just really don’t want to deal with all of that, that’s where we come in. Your insurance company will advise you to repair at a shop that “works with us”. Translation: “They do what we tell them.” Earl Stewart Toyota will insist that your insurance company pay to repair your vehicle properly, per the manufacturers’ recommendations, to its pre-accident condition. Bring in your car, show us the related damages, sign a repair authorization, hand us the keys and you are done. It’s that easy. We take care of everything from that point. All we ask is that you support our efforts to negotiate with your insurance company. They will do everything from using scare tactics to telling outright falsehoods to save a few bucks. You trusted us to sell you a Toyota and maintain it to manufacturers’ standards, now trust us to repair your collision damaged vehicle to its pre-accident condition.

The Federal Trade Commission: Most Car Ads are ILLEGAL

Can you remember reading, seeing or hearing a car dealer’s advertisement that had no fine print? The TV advertisements are especially egregious because, even with HD, it’s literally impossible to read the fine print. If the print were large enough, it’s not displayed on the screen long enough for you to completely read it. You’ve all heard the radio “fine print”. The advertisers are experts at making it incomprehensible. One trick is to put the disclosure at the beginning of the ad so that it appears not to be a part of the advertisement. They will use a different voice, which speaks very softly and very fast. I believe that they record the disclosure at normal speed and electronically increase the speed of the recording to an incomprehensible level. The fine print in newspapers and direct mail is the only fine print that is even possible to read and it often takes a magnifying glass to do so. Some tricks to make it even more unreadable are to make the color of the print blend with the background color of the paper (dark blue print on a dark red background), obfuscate the message by mixing in some legitimate, irrelevant disclosures like “Dodge is a copyrighted brand name of Chrysler Corporation, and they usually locate the fine print as far away from their false claims as possible.

Of course fine print deception is not limited to car dealer advertisements. Car manufacturers, pharmaceutical companies, and most other retailers take advantage of their customers in this manner too.

The Federal Trade Commission says that advertisers are not allowed to “contradict other statements in an ad or to clear up the misimpressions the ad would otherwise leave.” The FTC also says that “Accurate information in a footnote or a dense block of text likely will not remedy a deceptive representation conveyed by a headline or other prominent selling message because reasonable consumers may not read the footnote.”

Car dealer leasing ads and car manufacturer leasing ads commonly advertise low lease payments with large down payments, often obfuscated as “capital cost reductions”. You’ll see a new BMW advertised for $399 per month but when you take in consideration the $8,000 down payment which is impossible to read on the TV screen, the payment might actually be $899 per month.

You see a lot of “100% Guaranteed Credit Approval Ads”, but the fine print says that your credit score will affect the terms and down payment. Interpreted, this means if you have bad credit, you will have to make a down payment up to 100% of the price of the car and the financing terms could be as short as one month. The disclaimer in the fine print is a total contradiction of the headline, bold print claim of the ad and a violation of Federal law.

A popular deception by many car dealers is to advertise a very low price in the headline of the ad with the fine print totally contradicting the ad price. This is done by the fine print saying that the “price excludes dealer installed accessories” which can total thousands of dollars. The fine print also often says “customer must qualify for all rebates and incentives”. These are impossible for any one person to qualify for such as military rebate, college rebate, loyalty rebate, and conquest rebate. To qualify for all the rebates one would have to be on active duty in the military, a graduate of a 4 year accredited college within the past 6 months, drive the same make car as is advertised, and drive a specific competitive make car at the same time.

Another fine print scam is “Lowest Price Guaranteed or We Pay You $1,000”. There’s even one dealer who says he’ll give you the car free if he can’t beat his competitor’s price. The fine print says the dealer reserves the right to buy the other car from his competitor at the lower price. Now, what are the odds that your car dealer’s competitor will agree to that? The fine print also says that you must bring him a buyer’s order signed by the other dealer to verify the lower price. Have you ever asked a car dealer to give you a signed copy of a buyer’s order without actually buying the car from him? He won’t give it to you for the simple reason he doesn’t want to allow his competitor to see it and beat his price.

Florida law requires that dealer fees be included in the advertised price of all cars. Most dealers do not to this but instead disclose the dealer fee in the fine print. Often times they do not even disclose the amount of the dealer fee but simply say “plus dealer fee” or “plus fees”. Florida law does not put a cap on dealer fees as many states do. In theory, a dealer could have a $10,000 or higher dealer fee. Many have dealer fees over $1,000 now. This practice is a clear violation of the Federal Trade Commission’s rules.

I read in the newspaper last week that Governor Rick Scott had just signed 8 more bills into law. This week we have 8 more laws than we did last week. What our state and our country need are not more laws, its more enforcement of the laws we already have on the books.

Anatomy of a Car Ad

Most car advertisements are deceptive to the extreme. That doesn’t mean that all car dealers are bad people. I believe that many car dealers believe that they have no alternative but to “fight fire with fire”. Some car dealers are bad people in the sense that they choose to deliberately trick prospective customers into coming into their dealerships. In the minds of the other car dealers, who would rather advertise honestly, they have no choice but to “out exaggerate” and even “out lie” the bad dealers. The bottom line is there is no difference in the net effect on you, the car buyer. One could argue that the real villains in all of this are the regulators or even the media. The state attorney general, the Department of Motor Vehicles, the County Office of Consumer Affairs and even the BBB look the other way when it comes to unfair and deceptive advertising of car dealers. With the exception of the BBB, their defense is that their “just too busy” with other concerns. In the case of the BBB, as long as a member pays his dues and responds to all complaints, he will usually have a high BBB rating. The dealer who ran the advertisement this article is about, Napleton Hyundai, has an A+ BBB rating! The media are complacent in running ads that are obviously deceptive, pleading ignorance. They also recognize that car dealers are one of their, if not their, largest advertisers.

This full page newspaper ad appeared in Sunday’s (5-20-13) PB Post and Sun Sentinel. You can view the ad by clicking on www.AnatomyOfACarAD.com. The upper LH side of the ad has a picture of the General Manager with the caption, “Thanks for making us your #1 volume Hyundai store 55 months in a row in PBC.” The ad is for the North Palm Beach and WPB Napleton Hyundai stores. There are 3 Hyundai dealers in Palm Beach County, 2 of which are owned by Napleton. The 3^rd is Delray Hyundai and it’s not surprising that 2 Hyundai stores sell more than one.

Reading left to right, “Double your Rebate up to $8,000”. In the fine print it says on “select models” off of dealer list. The key word is “dealer” list which is not MSRP, but a markup over MSRP by as much as Napleton chooses…thousands of dollars over the manufacturer’s suggested retail price. Furthermore the fine print says “trade-in required”. This is so Napleton can allow you far less for your trade than it’s worth to help him cover doubling the rebate. The ad also says “free leather” or $1,000. Napleton can give you a “free 5 caret diamond ring” if you allow him to mark his dealer list price up high enough!

Reading further to the right you will see, “$1 over invoice”. The dealer invoice is not what the dealer really pays the manufacturer for the car. The average car invoice packs in thousands of dollars in profit to the dealer in the form of holdbacks, advertising subsidies, dealer cash incentives, and customer cash incentives to name a few. Any dealer would be happy to average the “invoice profit” on every car he sells.

Reading further to the right, “$4,500 for your trade” even if you have to “push, pull, or drag it” into the dealership. Napleton can give $45,000 for all trades if you’ll let him mark up the new car as high as he wants…remember his cars are all priced at “dealer list”, not MSRP which is displayed on the federally mandated Monroney sticker.

Just below this is 0% financing, $0 down payment, and 0 payments for one year. Of course to get 0% financing, you can buy only the Sonata and Santa Fe models and pay (you guessed it!) dealer list. $0 money down and 0 payments for one year are available only with credit approval by the banks (banks usually prefer a down payment and will not waive payments for one year). Oh, none of the above is available on the cars in this advertisement (fine print).

On the top far right of this ad, “We will beat any Hyundai dealer in the USA by $500 or we will give you $1,000.”  This requires a valid buyer’s order from the other dealership signed by you and the manager. Virtually no car dealer will give you this unless you are buying the car and driving it home at the same time. They do not want to allow you to show a firm price to their competition which they can beat. Also in the fine print, Napleton reserves the right to buy the car on which the other car dealer gave you the low price, at that price. I can promise you that no car dealer is going to sell a car to his competitor and allow that competitor to steal his customer and sell him a car. If Ed Napleton can show me proof that he has ever honored this “Price Beater Guarantee”, I will contribute $10,000 to his favorite charity.

Just under the phony guarantee is “Drive a 2013 Hyundai Santa Fe sport for only $179 per month lease. The fine print requires $3,967 down payment. You also must qualify for all rebates and incentives. This means that you must be an active member of the military and a college graduate of an accredited 4 year university within the last 6 months. It may also include loyalty or competitive conquest rebates. This means that you would have to be driving a specific year and model Hyundai or a specific year and model of a competitive make to be eligible for  the advertised payment.

There are 7 more models with advertised lease prices, just like the Santa Fe, each requires a large down payment. Also, in the fine print, all lease payments are “plus dealer installed accessories”. This means that Napleton can add thousands of dollars in virtually worthless accessories to the advertised prices. Typical dealer accessories are nitrogen in the tires, paint sealant, stripes, emergency road service, and glass etching. This can add thousands of dollars to the already highly marked up dealer list.

Finally, almost every advertised car carries a number next to the price. One example is stock #46413F45 for the Elantra. In the fine print it says that the $795 dealer fee is included in the price. Florida law requires that the dealer fee be included in the price of every advertised car. But, if you buy any other Elantra than stock #46413F45, you will pay an extra $795, even if that Elantra is identical to the advertised car. The salesman is also not paid a commission on the advertised car, so you can imagine how good your chances are of buying that car even if it hasn’t already been sold.

My last column was an “Open Letter to Our Attorney General, Pam Bondi”. I asked her to consider reprioritizing her focus objectives to rid Florida of crime and unfair and deceptive trade practices. I hope she will look at this column and this advertisement by Napleton Hyundai. 

An Open Letter to Pam Bondi Florida’s Attorney General

Dear Ms. Bondi,

Thanks for working so hard to protect Floridians from being taken advantage of by those individuals and businesses that would deceive us to unjustly enrich themselves. I know that your responsibilities are enormous and that your resources are limited, especially given the current fragile state of Florida’s economy. I fully understand why you must choose your objectives carefully and then focus those limited resources in your fight against crime and unfair and deceptive businesses and individuals.

I respectfully suggest that you consider the deceptive advertising and sale of automobiles by Florida car dealers as one of your focused targets. Speaking to advertising, the easiest way for you to learn how prevalent deceptive car advertisements are would be to go online and read the auto classifieds in any major Florida newspaper. I suggest you start with the Palm Beach Post and the Sun Sentinel any Saturday, which is the day you will find most of the auto dealers’ advertisements. Viewing the e-editions of these two newspapers will allow you to also read the fine print which is helpful in discovering the almost universal “bait and switch” nature of these advertisements. The TV, radio, and direct mail advertisements are arguably even more deceptive. The TV and radio “fine print” disclosure is nonexistent because it cannot be read or heard by anyone even with the sharpest eyes and hearing. The car dealers don’t even try to legitimatize many of their direct mail advertisements because they know they fly below the radar of the regulators since they can specifically target all recipients.

Speaking to deceptive sales practices, I consider myself an authority on this because I have been “mystery shopping” car dealers in South Florida weekly for several years. I send in a mystery shopper who purports to be responding to an advertised used or new car. In the vast majority of these hundreds of shopping reports I’ve discovered unfair and deceptive sales practices. In many cases sales people will openly admit to the shopper that the advertisement is a lie and that its sole purpose is to get people to come into the dealership. Probably the most common violation is the failure to disclose the “dealer fee”. In recent years most dealers have begun charging customers for their “electronic filing fee”, marking up their cost for tag and registration by as much as $300-$400. This new version of the dealer fee most often  not disclosed on vehicle buyer’s orders as is required by Florida law for the dealer fee although it is a dealer fee by another name.

A car purchase is the 2^nd most expensive purchase a person makes and, unlike a home purchase, the purchase is made about every 4 years. For most Floridians, nothing else requires a higher percentage of their earnings than their cars. If I’m right and most transactions involving car purchasing in Florida includes deceptive advertising and sales practices, this should be a priority item for your office to regulate.

For many years I have attempted to persuade the Florida Automobile Dealers Association, FADA, to regulate themselves. Although the chairman and president of FADA are receptive to this, they have been unable to get agreement from the executive committee and directors. I have suggested that FADA ask dealer volunteers in the various markets around Florida to monitor advertising and investigate consumer complaints. If a dealer was found to be engaging in unfair and deceptive advertising and/or sales practices, FADA would send him a warning letter. If he ceased and desisted from these practices, that would be the only action taken. If the dealer did not, FADA would notify your office and you would take whatever actions necessary to bring this car dealer into line.
 

I think it is in the best interest of Florida car dealers to regulate themselves, but there must be some “teeth” in that regulation. I believe if you wrote Larry Morgan, the chairman of FADA and Ted Smith, the president, a letter asking that FADA consider some self-regulation and submit that plan to the Florida Attorney General’s Office for approval, this might get the “self-regulation ball” rolling. Please call on me any time I can be of assistance. My cell phone number is 561 358-1474 and my email address is earl@estoyota.com.

Sincerely,

Earl Stewart

www.earlstewarttoyota.com

BUYING A CAR WHEN YOU HAVE A CREDIT PROBLEM

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. Make no mistake about it. A car dealer is probably making more money selling 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. 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 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 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 of 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 criminal offense.

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 as long as 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 of 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 of the features of the vehicle.

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 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 of 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. 

I’m Sorry, but Your Car Is Out of Warranty

Most everyone has heard these words, “I’m sorry but you’ll have to pay for this repair because your car is out of the manufacturer’s warranty”.  What should you do say or do? Obviously, we’re not talking about cars that are “way out” of warranty. A ten year old vehicle with 200,000 miles that has a 3 year or a 36,000 warranty will not be repaired free by your dealer or manufacturer. However, for cars those that are “close” to being within the warranty time and mileage there is a good chance that you can persuade the dealer/manufacturer to pay at least a portion of the cost of repair. This article is designed to tell you how best to do accomplish this.

The easiest way to have your car repaired at no cost is if you initially brought the vehicle in for a problem while it was still under warranty, the dealer “attempted” to fix it, but did not. When the problem resurfaces, as long as you have in writing and on the record that this happened, you should have no problem getting your car repaired at no charge.

To the lesser degree that your car is out of warranty, the greater is your chance that the factory authorizes a “goodwill” repair. Goodwill is what they call all repairs made at no charge when the car is out of warranty. If your car is only 5 miles out of warranty, this should be very easy to have approved. The further out of warranty, the more difficult this is and the less likely that you will have 100% of the cost paid by the manufacturer. For example, a car that’s 3,000 miles out of a 36,000 mile warranty may be granted just 50% of the cost of the repair under goodwill.

It’s important to understand that the dealer often has no say in whether an out of warranty car can be repaired under goodwill. A good dealer should support your request for goodwill because he gets paid by the manufacturer for doing the repair and this make his customer happy.  A bad dealer might not support your goodwill request because he would like to charge you more for the repair than the warranty will allow. A dealer can charge you anything he wants for parts and labor but the factory allows him only his approved warranty labor rate, markup on parts, and time to complete the repair.  If a dealer is reluctant to support your request for goodwill, be sure to take your request all the way to top. Take it to the service manager, then to the general manager, and then to the owner. If the dealer won’t support you, try taking it to another dealer who will. It’s very important that you have the support of the dealer when you take your request to the manufacturer. Without it, it’s highly unlikely you will get help.

Some dealers are granted the authority to make goodwill adjustments directly as well as making decisions as to whether a repair should be covered under warranty. This can be good and bad. As I said earlier, a dealer can have an ulterior motive for not wanting to repair your car under warranty…he can make more money if he makes you pay. A dealer who is authorized to make warranty/goodwill decisions is so authorized because he has kept his warranty and goodwill costs low. This is bad for the customer if the way he has kept them low is by denying legitimate claims to make himself look good in the eyes of the factory and to avoid a warranty audit. To some service managers, it’s more important to be popular with the factory than with the dealer he works for.  You want a service manager who works for a good dealer and whose loyalty is with that dealer who will be for his customers.

Manufacturers and dealers will favor those customers who have bought cars from them and had their cars serviced with them. The dealer/manufacturer has your entire sales and service history on their computer. If you have bought 2 or more cars of this make and had them serviced regularly by the dealers of that make, they will “stretch” on the warranty coverage and goodwill.

When asking for repairs for your car that is out of warranty, be courteous, factual, and as brief as possible. Never threaten to take your business away, sue, or call the media. Never raise your voice or curse. Dealership and factory employees are just like you…they tend to respond more positively to someone who is courteous and rational. You should put your request in writing, email or regular mail. If things are moving too slowly, it’s a good idea to call the factory 800 customer assistance number. Your request will be referred back to the dealer, but it’s good to be on record with the factory.

When encountering difficulties, go on your PC and Google your repair problem. Google will direct you to chat rooms and other sources of information about people who have the same problem. You will be amazed at the number of people who have had the same problem. Sometimes even your dealer may not be aware that this repair is common among owners of the year, make and model. Knowing this gives you a strong psychological advantage.

When you Google your repair problem, you may find out that the manufacturer has issued a notice to their dealers about this problem. This kind of notice is referred to as TSB or Technical Service Bulletin. Sometime s TSB will authorize the dealer to repair the car under warranty but only if the customer asks! You may even learn that this repair is covered under a recall campaign, but the dealer should have now that when he checked your VIN in his computer.

The bottom line is don’t just take “no” for an answer. Go through the steps that I’ve covered above and you should have a pretty good chance of getting at least some of your repair paid for by the manufacturer.

SHOULD I BUY MY CAR AT THE END OF THE LEASE?

The best thing about making this decision is that you are holding the best hand in the card game between you, the leasing company, and the dealer. That is because you know your car better then they do. You probably have been driving it for close to three years, you know how well you have maintained it, how worn the tires are, whether or not its been wrecked and repaired, and how many dings, dents, or upholstery blemishes there are. You know if it was garaged and how you carefully you drove it. You also know, better than anybody, how well it runs. All of these things determine the value of your car.

Unless you buy a new car, you can not have as much confidence in any other used car that you may buy than your own used lease car. The only assurance that you have when you buy somebody else’s used car is their word or the dealer’s word about how it was driven and maintained. That mean that if you did take very good care of your lease car, drove it carefully, kept it in a garage, waxed and washed faithfully, and maintained it carefully it is worth more to you than anybody else because you are the only one who knows that. And you can never be sure about that for any other used car you might buy.

Given that you like your lease car and want to keep it, the next step is determine its wholesale market value. The leasing company usually is not in the business of selling cars, just leasing them. Getting rid of off-lease cars is expensive and time consuming for them. You have an advantage here too and you should be able to negotiate a good price. Remember, you know your car much better than they do. They will usually give you a price you can buy the car for without even looking at it. Oftentimes they will call you first about buying your lease car before the lease is up. Be careful when this happens because this can mean that they are facing a loss if they have to wholesale your car at the auction. They are calling you to sell you your car for more money than they can get for it at the auction.

That is why you need to establish the current wholesale market value for your car. Car dealers call this ACV, for actual cash value. Check the Internet for information on the value of your car. www.kbb.com, the Web site for Kelly Blue Book is one of the best sources. Consumer Reports can also give you this information. The best check on the wholesale value is to actually drive your car to 3 or 4 car dealerships that are franchised for your make. If you drive a Ford, visit as many Ford dealerships as you can and tell them you want to sell your car. You aren’t misleading them because it’s a lease car. You could exercise your option to buy it from the leasing company and them resell it to the dealer, if the dealer’s offer was higher. If you live near a CarMax store, the largest retailer of used cars anywhere, they buy a lot of used cars over the curb and their prices are usually very competitive.

Now that you are armed with the true market value for your car, you can negotiate the best price with the leasing company. Even if they won’t sell you the car for the ACV, wholesale value, paying as much as $2,000 over wholesale for a car you have absolute confidence in is a good deal. If you can buy it for wholesale or below, you should celebrate!

Another thing to be on the lookout for with the leasing company is when they offer to extend your lease for the same monthly payment you are currently making. That is not a good deal. They are doing this because they will lose money if they sell this car at the auction at the present time. They want you to keep making payments on the car so that their depreciation rate catches up with the residual value. The residual value is the price they guessed your car would be worth in 3 years. If you had leased the car for longer at the onset of your lease, the payments would be lower than they are now. Why should you pay the leasing company the same as they charged you for a shorter lease?