We have until January 8th, 2024 to submit comments to the FTC about proposed rules to BAN CAR DEALER JUNK FEES. Please visit to be heard!

Friday, December 20, 2019

2020 New Year’s Resolutions for Florida Car Dealers

This blog is addressed to Florida’s car dealers, as well as those in the other 49 states. I don’t expect most of you to take these suggested resolutions in the spirit in which they’re intended, but I hope some of you will.

I’m a car dealer and I’ve been in business longer that most of you, since 1968. I began as a Pontiac dealer in West Palm Beach, and I did business back then just about the same way you do business today. I advertised cars for less than I knew I could, or would, sell them for. I added hidden fees to the prices I quoted my customers. I added overpriced accessories to my cars like undercoating and paint sealant. I negotiated the highest prices I could with those least capable of understanding how to get the best price. I even rewarded my salesmen when they made a profit of $4,000 or more on some unsuspecting, defenseless customer…a $500 bonus in addition to a $1,000 commission and his name on our revered SLAM DUNK BOARD. Bear in mind that I would also sell cars to smart, sophisticated negotiators for $100 profit of even less. This way of selling cars is unfair, immoral, and unethical. It took me a long time to figure this out.

When the Internet and World Wide Web became a reality in 1990, who could have guessed that it would change the world more than any invention in the past. What has transpired from this spark at the end of the 20th century, is the KNOWLEDGE EXPL0SION of the 21st century. With Big Data, Artificial Intelligence, and Quantum Computing giving us tools like Google, Apple, Facebook, Amazon and Netflix, the sum-total of human knowledge is doubling in less than every 12 hours. I was born in 1940 when human knowledge was estimated to be doubling every 12 years. The bottom line is that everybody is getting a lot smarter, especially the consumer. If car dealers want to survive, you must begin dealing intelligently with their customers. Before you know it, you won’t have any more customers you can deceive into buying cars they don’t want and paying higher prices than they should. 

1. Display your lowest price on every new and used vehicle you sell.

2. Add no hidden, bogus fees to your quoted or advertised price.

3. Never pre-install dealer accessories to your vehicles, especially if they’re not included in the advertised or quoted price.

4. Don’t deprive your prospective customers of their American, inalienable right to shop and compare your lowest price with the competition. Capitalism, competition, and the free market place are American attributes which make our country the greatest on the Planet.

5. Do not switch a customer that wants to buy a car to leasing because you can make a lot more money leasing. If leasing is the best alternative for your customer, your profit should be equal on the buy or the lease.

6. If your customer wants to finance his car with you, offer him a fair, competitive interest rate. Offer to sell him “products” like extended warranties, maintenance contracts, GAP insurance, road hazard insurance, and emergency road service only with thorough disclosure of real cost and benefits. Never add anything to the finance contract that the customer does not know about or understand. Never say or imply that the lender requires that he buy an extended warranty or any other product.

7. Never sell a used vehicle with an unfixed dangerous recall. Most car dealers are doing this today, wantonly, and in most cases not even disclosing the recall. Some of these recalls have no fix available.

8. Never display conditions that increase the real price of the advertised vehicle in the unreadable fine print of your advertisements. All car dealers do this and so do their manufacturers. Where is the honesty and transparency in advertising a new car that you can supposedly lease for $299 per month when the unreadable fine print requires a $5,000 down payment?

9. Don’t falsely give hope to prospective customers with bad credit by understating the conditions that they must meet to obtain financing. For example: “ANY CREDIT APPLICATION ACCEPTED” or “WE FINANCE GOOD PEOPLE WITH BAD CREDIT”.

10. Don’t trick customers into believing that you will pay off all the money owed on their current purchased or leased car and sell or lease them a new one…” WE’LL PAY OFF THE MONEY YOU OWE ON YOUR PRESENT CAR, NO MATTER HOW MUCH IT IS”. More and more car drivers owe more on their cars than they’re worth…often many thousands of dollars. You’re tricking them into thinking you are paying off their old loans, when the truth is, you’re adding what you paid the bank to the price of the new car you sell or lease them.

Monday, December 16, 2019

Open Letter To: Governor Ron Desantis, Florida House Speaker Jose Oliva, Florida Senate President Bill Galvano, Attorney General Ashley Moody

Subject: Enforce Florida Statute 501.976 (16);

Dear Ron, Jose, Bill, and Ashley,

You may know of me, I’ve been an auto dealer in Palm Beach County for over half a century. I currently own a Toyota dealership in North Palm Beach/Lake Park, but I’m more known for my activities as a consumer advocate for car buyers. You can Google me and learn about my platforms…radio show, blog, newspaper columns, book, and public speaking.

I’ve been mystery shopping car dealers weekly for more than 17 years. I’ve learned that very few car dealers in Florida are abiding by the Florida law requiring them to include all profits and costs to the dealers in their advertised prices. Last week, for example, I mystery shopped H Greg in West Palm Beach, part of a 20-dealership chain. Their online advertised price excluded $1,298 in hidden fees. You can access this shopping report and hundreds more just like it by going to my I estimate that the dealers in Florida that abide by this law to be less than 1%.

Because of the lack of enforcement of this law, dealers have been emboldened, and they have become more aggressive and ingenious in their ways to profit by deceiving the car-buyers in their advertising. You should know that Florida has the least regulated hidden fee laws in the USA. No other state allows car dealers to charge as much as they want, NO CAP, in hidden fees, name the hidden fee anything they want (tag agency fee, electronic filing fee, doc fee), and Florida dealers can charge as many different hidden fees as they like. Two or three fees is common place.

Governor Desantis, Speaker Oliva, President Galvano, and General Moody, you were elected by the voters (who are also the car-buyers) of Florida because they believed that you would uphold your oath of office and enforce our laws. When they voted you in office, they believed that you would be concerned about their ability and right to respond to car dealers’ advertising without fear of being tricked into paying car dealers thousands of dollars more than the advertised price.

I’m very much aware that car dealers are an important part of Florida’s economy and employ thousands of Floridians. Dealers’ profitability is a valid concern and I know that the Florida Auto Dealers Association and most individual car dealers supported your elections. However, the good things that car dealers do for Florida’s economy and providing jobs don’t grant them immunity from its laws.

I’m inviting each of you to appear on, or call into my radio show, Earl on Cars, any Saturday morning, 8-10 am. You may call me anytime on my persona cell phone 561 358-1474 to set up a date and time.


Earl Stewart

Recovering Car Dealer

Monday, December 09, 2019

How to Get the Lowest Price on Any New Toyota from Any Toyota Dealer

My Toyota dealership in North Palm Beach, Florida may be the only car dealership on the Planet that posts online its lowest out-the-door price, on all new and used cars.

If you doubt my word on this, ask yourself when a car dealer has quoted you a price that you can take home and shop and compare with other car dealers’ prices that represents the total out-the-door price of the car you want to buy . By the way, the definition of an out the door price is one that you can write a check for, hand it to the salesman, and get in your car and drive home. There can be no extra charges for dealer installed accessories or hidden fees, also known as Dealer Fee‘s. My guess is that your answer to this question is you’ve never had an out the door price quoted you by a car dealer (that he would honor).

FYI, this article is not an advertisement or commercial to try to sell you a new reaches readers all over the United States and the world, as do my newspaper columns, podcasts, Twitter and YouTubes. The odds that you live close enough to my dealership to be able to buy a car from me are very slim.

What I’m giving you in this article is the way to find a very low, out-the-door price on any new Toyota that you might want to purchase from any Toyota dealer anywhere. Here’s a link to the out-the-door price on a new Toyota RAV4, The out-the-door price is $27,927. You write me a check for that price and take the car home. There are no hidden fees and dealer installed accessories (like nitrogen in tires and paint sealant). You can click on my website,, and get out the door prices on every new Toyota model (and all used cars too).

Remember, I’M NOT TRYING TO SELL YOU A TOYOTA. This article is to empower you with something you already have for buying all other retail products, except cars. By showing another Toyota dealership my lowest price on the new Toyota of your choice, he has no honest choice (if he wants your business) but to match or beat my price. However, he has lots of dishonest choices and PLEASE EXPECT THE DEALER TO TRY THEM. The most obvious choice is to lie about matching my out-the-door price and add hidden fees and dealer installed accessories. The dealer can also attempt to undervalue your trade-in allowance. If you’re financing the car with the dealer (usually a bad idea), he’ll make over $1,000 in the financing. If none of these tricks work, he’ll try desperately to switch you to a different vehicle so that you can’t compare prices. If all the above fails, he may, in total frustration, tell you that “Earl Stewart won’t really sell you the car at that price”. Or, another favorite is “Earl Stewart really charges hidden fees, but he hides them in the price of the car!”. I laugh every time I hear that one. 😊

I’ll not only sell you any car at my out-the-door price, but I’ll sell everyone (even the dealer that’s saying I won’t) at that price. The most important thing is that the prices are my lowest prices and I will not sell any car for 1 penny less to anybody…not the Governor of Florida, President of the USA, or Queen of England. If did cut my price for certain people, I wouldn’t be true to my word that my prices are my LOWEST prices. Just because the prices are my lowest prices doesn’t mean another dealer can’t sell you the same car for less. They can, but they just don’t want to. I’ve never advertised (like most other dealers) “Nobody will sell you a new Toyota for less!”. Of course, they will! If you force them to, they don’t have a choice. All car dealers are insanely competitive and they’d rather make a small profit (or even no profit) instead of lose a deal to Earl Stewart or any other Toyota dealer.

If the Toyota dealership that you’re buying from doubts my claim, please ask the dealer (or salesman) to feel free to call me on my personal cell phone, 561 358-1474. I’m sure I’ll be able to convince them; if not, I’ll put it in writing and have it notarized.

Good luck and I’d love to hear back from any Toyota buyers in the USA* that give this a try.

*If you’re buying a new Toyota outside of the Southeast USA (Florida, Georgia, Alabama, North Carolina, South Carolina), take into consideration that all other Toyotas have an average cost of about $775 less. This is because Toyotas in the Southeast USA have an average of $775 added to the cost by the independent Toyota Distributor that resells new Toyotas to me and all other Southeast Toyota dealerships.

Monday, December 02, 2019

COMPETITION: Car Dealers’ Achilles’ Heal

The retail and wholesale auto industries are highly competitive. Toyota desperately wants to outsell Honda, Chevy desperately wants to outsell Ford, and Mercedes desperately wants to outsell BMW. The auto manufacturers “live and die on the 30-day sales cycle, month to month. This desperation is passed along to the retailers of their products, the car dealers. Car dealers have short term contracts (franchises) with their manufacturers, typically 6 years. If a car dealer doesn’t meet his performance goal in the number of new vehicle sales, his franchise can be canceled. This literally puts him out of business and the millions of dollars he has invested in his buildings, land, equipment, and inventories can virtually vanish.

The auto manufactures assign quotas to their dealers. These quotas are based on intensive market studies of the geographic areas surrounding each of their dealers. The manufacturer tells each of their dealers the minimum number of new cars he must sell each month. If he falls short, his existence as a car dealer is in danger. The dealer must sell his assigned number and percent of vehicles sold within his market area. These market areas vary but are typically about a 20-mile radius from the dealership. Within that radius are representatives of most other makes of cars and the same make as the dealer’s, because markets usually overlap.

The major competition to the auto manufacturer is different from the major competition to the auto dealer. A Mercedes dealer is far more likely to lose a sale to another Mercedes dealer than to a BMW dealer. The Mercedes manufacturer doesn’t care which Mercedes dealer sells the customer; the manufacturer is worried about BMW, Infinity, and Audi dealers. Thanks to the Internet and the information explosion, most car buyers today have decided which make car they’re going to buy before they enter a car dealership. When the customer visits Mercedes dealership A and leaves without buying, that customer is probably going to buy a Mercedes from Mercedes dealership B or C.

Now you’re beginning to understand why car dealers’ desperate competitiveness is your friend when buying a new vehicle. Car dealers pass along the quota assigned to him to his sales managers and salespeople. A manager that doesn’t hit his quota loses his job just as does a salesman that doesn’t sell a certain minimum number of cars per month. Adding to this desperation is that EVERYBODY in the auto industry is paid on commission. Mercedes management, from the CEO all the way down is paid on performance. The car dealer is paid by profits, not salary, and sales managers and salespeople are paid a commission based on profit on each car.

As hard as this may be to understand or believe, car dealers will sometimes sell cars at a loss in order to not lose a sale. Your awareness of this desperation is your “ace in the hole” when buying a new vehicle. By “working” at least 3 car dealerships against each other, you can buy your new car at the lowest possible price. Unfortunately, this is easier said than done. It’s not for the timid or faint of heart. You’re going up against seasoned professional salespeople and their managers. You’re playing in their “game” that they play day in and day out.

Here are a few simple rules that, if followed to the letter, will result in your buying your next new vehicles at the lowest price possible:
  1. Choose the exact make-year-model vehicle you will buy and the exact accessories. Do not change your mind after you begin gathering competivive prices. Car dealers’ favorite tactic is to “switch” you to a different vehicle from the one you initially planned to buy.                           
  2. Make your lease or buy decision before you begin shopping and stick with your choice. Car dealers’ second favorite tactic is to switch buyers to leasing. This greatly enhances their profits and makes it more difficult to be compared to their competition.                                                   
  3. Insist on an out-the-door price from each dealership. This will be your most difficult task. An out-the-door price, strictly speaking, is the amount of money you pay the dealer permitting you to drive the new vehicle home. It’s acceptable to be quoted the full price with only government fees of sales tax and license and registration added. Be clear that you will not pay for any dealer installed accessories not installed and included in the current price. Also you will not pay for non-government fees aka “taxable fees”. Here are links to my two blogs that will assist you in this most difficult task. and

Friday, November 22, 2019

Earl’s Suggested Word-Track for No Hassle/No Haggle Car Buying

You can use this word track to buy a car online, via regular mail, over the telephone, or in person. I strongly recommend that you use it online, but I know that some car buyers, seniors like me, are not as comfortable with buying over the Internet. Using this word track in person can work, but it will be much more difficult and take a lot longer. Only a person with a very strong will, stamina, and a very thick skin should attempt this face-to-face. I strongly recommend that you don’t.

(1) Dear Car Salesman, “Within the next two weeks (enter your own time frame), I will be purchasing (leasing) a (fill in the specific make, year, model and optional accessories).” You should carefully research the vehicle that you decide to purchase using all sources of information available such as Consumer Reports. You should also test drive the car to be sure it feels and drives the way you want it to. It is vital that you not change your mind during the purchasing process. If you do change your mind, you must begin all over again. Never let a car salesman change your mind for you.Switching the type and price of the vehicle you’re buying (bait and switch) is one of their favorite ways to charge you more money than you had anticipated paying.

(2) “Please quote me your lowest price on (your specific car). This price must be an out-the-door price with only state sales tax and the license tag fees paid to the state. To be sure there is no confusion, please understand that the only dollar amounts that I will pay in addition to the price you quoted are taxes and fees actually paid to the state government. I will not pay dealer fees by any name such as electronic filing fees, tag agency fees.”

(3) “I understand that my request may not be one you wish to comply with because you are concerned that I will shop and compare your price with other car dealers. Your concerns are valid because this is exactly what I will do. You may be asking yourself, ‘why should I do this if I know that my lowest price may not be low enough and that I will show it to your competitor to get an even lower price?’ My answer is quite simple; you may have only a small chance of winning my business if you do give me your lowest price, but you will have ZERO chance of winning my business if you do not, because you will never hear from me again.”

(4) “I will sell my trade-in to the highest bidder, just like I will buy my new car from the lowest bidder. I will also finance my car at the lowest interest bid by a bank or credit union. If you can meet or beat other dealers and banks, I will trade my car into you and/or finance with you.”

(5) “If you quote me your lowest out-the-door price and I come to your dealership to purchase my car, please don’t even think about: (A) Telling me that the car I specified was sold and that you would like to show me other cars just like it. (B) Telling me that the car I specified has some accessories/options that you installed like nitrogen in the tires, glass etch, pin stripes, floor mats, paint sealant, etc. (C) Telling me that you priced in rebates and incentives that I don’t qualify for like college graduate, military, customer loyalty, customer conquest, etc. (D) The price you quoted me is only valid if I finance my car through you. If you do any of these things, I will not only not buy from you, but I will report you to the Florida Department of Motor Vehicles, BBB, the County Office of Consumer Affairs, Florida Attorney General, and your manufacturer. “ Furthermore, I will expose you on Facebook, Google, Yelp, Twitter and any other form of social media I can think of.

(6) “If everything goes well with no shenanigans, I will write a letter of commendation to your owner and manufacturer. I will also tell all my friends, neighbors, relatives, work associates, and club members about my wonderful experience with you and your dealership. I will also post recommendations on Google, Yelp, Facebook, and Twitter.”

(7) “The choice is yours and I hope that you see the benefits of selling me a car at the lowest price you can afford to give me. I also hope you can see the dangers of giving me a dishonest price so that you can get me into your dealership and try to charge me more than we agreed.”

(8) “I wish you the best of luck and I sincerely hope we can do business and have a long car buying and servicing relationship.”

Monday, November 18, 2019

Hidden Fees and Accessory Charges Defeat Buyers’ Online Buying Advantage

For years I’ve advised car buyers to go online to get the lowest price on new or used vehicles. Online, you can avoid the haggle and hassle of dealers’ game-playing when you’re inside the dealership. Online, you can even maintain anonymity by not giving them your real phone number and giving them another email address. Car dealers know that they have just one chance to sell you a car and if their price is too high, they may never hear from you again.

As the percent of cars bought online has soared, car dealers have had to “adapt” in order to maintain their profit margins. This “adaptation” amounts to lying about the prices they give you online. They give you a very low price, lower than their competition’s, to which they later add thousands of dollars in hidden fees and dealer installed accessories.

I use the word hidden fee rather than dealer fee because dealers learned long ago that car buyers were becoming more aware of the hidden profit named “dealer fee”. Some dealers advertise “No Dealer Fee” because they renamedtheir dealer fee something else. Dealers name their hidden fees whatever they choose…usually something that sounds like an official government fee. Some commonly used examples are “tag agency fee”, “electronic filing fee”, “e-filing fee”, dealer services fee, “administrative fee”, “documentary (doc) fee”, “dealer prep fee’, etc. Most car dealers employ multiple fee of this nature totaling at least $1,000 and some over $3,000.

Dealer installed accessories are added to the vehicles but not included in the price you get. These accessories cost the dealer very little and they mark them up as much as 1,000%. Examples are nitrogen in the tires, pin stripes, window tint, floor mats, paint sealant, fabric protection, road hazard insurance, emergency road service, etc. The total extra profit to the dealer for these averages at least $1,000.

Third party buying services can be the best way to buy a vehicle. Consumer Reports, American Express, GEICO, True Car, AutoTrader, Car Guru, and are all legitimate companies that try to obtain the lowest prices for their members and users. However, all of these companies are deceived by their dealer members when they quote customers their supposedly low price. A buyer can go on AutoTrader to buy a specific year-make-model vehicle and sort by lowest price. The car dealer that comes out first should have the lowest price. But what the buyer doesn’t know is that this car dealer is adding thousands of dollars to the price in hidden fees and dealer installed accessories. TrueCar advertises that their TrueCar price includes hidden fees and dealer installed accessories, but that claim is only as good as the honesty of their dealers. Third party buying services deal with well over 10,000 car dealers and it’s impossible to inspect and be sure that they all are playing by the rules. The fact is that most car dealers do not play by the rules.

This all means that the responsibility for getting an honest price lies with you, the car buyer and it’s BUYER BEWARE, CAVEAT EMPTOR. Whether you’re dealing through a third-party buying service or directly online with a car dealer, burn this term into your brain, OUT-THE-DOOR-PRICE. Never set foot into a car dealership without previously obtaining a written document stating the full, complete out-the-door price of the vehicle you’re buying. The only legitimate, honest fees that should be added are government fees of state sales tax and license plate/registration. To be absolutely safe, ask that all fees (including tax and tag) be included in the price they give you. A good way to clarify this and be certain they can’t pretend like they misunderstood…tell the dealer you’re bringing a check from your bank or credit union marked PAYMENT IN FULL.

Monday, November 11, 2019

Negative Equity

(aka "Upside Down" & "Underwater")
You’ve probably seen a lot of car advertisements claiming, “WE WE’LL PAY OFF YOUR OLD CAR, NO MATTER HOW MUCH YOU OWE”! This is a lie, because no car dealer every pays of your car for you; you pay off your car because the dealer adds the payoff amount to the price of the car that he’s selling you.

The Wall Street Journal recently (11-11-19) featured a front-page story, “Car Debt Traps More Drivers”. The article begins “John Schricker took out a loan to buy a car in 2017. Then he took out another. And then another. In two years, the 40-year-old electrician signed up for four auto loans, each time trading in the previous car and rolling the unpaid balance into the next loan. He recently bought a $27,000 Jeep Cherokee with a $45,000 loan from Ally Financial Inc.”

This practice has been going on as long as there’ve been car dealers, but it’s worsened in recent years due to sharply increasing car prices with sharply reduced dealer profits on new cars. Car prices are soaring from the revolution in digitalized electronic safety features, but dealers’ profit margins have shrunk from the increasingly educated 21stcentury consumer, armed with the Internet and online buying. 33% of new car buyers that traded in their old car so far in 2019 owned more on their trade-in than its actual value, compared to 28% five years ago and 19% a decade ago, according to the Wall Street Journal.

Due to car dealers’ reduced ability to make large profits on the sale of new cars, they are focusing on their finance profits. Finance profits are enhanced by the sale of extended services contracts aka warranties, pre-paid car maintenance, GAP insurance, road hazard and roadside assistance insurance, and a litany of other overpriced and usually unnecessary services and products. Car dealers make more money in their F&I (Finance and Insurance) departments than their new car sales departments. Adding the negative equity from car buyers’ trade-ins to the loan on their new cars further enhances the dealers’ profits in their Finance and Insurance Departments.

Many new car buyers with negative equity in their trade-ins are not aware of it, and car dealers don’t bring it to their attention for fear of losing the sale. The facts are revealed in the sales and financing contracts which most buyers don’t read carefully or understand. Most car buyers are focused on one thing…their monthly payment. If a dealer can offer a monthly payment close to their current payment, this usually satisfies the buyer. Dealers can often do this by extending the terms of the loan to a much as 72 months, surprising the buyer with a large down payment, or “flipping” the buyer to a lease.

All the above is why new car buyers should make a point of completely understanding all the numbers of their purchase or lease transaction. This is best done by separating the new car purchase into (1) establishing the actual value of the trade-in compared to the payoff to the bank, (2) knowing the out-the-door selling price of the new car, and (3) the best interest rate, down payment, and terms usually obtainable from their bank of credit union. Car dealers finance most of the new cars they sell through kick-back arrangements with their banks. These interest rates and terms are usually not best for the buyer.

Monday, November 04, 2019

Should I Buy a Car or Have a Colonoscopy?

If you’re over 55, you should have had a colonoscopy. If you haven’t, call a gastroenterologist, because this could save your life; It did mine, but that’s another story. I had another colonoscopy (about a half dozen, so far) a few days ago, and I must 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.

If you need further proof that buying cars is an unpleasant experience, just read the latest Gallup Poll entitled HONESTY AND ETHICS IN PROFESSIONS. The Gallup organization has been taking this poll every year since 1977. Car dealers have ranked last, or nearly last, in every poll…FORTY-THREE YEARS! For the latest full year poll in 2018, click on

My newspaper columns and blog consist mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful one. 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”. You can read all my articles (hundreds) at You’ll find links there to listen to my live, weekly radio show (Saturdays 8-10 AM EST), my YouTube videos, Podcasts, Facebook, Twitter and a wealth of other information on “how not to get ripped off by a car dealer”.

Almost every one of these articles originated from readers of my column, callers to my radio show, and others’ experiences when buying cars from car dealers. I get a lot of calls from people who’ve 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’ve already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I’ve called car dealers asking them to consider undoing a wrong they have caused one of their customers. I must confess that my batting average on this effort is “below 300”. I won’t give up, however. One of my most recent calls was from a customer who was charged nearly a $1,000 in service work performed on her car when she had brought it in for a routine service that should have cost her less than $100. She called me for help and was forceful and diligent in following my advice. She got a complete refund on the “unasked for, unnecessary charges”.

One thing that amazes me about these weekly columns and my radio show is that I have been writing and airing for nearly 14 years is that no car dealer has ever called me to complain, or for any other reason. I’ve 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’m 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’m 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.

Monday, October 28, 2019

Ten Tips on Buying the Right Used Car

I sell new and used cars, but if I was not a car dealer and I needed to buy a car, I would buy a used one instead of a new. This is because a used car is a better value. You get more for your money due to avoiding the initial rapid depreciation of a new car. I use the term “used car” in this article because I despise mumbo jumbo euphemisms like “pre-owned”. A used car is a used car is a used car.

(1) Never buy a used car without a CarFax report. The dealer should provide you with one at no charge because any dealer worth his salt runs a CarFax report on every used car he trades in or buys to protect him. Simply don’t buy a used car from anybody that does not give you this report. CarFax reports now have, not only the information about collision damage, floods damage, previous odometer reading, and title issues, (all obtained from insurance records) but also the mechanical repair history (obtained from dealer records). The CarFax report also shows outstanding safety recalls, but I also recommend that you double check this with the NHTSA, National Highway Traffic Safety Association at In my experience, CarFax misses safety recalls about 30% of the time. Unfortunately, there is no law requiring car dealers to even disclose an unfixed safety recall and most dealers are willingly selling their customers cars with dangerous safety recall like Takata airbags.

(2) Have your car inspected by an independent mechanic. Insist on having the used car you are thinking about buying inspected by your mechanic, not affiliated with the dealer. This should cost you no more than $150 and will be money well spent. The mechanic should look, not only for mechanical issues, but body and flood damage. If the mechanic finds some minor things that need fixing, insist that the dealer take care of these and include it in the price he already quoted you. If the dealer won’t allow this, don’t buy from him.

(3) Consult Consumer Reports,, and These sources have complete information on the safety, reliability, maintenance cost, and even what a fair price is to pay for any used car. Consumer Reports lists the “Best and Worst Used Cars”. This is great guide and don’t ever buy a used car that’s on the “worst list”.

(4) A Certified Used Car is only as good as the dealer who sold it to you. Most manufacturers don’t even require that the dealer fix open safety recalls to call the car “Certified”. All manufacturers sponsor “certified” used cars of their make. The main reason for this is that they like to sell the dealer warranties that the dealer then marks up and sells to you. A secondary reason the manufacturers do this is to enhance the resale value of their make car. This helps them sell more new cars because of the higher trade in value and the higher residual values on cars they lease enhance their profits. You can buy a warranty for used car even if it’s not certified, but in a certified used car it’s usually included in the price (which makes the price higher). One good thing about manufacturers’ certified programs is that sometimes the manufacturer will offer you lower financing rates. Certified used cars require that the dealer inspect all critical parts of the car and fill out a checklist that is anywhere from 75 to 150 items. That’s all well and good but how carefully is this inspection being done and by whom? You should ask to see a copy of the check list and ask about the qualification of the mechanic who performed and signed the inspection. All too often, the dealer assigns the lowest priced mechanic he has to perform these checks. It’s questionable whether he even performs all of them. A red flag is if you notice a straight line drawn through all of the check boxes instead of them being checked off individually.

(5) Money Back Guarantee. A lot of dealers advertise that if you change your mind about the car you bought you can bring it back and exchange it for another. This is a worthless guarantee. You can be sure that they will pick the car and the price of the car they will exchange it for and will end up making an additional profit. CarMax has a reasonable guarantee which refunds all your money within five days with restriction that the car is returned in the same condition that it was sold. CarMax is a good place to buy a used car.

(6) Contact the previous owner of the car. The previous owner of the used car should be happy to talk to you. Insist that the seller provide you with his telephone number. If the dealer sold the car to that owner as a new or used car and serviced it, ask if you can see the service file.

(7) Test drive the car just as you will be driving it later. Simply taking the car for a spin around the block with the salesman is not enough. I recommend that you drive the car in the manner and places that you will be driving it when you own it. Take it out on the expressway if you do a lot of higher speed driving. You should drive the car for at least a few hours at all the same speeds, conditions, and on the same roads that you normally experience. Park the car, back it up, and take a friend for ride to get their opinion. You don’t want to have any surprises when you bring it home for keeps.

(8) The Internet is the best place to shop for your used car. Most dealers today display all their used car inventory right on their website along with the prices. These prices are close to the real price you will pay. The dealer knows that he won’t get many responses if he overprices his used cars. Shopping on the Internet give you ample opportunity to compare the same or similar used cars with lots of different dealers. As always, call the dealer before you come in to confirm the Internet price is an out-the-door price without a dealer fee, doc fee, dealer prep, etc. and are good choices to buy a used car.

(9) Commit all of the dealer’s promises to writing. Take notes of everything the salesman and sales manager promises you such as “we’ll fix that CD player if you’ll bring your car in next week” or “if you ever have a problem with the car we’ll give you a free loaner when you come in for service”. Make those notes part of the buyer’s order and be sure that a manager signs it. It’s also a good idea to always shop with a friend. In a “He said she said” situation, two people trump one.

(10) Get at least three bids on financing. Know what your lowest interest rate is for the year, make, and model car you’re buying. Get quotes from your bank or credit union and at least one other bank in addition to the rate your dealer offers you. If you do use your dealer’s financing, be sure you know and understand everything that’s included in your finance contract. You will be offered products like warranties, GAP insurance, maintenance, road hazard insurance, etc. It’s illegal for a dealer to tie your acceptance for financing or interest rate to your buying a warranty or any other product.

Monday, October 21, 2019

If You Can’t Find an Honest Service Department, You May be Able to Find an Honest Service Salesperson

Servicing your car is just as scary as it probably was buying it, but you only must buy a car every 4 or 5 years, maybe even longer. During the time between buying one, you should bring it in for service at least 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 and require far less maintenance than those of 20 years ago. Requiring less maintenance and repairs is a threat to the car dealers’ most profitable department. One way they can overcome this is to simply sell you more service than you really need by convincing you that it’s necessary.

Did you know that virtually every employee in a service department gets a percentage of the total amount of service he sells you? 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. 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”. 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.

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 good. When you have a department or company where everybody is on commission, it takes an awfully altruistic manager to fire a top-producer. The more his “rotten apples” 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.

More often than not, 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 for 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 all 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, October 14, 2019

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 believe 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 that loan to people with bad credit. Their interest rates are lower than special finance lenders, 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 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, Google ranking, Yelp ranking, 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.

Monday, October 07, 2019

Profiles of Car Dealer Victims

There’s a mindset among many Americans that, “The best government is that which governs least”. I understand and largely accept that thought, but I do believe governments have a duty to protect those that cannot defend themselves. When I advocate passing laws to prevent car dealers from adding hidden fees to their advertised prices, or selling cars without disclosing dangerous recalls, I’m often attacked by those who say car buyers have a responsibility to discover these deceptions on their own…without government interference. It’s like saying, “If you were more careful, you wouldn’t have been cheated; you deserve what you got!”

I receive a lot of emails, calls, and letters every week from victims of car dealers who were taken advantage of in buying, leasing, and servicing their cars. They mostly call to ask what they can do to get all or some of their money back. These “victims” fall into different categories: The elderly; the very young; Those who don’t speak or understand English well; The uneducated; People with bad credit; and everybody else.

(1) The elderly, especially widows, are the most victimized. The reasons for this are that Florida, especially South Florida, is a “retirement” state. Baby boomers and pre-baby boomers make up a disproportionately large percentage of Florida’s population. Not only that, but life expectancies have soared in recent years…81 for a woman and 76 for a man. Husbands usually predecease their wives. Women’s role in the American culture is a great deal different than in the 1930’s and 1940’s. Often, the husband was, not only the breadwinner, but the decision maker in the household. Widows of that era are often buying their first car today. Men and women in their seventies, eighties, and nineties (Yes, I have a lot of customers in their nineties) aren’t as sharp as they once were. I’m 78 and I’ll be the first to admit this. In my opinion, men and women of my age, and older, are more trusting. We can’t forget the terrible disease, Alzheimer’s. Unless a court declares a person incompetent, a person with Alzheimer’s can legally buy a car in Florida and it happens all too often. This is one of the most despicable acts that some car dealers commit.

(2) What chance does a teenager or kid in his twenties have when negotiating with a car salesman and his manager to buy a car? Usually it’s the parents who call me to tell me how their son or daughter was taken advantage of. I don’t tell them this, but what I’m thinking is “Why did didn’t they accompany them to the car dealership to advise them?”

(3) South Florida is not only a retirement area, but it’s a haven for immigrants from Cuba, Haiti, and South and Central America. Many of these are first generation Americans who have a difficult time with English or can’t speak, read, or write English at all. These people are easy prey for unscrupulous car dealers. Can you imagine how difficult it would be for you to get a fair price on a car you were buying in a foreign country where you were didn’t speak or understand the language?

(4) Let’s face it; there are too many Americans who never had the benefit of a proper education. We have too many high school dropouts and too many high school graduates who still can’t read or write as well as they must to function in our society. Lack of a good education is one of America’s most serious problems and we’re seeing other countries like China, Japan, Germany and India pass us by in educating their children. It’s almost criminal how the educated are exploited by car dealers’ advertising and sales tactics. How many car dealers’ TV and online advertisements have you seen that you laugh at, knowing that they’re totally untrue, “bait and switch” to lure you into the dealership. You wonder who would believe that kind of nonsense. The reason that car dealers keep running those ads is because they work.

(5) There are always people with bad credit who must buy a car, especially In Florida. Without an effective mass transit system, a car is virtually a necessity to get to your job or find a job, not to mention the doctor, school, or the pharmacy. People with bad credit are at the mercy of the car dealer. The main thing on these peoples’ minds is not how good a price or a car can I buy or how low an interest rate, but can they be financed? Knowing this, car dealers will charge whatever price and interest rate the lender will let them get away with. People with bad credit almost always pay dealers a higher profit than those with good credit.

(6) “Who should be held responsible for car dealers ripping off customers?” For categories (1) through (5), the answer is our regulators and our lawmakers. But for the last category, “Everybody else”, it’s themselves. Of course, it goes without saying that the car dealers who do this are responsible too. But who doesn’t know that most car dealers do business this way? Who doesn’t know that car dealers perennially rank last on the annual Gallup “Honesty and Ethics in Professions” poll? I received an email from a woman who fell in none of the first 5 categories above. She was terribly victimized by a very unethical car dealer from whom she bought two used cars on the same night. Her email asked me for advice on what she should do. Of course, the “horse was out of the barn” and this makes things more difficult. This woman did not ask for or receive a CarFax report on either used car. Nor did she take either car to her mechanic for approval. She clearly didn’t investigate the dealer for reputation. She didn’t check any sources like Consumer Reports for recommended used cars. She did not shop and compare prices for similar cars and the list of “did not’s” goes on. If you don’t do your due diligence when you buy a car you are equally culpable with the car dealer who took advantage of you.

At this point, I will shamelessly plug my book, Confessions of a Recovering Car Dealer. I say “shamelessly” because 100% of the proceeds from my book go to Big Dog Ranch Rescue. You can buy at book on Amazon by clicking will tell you everything you need to know about how not to be ripped off by a car dealer. Or, you can read my blog articles on this at

Monday, September 30, 2019

Earl’s Costco Auto Buying Program Tutorial

I’m a strong advocate of the Costco auto-buying program. In full transparency and disclosure, I’m also a certified Toyota dealership for Costco. I get more questions about the Costco Auto buying program than just about anything else and that’s my reason for writing another article on the subject.

My only complaint about Costco’s program is that, in my opinion, there’s too large a burden of due diligence placed upon the Costco car buyer. I believe that a Costco member should be able to go online at and get the out-the-door price of the vehicle they want and the dealership they can buy it from. Sadly, this is not often possible, and what follows is a “tutorial” of the precise steps you most follow to get the true Costco member price. 

  1. Go to Click on “New Vehicles” and enter your zip code. Select the year, make and model of vehicle you want to buy. NEVER GO TO THE DEALERSHIP WITHOUT REGISTERING ONLINE. You may be deceived by a non-Costco certified salesman into believing you’re getting the Costco price.
  2. Click on “Locate Dealer”.
  3. Enter your name, Costco member number, and email address. Click again on “Locate Dealer”. If you’re not a Costco member, I recommend you pay the nominal annual member ship, $65, and become a member. Your savings on buying a car will exceed this cost many times.
  4. You will be given the name of the dealership and the name of the sales people at that dealership that are certified Costco representatives. DO NOT, UNDER ANY CIRCUSTANCES, DEAL WITH ANY OTHER SALES PEOPLE.
  5. You will be contacted by phone and email almost immediately by the Costco representative. Verify that she or he is named on the Costco website.
  6. Ask the Costco representative to email you the out-the-door Costco member price on the vehicle you have selected. Explain that this price must include all charges by the dealership except government fees…sales tax and license tag and registration. If she or he refuses, report this to Costco at 800 755-2519.
  7. If you must visit the dealership to further evaluate the vehicle you’re buying, demand that you see theCostco Member-Only Price Sheet. This price sheet on the specific car you’re buying should disclose any added price for dealer installed accessories. If there are dealer installed accessories, DEMAND A CAR WITHOUT THEM. This price sheet must also disclose any added, hidden non-government fees aka “dealer fees” by many names like doc fee, electronic filing fee, tag agency fee, dealer prep fee, administrative fee and notary fee.
  8. Determine your own out-the-door price by adding any of these hidden fees or dealer installed accessoriesto the “Costco Price”. Also beware of hidden fees that aren’t disclosed on the Costco Member-Only Price Sheet. These will “pop up” later in the F&I or Business Office and are unknown and unacceptable to Costco.
  9. To be safe, you should shop and compare the final out-the-door price you’ve calculated with at least two other dealers.
  10. If your experience with the Costco dealer was not a good one and they did try to deceive you, contact Costco at 800 755-2519. You will be asked by Costco to fill out a customer satisfaction survey after your purchase which will entitle you to service and parts discounts with that dealer.

Costco requires their certified dealers to sell Costco members cars at a LOWER PRICE THAN THEY SELL CARS TO ANY OTHER CUSTOMER. You may or may not know that most car dealers sell the same car to different buyers at vastly different prices…depending on the sophistication of the buyer, the salesman, type of advertising, and even the time of the month. A few buyers get extremely low prices which requires a certified Costco dealer to sell a Costco member the car at an even LOWER price. Car dealers don’t like to do this and come up with very clever ways to trick Costco buyers into paying more…hidden fees and dealer installed accessories are two of their favorite tricks. COSTCO MEMBERS BEWARE.

Monday, September 23, 2019

How Do You Learn the Dealer’s Cost on a Car?

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

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

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

Last but not least, remember the hidden fees named whatever the dealer chooses… “dealer fee”, “dealer prep fee”, “doc fee”, “dealer inspection fee”, “electronic filing fee”, “e-filing fee”, “tag agency fee”, “taxable fees”, etc. which are added to the advertised price or the price you were quoted by the salesman.. They are printed on the buyer’s order and sometimes the worksheet and are lumped into the real fees such as state sales tax and tag and motor vehicle registration fees. Most dealers in Florida (it is capped or illegal in many states) charge these fees which range from $500 to $3,000. If you’re making your buying decision on your perceived cost of the car, even if you were right, here is up to $3,000 more in profit to the dealer.

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

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

Monday, September 16, 2019

How and Why Car Dealers Sell You Things You Don’t Need or Want (or even know about)

If you bought a new car recently, the probability is almost 100% that there were products and services added by the car dealer to the price you paid for the car. You may not even know that you paid extra for items like interior fabric protector, paint sealant, rental car assistance, roadside assistance, nitrogen in your tires, glass etching, pin stripes, and window tint. The one thing all these items have in common is that they’re over-priced. The markups on these products are much higher than any factory accessory installed by the manufacturer. Factory accessories like cruise controls, sunroofs, and navigation systems are marked up in the range of 15% to 25%. Dealer installed accessories are marked up 100% to 500% and higher.

Non factory installed accessories are also pre-installed by auto distributors. When cars first were retailed in the early 20th century, they were sold to the retail buyer through dealerships that were owned by the factories like GM, Chrysler, and Ford. This evolved as sales grew to factory owned distributors that distributed cars to independent dealers. When imported cars like Honda, Nissan (Datsun), Mazda, and Toyota became popular, they were mostly sold through independently owned distributorships that established networks of car dealers. Most of these distributorships have vanished and the manufacturers sell most of their car directly to independent car dealers. The largest and most notable exception is Southeast Toyota (SET) headquartered in South Florida. SET buys all their new Toyotas directly from Toyota and resells them to all the Toyota dealerships in Florida, Georgia, North Carolina, South Carolina, and Alabama.

Because Toyota is, by far, the best-selling vehicle in the Southeast USA, the impact of the non-factory, pre-installed package named “ToyoGuard” is worthy of mention. Most Toyota dealerships in the Southeast and nearly all in South Florida order most of its cars with this distributor installed accessory package. The platinum ToyoGuard package retail price is $699. The cost to the dealer (if he orders at least 75% of his vehicles so equipped) is only $225. That’s a 311% markup! I’m not sure what the actual cost to Southeast Toyota is, but it’s probably a lot less than $225. Included in this package are fabric protection, paint sealant, rental car assistance, roadside assistance, 2 oil changes, and 4 tire rotations. One can debate the value of this “$699” package, but the fact that the true cost to the dealer is only $225 and the true cost to SET is less than that is indisputable.

The fact that the true cost of ToyoGuard and all dealer installed accessories is a tiny fraction of the retail price is not the main reason I object to them. The main reason is that I believe the retail buyer of a new car is entitled to choose the accessories on the car she buys. Extra, over-priced accessories on an “addendum label” next to the factory window sticker are likely not something the buyer wants or, most likely, even knows about.

I fully support the right of car dealers and distributors to sell extra accessories to their customers. But the features, benefits, and value of these accessories should be presented first, and sold only if their customer agrees that they are a true value at the price charged. When a car dealer or distributor adds accessories to almost every car he sells before the retail customer has a chance to say “no”, it’s ethically and morally wrong.

To avoid being duped into buying something you didn’t want or know about, always ask the salesman this question. “Does the advertised price and the price you quoted me include any accessories that were not installed by the vehicle manufacturer?”

Monday, September 09, 2019


(1) The “Big Sale Event”. If you look in today’s newspaper, you will find that most car dealers in your area are having a sale of some kind. It may be because of a current holiday, “too large an inventory” of cars, to “reduce their taxes”, “the manager is out of town”, or some other nefarious lure. Advertising 101 says that you should give the prospective buyer a “motive to act”. Unfortunately, it doesn’t matter whether the motive is real or not. The fact is that most car dealers do not sell their cars for less during “sales events” than they do at any other time. I point this out so that you don’t rush your buying decision. If you don’t buy a car during the tight time constraints of a phony sales event, you can negotiate just as good a price the next day. The exceptions to this are legitimate rebates offered by the manufacturer. These often expire at the end of the month which is one reason why the “last day of the month” really can be the best time to buy a car”.

(2) This is the out-the-door price, plus FEES. Every car dealer I know of adds (except me) raises the price he gives you by tacking on multiple PHONEY FEES, disguised asgovernment fees. Many buyers never realize that the total price includes an average of over $1,000 (as much as $3,000) in hidden added profit to the dealer. Customers don’t know this because the paperwork you sign when you think you’re buying the car is not a legal document (vehicle buyer’s order), but a worksheet. You sign the legal documents in the F&I or business office when the law requires disclosure of non-government fees. These are hidden in the fine print along with lots of other fine print that nobody reads. Most buyers assume that the big increase in the price they thought they were paying is from sales tax and license-registration government fees. The names of these fees disguise them to make you think they’re paid to the government…electronic filing fee, e-filing fee, doc or documentary fee, tag agency fee, etc.

(3) “The Price I’m giving you is only good for today”. If a salesman or sales manager tells you that, it is probably only a tactic to push you into buying the car. The only exception would be the expiration of a factory rebate. Once again, this is simply a tactic to push you into buying before you have a chance to do your comparative price shopping.

(4) “Take the car home tonight and see how you like it”. Driving the car you are considering buying home can be a good thing. It will give you a lot better idea about how the car performs, etc. However, there are two reasons the car salesman offers this. One is that you must leave the vehicle you might be trading in with the car dealer. This means that you cannot shop prices with other dealers. The second reason is the psychological impact of parking that new car in your driveway where your family and neighbors can see it. The slang expression for this is “the puppy dog”. If you were to take home a little puppy from the pet store, you and your children would fall in love with her and could not return her the next day.

(5) “You must give me a deposit before I can give you a price”. This must be one of the most insulting ways that some car salesmen have of intimidating a prospective buyer. It’s amazing how many people succumb to this which allows the salesman an element of control…. you can’t leave until they give you your money back. If confronted with this ultimatum, simply walk away.
“Are you ready to buy a car today”? Often, if you say no to this question, the salesman will tell you to come back when you are ready to buy. He will tell you to shop around and come back with your best price so that he can beat it. The salesman is afraid that, if he does give you his best price, you will go somewhere else and that salesman will beat it. Of course, that is the whole idea of competition and that is exactly what you want to do. If the salesman is afraid to give you a price because his competitor will beat it, it must not be the best price!

(6) “Make me an offer and I will take it to my manager for approval”. This is a very common tactic which you have probably already encountered. It is not unethical. It is simply part of negotiating. I point this out so that you are fully aware that this is part of the negotiating game. Be aware, that no matter what price you offer, the manager will ask you for more money. Even if you offered a high price that would be a very large profit for the dealer, the manager would ask you for more money. The psychology behind this is that if you suddenly accepted the offer, you may frighten the customer by thinking he had offered too much (which he would have). When you negotiate, you must be well versed on what is a good price for that car. Start out below the best price you think you can buy it for. If you cannot negotiate a price close to your best price, get up and leave. Continue this process with another car dealer.

(7) The “really big” discount. The other day a friend showed me direct mail advertising piece from a new car dealer with a coupon good for $2,000 discount on any car in his inventory. This is very common for newspaper and TV ads too. Federal law requires new cars to have a price sticker on the window named the Monroney label. A discount from this suggested retail price gives you a fair basis for comparison. Unfortunately, most car dealers today, increase the suggested retail price substantially with the use of an addendum to the Monroney sticker often referred to as a “Market Adjustment Addendum”. This “adjustment” can be several thousands of dollars. Be sure you know what the asking price is for the car when you have been offered a “big discount”.

(8) The” really big” trade-in allowance. Car salesmen are trained to seek out your “hot button”. Some car buyers are focused on how much the car dealer will offer for his trade-in. It’s very easy to offer you more for your trade-in than it’s truly worth by simply inflating the price of the car you’re buying by hidden fees, dealer installed accessories, or by simply inflating the MSRP.

(9) The “very low” monthly payment. Everybody is a “sucker” for a low monthly payment. That’s why leasing is so popular today. We budget all our spending around our weekly or monthly salaries. It’s easy for us to overlook the fact that it’s not only the amount of the monthly payment but the total number of payments and the down payment hidden in the fine print that counts.

(10) Just $100 above “dealer invoice”. Webster defines “Invoice” as the price the buyer pays to the seller. It should be ILLEGAL for manufacturers and car dealers to label the document that they send car dealers when they sell them a new vehicle as an invoice. THE INVOICE IS NOT THE SELLING PRICE BY THE MANUFACTURER TO THE DEALER. The invoice conceals multiple hidden kick-backs to the dealer by innocuous names like holdback, dealer incentive, advertising fee, floorplan assistance, etc. A car dealer averages thousands of dollars of kick-backs on each vehicle invoice he buys. Many dealers sell most of their new vehicles below invoice. Interestingly many manufacturers don’t allow their dealers to advertise prices on new cars below dealer invoice. One could conjecture that this may have the effect of artificially inflating the fair market price of new vehicles.

(11) “We want to buy your used car”. First, let me say that car dealers do like to buy used cars from the public; it’s not always a ruse to sell you a new car. Dealers like to buy used cars from you because they can buy them for much less than they must pay at the auto auction where other car dealers are competing to buy the same vehicle. However, most advertisements that you see (especially direct mail) are just trying to trick you into coming into the dealership so they can sell you another new or used car.

The best protection from all the above is to find a car dealer that you can trust. Ask your friends about their experiences with dealers and call the Better Business Bureau and the County Office of Consumer Affairs. Check the dealers’ Google rankings. A good tip on reading Google rankings is to ignore the “5 stars and “0 stars”. Read the 3- and 4-star ratings. They’re likely to be more real and thoughtful. All things being equal choose the dealership that has been in business a longer time and an owner or general manager who will make himself accessible to you and all his customers.

Monday, August 26, 2019

THE BOX: Car Dealers’ New, Major Profit Center

Okay, you've just bought that new or used car and the pressure is off…right? WRONG! The next step for the car dealer is to get you into the “box”. You won’t hear this word mentioned. It’s inside car dealer slang for the F&I (finance and insurance) office or the business office. This is the place that you sign all those papers making the sale legal and final. But in addition to that, it’s also a very important profit center for car dealers. In most car dealerships it’s the most profitable department. It’s not uncommon for car dealers to make an additional $2,000 profit or more in “the box” on each car they sell.

In the last few years, the average profit margins on new and used cars has narrowed. This is for a variety of reasons including the knowledge explosion (Google), the Internet, big data, third party car-buying sources like Costco and TrueCar, and the pressure from the auto manufacturers on dealers to increase their sales volume. Maybe the single biggest pressure on car profit margins is the education and sophistication of the 21st century consumer. The biggest auto retailer in the world is AutoNation. Because they were losing money selling new cars, they made the decision over a year ago to raise new car prices even though this cost them volume. They also made the decision to emphasize profits from the sale of “products” like extended warranties and the “interest spread” in their Finance and Insurance departments, aka THE BOX.

Here’s how that profit is generated. First and usually foremost is making money on the interest they charge you. Essentially, they make money on “the spread” just like banks make money when they loan it. For example, a car dealer will borrow money from Bank of America for 2.9% and loan it to you for 5.9%, or whatever interest rate they can convince you to accept. The second way they earn that big profit in “the box” is by selling you “products” which are added to the price of the car you just bought. There are many products and some of the most common are extended service warranties, maintenance plans, road hazard insurance, GAP insurance, window etch, and LoJack.

The way you should protect yourself on the interest rate is to have already shopped your own bank or credit union and two other banks for the best interest rate you can qualify for. Never go into “the box” without knowing what the best rate other banks or credit unions will allow you. The best way to protect yourself against the products they will try to sell you is to completely understand each product. Do you need an extended warranty on your new car? If this product costs $1,900 for example, how long are you going to keep the car and how long are you likely to be driving it when it’s out of the manufacturer’s warranty? Ask the same questions of each product they try to sell you. If you are unclear on the merits of a product, don’t commit. You can always go home, think about, and seek advice from friends and advisors.

Another important tactic is to never go into “the box” alone. If it’s just you and the F&I manager [often called business manager], and there’s a dispute over what was said, it’s just your word against his. Also, having a friend or advisor present will usually be a deterrent to any attempted deception.

These are some of the kinds of deception you should be on the lookout for. Tying the sale of a product like an extended service contract to the interest rate or eligibility to have the bank finance your car is illegal. But this practice happens all too often behind the closed doors of the “the box.” The F&I manger may tell you that the bank “requires” you to buy the extended warranty, GAP insurance another product in order to protect the bank’s collateral. This is simply a lie and it’s illegal for banks or car dealers to do this. Another common form of deception is to simply not disclose the products or interest rate, and have you sign the contract without reading it. There are many documents to be signed after you buy a car. Buyers are often in a state of euphoria now that they have bought their dream car and are in too much of a hurry to sign everything and drive their new car home. The car dealer is required by law to give you a signed copy of the installment sales contract. Be sure you carefully read it and be sure have a copy. If you don’t get a copy, you may find that you signed a different contract than the one you read.

Extended service warranties, GAP insurance, and other insurance products are regulated in Florida unlike many other states. This affords you some degree of protection like being able to cancel an insurance product if you did not use it. In Florida, you can do this in 60 days for a 100% cancellation. You don’t get the cash back and your monthly payment won’t go down however. But the amount is taken off the principal amount you are financing through the bank. You cancel insurance products after 60 days, but the cancellation is not pro rata and you pay a large penalty.

If you remember nothing else from this article, please remember one thing. Do not hurry the process of financing your car and signing the papers. Don’t let the car dealer pressure you into signing anything you don’t understand. Time is on your side because it will allow you to think and to consult with others who can help you make your final decision. I get a lot of calls from victims of “the box” and the one thing they all have in common is that they let themselves be rushed into signing the documents so that they could drive their dream car home that same day.

Monday, August 19, 2019

Dealing with Hidden Fees (aka Dealer Fees)

Hopefully by now, all but my newest readers know about the infamous “Dealer Fees”. If you don’t know, they’re hidden price increases 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 they go 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’s done so as to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fees 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 bunch of papers. The dealers get around 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 are 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 sell a lot 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…not true.

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 fees in the price if they mention their dealer fees in the fine print. They also allow car dealers to simply state in the fine print that they have a Dealer Fee but not even mention 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:

(1) 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 it’s part of the license tag and registration.

(2) 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 who do not charge dealer fees. 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.

(3) As long as 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. You can download a legal form,, that you ask the car dealer to sign before you sign the vehicle buyer’s order. The dealer legally commits that the price he quoted or advertised is an honest out-the-door price. If he won’t sign this affidavit, than you won’t sign the buyer’s order.

(4) 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.

(5) 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.

I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Ashley Moody. If enough consumers (who are also voters) let our elected officials know how they feel about Dealer Fees, it will bring positive results.