A Tool to Help You Get the Out-The-Door Price from a Car Dealer

This same column ran a few months ago before the Coronavirus pandemic struck the world. I’m rerunning it now because car dealers are so desperate to sell cars that they’ve pulled out all the stops with respect to trickery and deception. This is arguably the best way to get an honest, low, bottom-line price on a new or used car.

Below, you’ll find a link to a form that was created based on a discussion with Nancy Stewart, my co-host on our radio show, “Earl Stewart on Cars”. This radio show runs every Saturday morning 8-10. You can stream it at www.StreamEarlOnCars.com. It’s also available at www.Facebook.com/EarlOnCars andwww.YouTube.com/EarlOnCars.

The next time you purchase a vehicle, insist that the price quoted to you by the salesman be certified by the signature of a manager of the dealership; or, if you are responding to advertisement, be sure that the advertised price is so certified.

Most of the skullduggery by car dealers comes from two sources, hidden fees added after the price is advertised or quoted and dealer installed accessories that are pre-installed on the vehicles, but not included in the advertised or quoted prices.

You can even use this form when you shop by phone or online. Fax or scan and email the form to the car salesman and insist that he sign it and fax or email it back.

This form is available for download at EarlOnCars.com or you can just click this link http://earlstewartteam.com/pdf/outthedoorpriceaffidavit.pdf.

You may even be thinking, what if the car salesman refused to sign this document? My answer is simple…LEAVE!

Hidden Charges in the Service Department

The last time you paid your bill for your car’s maintenance or repair, there was there was an extra, probably unnoticed charge at the bottom of the service invoice. This extra charge was not for the parts or labor performed on your car. If you noticed it at all, it was hidden at the bottom of the invoice near the line for sales tax.

This service charge is the “little brother” of the infamous Dealer Fee, the hidden PRICE INCREASE which is added to the bottom of the bill of sale when you buy a car. Just like the dealer fee, this service charge is not really a fee at all; rather, it's pure profit to the dealership or independent service facility. Just like the dealer fee, it too goes by many different names: "Sundry Supplies Fee", "Miscellaneous Fee", "Hazardous Waste Disposal Fee", "Waste Oil Disposal Fee", “Environmental Impact Fee”, etc. The “Waste Oil Disposal Fee” is particularly deceptive and dishonest because car dealers sell their waste oil to refiners for a tidy profit. Unfortunately, charging any arbitrary extra amount onto the price of auto service is completely legal in Florida! There is also no law requiring consistency in naming this extra charge or even in limiting the amount of that charge. If a car dealer wanted to name the fee CAR DEALER’S RETIREMENT FUND, it would be legal (and a lot more honest than Environmental Impact Fee).

The size of this bogus fee is calculated as a percentage of the total legitimate parts and service charge you incurred and varies from as little as 5% to 10% and higher. Typically, there is a self-imposed “cap” on this phony charge so that you don’t notice it when you pay your bill at the cashier. Caps also vary from about $25 to $50. Remember that most people service their cars about every 6 months or 5,000 miles and keep their cars 6.5 years. If your average “hidden charge for service” was $15, over the course of ownership you would pay $195 for work that was never performed on your car! The average dealer fee in Florida is over $1,000, but a car dealer makes his money on the bogus service charge with volume. A car dealer may sell a few cars each day, but he or she may service dozens. Therefore, a car dealer “steals” far more money from his service customer than he does his car buying customers.

Auto service companies and car dealers know that this is wrong and expect some of their customers (those that are alert enough to catch it) to react angrily. Calls from these customers are what inspired me to write this column. One caller that was a regular reader of my column and called me to ask what the “sundry supply fee” for about $30 at the bottom of his service invoice at Sunrise Ford in Fort Pierce was. I explained it to him. By reacting angrily and threatening to take his service business elsewhere, he was able to have his $30 refunded.

This is my recommendation to you: always inspect the service invoice before you pay. If there is any charge on the invoice that you cannot recognize, ask for a complete explanation. The explanation you are likely to hear is that these are for “miscellaneous” supplies and costs the dealer incurs in repairing the average car, probably not yours. They will talk about nuts and bolts, screws, fasteners, grease solvent, and maybe even “soap to wash the mechanic’s hands”. Of course, these are just normal overhead costs of doing business. They might just as well be charging you for their power and water bill or salary to their mechanics. You tell them that their costs of doing business should have been included in the price you were quoted for the labor and parts on your repair order, not sneakily tacked onto the bottom of the invoice when you were paying the cashier.

Buying a Car During a Pandemic... Best of Times; Worst of Times

If you go about it in the right way, you can buy a new or used vehicle in the next 30 to 60 days at lower price than you ever paid before. If you’re not careful, you will be taken advantage of by the car dealer, paying him a higher profit than you ever paid before.

Why is today the “best of times” to buy a car? Auto manufacturers are fearful for their very existence. When the Covid-19 threat is behind us, many auto manufacturers won’t have survived. Ford’s bond rating was recently downgrade to “Junk” and all the major auto manufacturers have had their bond rating (cost to borrow money) downgraded. Ford, GM, Chrysler, and Nissan are likely candidates for bankruptcy.

The “auto-selling pie” has suddenly been radically reduced in size, and too many auto manufacturers are competing for a big enough slice of the smaller pie to survive. There’s simply not enough pie to go around. Survival is our most powerful instinct, and it motivates us to do things we would never otherwise do.

Auto manufacturers are offering huge discounts and financing terms that were unheard of before this pandemic. If you don’t remember anything else from this article, remember this: MAUFACTURER DISCOUNTS, REBATES, ZERO PERCENT FINANCING, NO PAYMENTS FOR SEVERAL MONTHS, AND LOWER LEASE PAYMENTS ARE TRUE, but CAR DEALERS ADS ARE MOSTLY UNTRUE.

Most car dealers have very large overhead expenses. The manufacturers require that they invest millions of dollars in large facilities for selling new and used cars, parts, service, and sometimes collision repair. The dealer can control some expenses like advertising, and he can reduce personnel expenses by layoffs. However, he still must pay his rent or mortgage payments, utilities, and the interest to finance the cars in his inventory. (almost all dealers borrow millions of dollars for this). This means that every car dealer has a certain level of sales and service that he must sell in order to break even and hopefully make a profit. A car dealer may average selling monthly 100 new vehicles, 75 used, and servicing 500 cars. This dealer was probably making a nice profit, maybe $100,000 per month. During the Coronavirus, dealer sales are off anywhere from 40% to 70%. This almost certainly causes him to lose a substantial amount of money monthly, because he’s selling cars and service below his breakeven point, about 75 new, 50 used and 350 service vehicles. After the car dealer has slashed the expenses that he can, he has only one choice to SURVIVE. He must raise the prices of the fewer cars he sells.

If you’re a regular reader of my articles, you know that car dealers sell each car at different prices to every buyer. A Ford dealer will typically sell an identically equipped F150 truck (same MSRP) at different prices to every buyer during a given month. The profits on this truck can range from $100 to $5,000 or even higher. Dealers can do this by their “smoke and mirrors” unfair and deceptive sales practices. They’ll undervalue your trade-in allowance, charge you a high interest rate, make you believe they’re giving you a large discount by falsifying the MSRP, or add hidden fees and dealer installed accessories that you don’t realize you’re paying for.

The very real and generous discounts being offered by auto manufacturers make it easier for car dealers to raise their price to you. When you negotiate to buy their car, they’ll try to make you focus on the special deals offered by the manufacturer, like “no payments for 6 months and zero percent for 72 months”. Remember, this is a discount being absorbed by the manufacturer, not the dealer*. When you buy your next new car, you automatically get the manufacturers’ discounts, but you still must FIGHT for the dealer’s discounts. In fact, you’ll have to fight harder than ever because that dealer must average a higher profit per car than before the Coronavirus pandemic to SURVIVE. You’re buying one car and that same car will be sold to several other buyers during the month. You want to be the shrewd buyer that paid this dealer $100 profit, not the ones that paid $2,000 to $10,000!

You do this by remembering or rereading my articles on using competition to get the lowest price. Shop at least 3 car dealerships online after having chosen the exact year-make-model car you will buy. Shop your trade-in value separately and your financing separately. Beware hidden fees and dealer installed accessories and never commit to buy unless you have a bonified out-the-door -price. The definition of an out-the-door price is the amount of money you write out a check for, hand to the car salesman, and drive your new car home.

With the Coronavirus pandemic it’s mandatory that you do your car shopping and buying online. You should be able to do this without ever having to visit the dealership or interact with a salesman. The dealer should consummate the purchase and financing online and deliver your car to home.

Good luck and I pray for the safety of you and your family.

*Although special offers that are coming directly from the manufacturer are legitimate, you must also be careful to read the fine print. For example, Ford is offering "no payments for six months." Three of the months are deferred payments for which you will still be charged interest. The other three months are being "paid for" by Ford, but your rebate is less... you are actually paying more for the car!

Compassion, Car Payments, and Coronavirus

There’s not much good to be said about this terrible worldwide pandemic. Covid-19 has brought on unprecedented business closing triggering record levels of unemployment. Too many Americans are suddenly unable to make their rent or mortgage payments and their car payments on leases and purchases.

Banks and leasing companies are threatened, not only because few people are borrowing money to buy homes or buying or leasing cars, but those that already rented, bought or leased have stopped making their monthly payments.

All lenders are more inclined to reduce and relax monthly payment requirements if the borrower contacts them first and asks. To a lender, being called by borrowers represents good faith, and is an indicator that this borrower is more likely to pay out the loan than the borrower that doesn’t call.

The sooner you call your lender, the better. Don’t call the car dealership that you bought or leased from because the dealership is not the lender. Even though you bought or leased your car there and signed the lease agreement or retail installment contract, the dealer “sold” the contract you signed to the real lender…a bank or leasing company. Oftentimes the lender is owned by the vehicle manufacturer…Ford Motor Credit, Toyota and Honda Financial Services, Chrysler Capital, etc.

If you’re leasing a car and the end of your lease is approaching, you may, understandably, not want to start the process of buying or leasing another vehicle at this time. Call the leasing company and ask for an extension on your lease. You’re almost sure to get a three-month extension at the same monthly payment and you can ask for more…six months isn’t out of the question.

If you’ve been laid off and making your lease or purchase will be difficult, ask for a hiatus on making your monthly payments. Tell them how much time you need before you can resume making payments or ask for a reduction in the amount. This won’t harm your credit rating. You should tell the lender when you expect to be back to work and any other factors that will affect your ability to begin making your payments again or resume making the full payments.

Remember that the key to success in this tactic is to CALL THE LENDER BEFORE THEY CALL YOU. If they call you first, they’re not calling to help, they’ll be calling because you didn’t make your payments on time. By calling them first, you have the upper hand, and are very likely to get some relief on your loan or lease payments.

Coronavirus, Car Dealers, and Consumers

Deservedly and not unexpectedly, there’s a huge amount of negative media focus on the consequences of COVID-19. Call me a “cockeyed optimist”, but I believe that, in the aftermath, one positive result will be making it possible for car buyers to get an honest, transparent and competitive price when they buy a car.

This will happen as car dealers realize that almost nobody is coming into their showrooms to buy cars. They’re already advertising that they will deliver the car to your home, but the problem is you must buy it first. If a car buyer is to maintain safe distancing during the CD-19 threat, she doesn’t want to visit the car dealership, interact with car salesmen, and will try to buy the car online.

I’ve always advocated shopping for the best price online. For one thing, you can shop and compare prices at a lot more car dealerships on the car you choose. You can also maintain your anonymity by not revealing your real phone number and using a different email address. This eliminates the annoyance of multiple calls from multiple car salesmen. Car dealers know that and will “dig in their heels” on giving you an honest, out-the-door price. They don’t want you to compare their price with their competition.

Last week, I mystery shopped, online, Palm Beach Toyota in West Palm Beach, FL on a new Camry. I told them that because of the Coronavirus crisis, I wanted to buy my car completely online without leaving my home. The only price I was able to get was MSRP, and I knew that even that price wasn’t out-the-door because Palm Beach Toyota adds over $1,000 in hidden dealer fees. They asked for my phone number, but I told them I preferred to communicate online (I used a Yahoo email address under a pseudonym). When I said that I would not buy the car until I had an out-the-door price, all emails stopped. I sent them an email this morning saying that I had contacted five Toyota dealers, and only one had responded with an out-the-door price. I said, if I don’t hear back from you by noon today, I will ask that Toyota dealer to deliver the new Camry to my home. I finished this column and waited until noon today (Monday, April 6) for a reply from PB Toyota. There was no reply and, had I been a real buyer, they would have lost

It will take car dealers a while before they realize that they have no choice, but to give you their best out-the-door price. April will be a VERY BAD sales month for all car dealers and May will be even worse. Lots of car dealers and some manufacturers will go out of business. Those car dealers that want to survive will have to sell cars at lower prices than their competition. Because the number of customers that buy a car will be, at best, half of normal, the car dealers that survive must give the customers what they demand…an online out-the-door price.

As I write this article, nobody knows for certain how long this crisis will last or how severe it will be; it will end, and everything will eventually get better, but retail buying, including cars, will never return to normal. The new normal with car buying will be better than what has been going on for over 100 years. The Coronavirus will bring an end to the haggle/hassle, bait-and-switch, hidden fee style of selling cars that has always been.

My wife, Nancy, and I are pretty much quarantining ourselves like most Americans. I conduct my business meetings by www.Zoom.com or conference calls. Our groceries and everything we buy are delivered from Publix, Costco, Walmart, Target, and the king of online, AMAZON. We love it and will never go back to the old way. We shop and compare to ensure the lowest price. We select the products we buy after reading online reviews by verified purchasers. Deliveries are very fast, next day or 2 days 90% of the time. Most purchases offer unquestioned returns for full credit. Millions of Americans who didn’t do most of their shopping online have had to and will continue to have to for months. They will have tried online and fallen in love with it before this crisis ends. THEY WILL NEVER GO BACK TO THE OLD WAY OF RETAIL.

It’s a good think Amazon came along and threatened the other retailers a few years ago. It forced the smart ones like Walmart, Costco and Target to seriously get into the online business. Those that didn’t perished or soon will. It took a worldwide pandemic to get the car dealers’ attention, but now it’s their turn.