Suggested Word Track For No-Haggle, No-Hassle 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 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. 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. That 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. “

(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 of 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.”

The 3 Main Reasons You Overpay for a Car

Almost everyone that buys a new or used car looks at the purchase as a single transaction. But it’s not; it’s THREE transactions. Those are (1) Getting the lowest price for the used or new car you have decided to buy. (2) Getting the highest price when you sell your trade-in. (3) Getting the lowest interest rate when you finance your purchase.

Car dealers depend on you looking at the purchase of your car, the trading in of your old car and the financing as one transaction done with them. This allows them to sell you a new car at a very low price (even below their true cost) if they can get your trade-in for less than it’s really worth. The vernacular that car dealers use for this practice is “stealing the trade”. The same thing is true if they can finance your purchase at an interest rate higher than normal. Car dealers get “kick-backs” from banks when they charge an interest rate higher than the lowest interest rate the bank offers. In fact, car dealers make more money from the financing of cars than they do from the cars they sell.

Car dealers know that most prospective car buyers have a “hot button” when it comes to buying a car. With many it’s the monthly payment. With some it’s “How much can you allow me for my trade?” Some are mainly focused on the price of the car their buying. Some are actually focused only on how small a down payment they have to make. With others, it’s the lowest interest rate. The salesman’s job is to find your hot button. Once they know that, they can give you what you’re focused on, like high trade-in allowance, but still make a much bigger profit on the overall transaction than you should be willing to pay.

You’ve seen and heard the advertisement. “$3,000 Over Kelly Blue Book for your trade-in,  Minimum $10,000 trade-in if you can push, pull, or drag it in, or We need your (fill in the blank of any year-make-model) and will pay you $5,000 over book.” All those ads are designed to do are get you into the dealership based on your hot button. They can actually give you a high trade-in allowance just by marking up the car you’re buying enough to offset how much extra they give you for your trade. 

The same thing sort of trickery applies to any one single hot button. A low monthly payment can generate a huge amount of profit to the dealer with a long enough terms (84 months for example) or a high interest rate. A low price on the car you’re buying is offset by “stealing your trade”, allowing you thousands less than your trade is really worth. A low down payment leaves the door open too. You’ve all seen the 0% financing ads, but this means nothing if you overpay for the car you’re buying or let go of your trade for too little.

The only save way to get the lowest total transaction price is to negotiate each price separately…the car, the trade-in, and the financing. When you’re shopping for the lowest price for your car, tell the car dealers you don’t have a trade-in and you’re paying cash. When you’re shopping for the highest price on your trade-in, tell the car dealers that you don’t want to buy a car, just sell the one you have. When you are shopping for the lowest interest rate, check with you own bank or credit union and another bank or credit union for their best rate before you ask the dealer what his lowest rate is.

After you’re armed with all of this information, go to the car dealer who offered you the lowest price on the car you want to buy. Then ask him if he can meet or beat the highest price you have quoted on your trade-in. Similarly, ask if he can meet or beat the lowest rate you have on your financing. When you’ve done all this, you can be assured you have the best total transaction price. There’s one caveat on the trade-in. In Florida, you pay 6% sales tax on the difference between the trade in and the price of the car. Therefore the dealer you trade the car to can be 6% lower than the high bid on your trade from another dealer and still match it, because you will lose the sales tax savings if you sell your car to another dealer since you won’t have a trade. 

The Truth Sells Cars

Remember that you heard it here first. There is a company that “gets it” when it comes to selling cars. If you’re a reader of my weekly column and blog, you’ve heard me mention TrueCar before. In full disclosure, I’m a dealer for TrueCar and I’m also a member of their national dealer council.

The CEO of TrueCar is a very smart man named Scott Painter, and about 10 years ago he figured out that the way to be successful in the retail car business was to create a company that always told the truth about selling cars. He saw that most car buyers, not only disliked the car buying process, but actually feared it. He knew that car buyers are usually fearful that they will pay too much for their next car. Nobody likes to be taken for a sucker. How bad do you feel when you find out that your friend bought the same car that you did for $2,000 less? He read the annual national Gallup polls that ranked car dealers last in honesty and integrity. He saw and heard the bait and switch advertising and was aware of the unethical and deceptive sales practices that exist in most car dealerships.

Scott Painter also saw the amazing success of 21^st century companies like Apple, Amazon, Starbucks Costco and Nordstrom. They are successful because their customers believe what they tell them is true. He saw a huge opportunity if he could create an online company that would take the fear and distaste out of buying a new or used car. Scott found a group of very smart investors who shared his vision and TrueCar was born.

TrueCar sells cars through existing dealerships.  To become a TrueCar dealer the dealership must allow TrueCar to access their data management system, DMS. TrueCar keeps this information confidential and does not disclose the name of the individual dealers. But by analyzing the data of all the cars sold in a market, TrueCar knows what each year-make-model car is selling for. They can then tell prospective car buyers what they should pay for that car. The buyer knows the price of the average transaction as well as the lowest and the highest transactions. TrueCar then gives them the “TrueCar Price” which is the lowest price that a TrueCar dealer will sell that car for. This price is a good, low price, considerably below MSRP, and lower than the average price transaction in that market.

The TrueCar dealers are giving you a low price because they know you are comparing their price with, not only other TrueCar dealers, but other dealers for that make in your market. The TrueCar dealer is contractually obligated to sell you that car at the price he posts on the TrueCar website. 

I’m not suggesting that buying a car from a TrueCar dealer today is completely without risk. I am saying that it’s the safest way to get your best price on a new or used vehicle. You should still shop and compare your TrueCar price with at least two other car dealers. TrueCar is evolving and improving their processes and their dealers continuously. I speak from the perspective of a member of TrueCar’s dealer council. Last week I attended a meeting in Santa Monica, Ca. where I met with Scott Painter and all of the top executives of TrueCar. Plans are in the works for even more transparency when it comes to the TrueCar price.

Scott Painter walks a tightrope between the car dealers and the consumers. The car dealers, car dealer associations, and politicians (influenced by dealer lobbyists) rebelled against TrueCar two years ago. Dealers did not like the fact that TrueCar was requiring them to offer their lowest price to the car buyers. Most car dealers think that the “haggle and hassle” way of selling cars is the best way to make more money and sell more cars. Dealers quit in large numbers and TrueCar lost over half of their dealers nationwide. This mass defection was aimed at the heart of the True Car business model: in several states, True Car charges dealers $299 for every new car sale and $399 for every used car sale generated through their referral process. The FTC is currently investigating this as an illegal boycott by the car dealers and it hurt TrueCar financially.

 Since then, TrueCar has rebounded strongly and is currently bigger and financially stronger than ever before. Dealers have come to realize that they do sell more cars with TrueCar, albeit at a lower profit. TrueCar is growing exponentially and I expect them to be the main way that cars are bought and sold in the USA within the next ten years. Scott Painter has a favorite saying…”Truth Sells”. In fact, he bought the URL, www.Truth.com. He’s looking at expanding the honest way of retailing to other industries worldwide. Who knows? We may be buying houses, stocks, and insurance through a “True” company in the next decade.

My advice to you, the car buyer, is that the next time you buy any new or used car, click on www.TrueCar.com. My advice to the car dealers (who regularly read my column and blogs) is “Get aboard the TrueCar train before it leaves the station.” The way TrueCar is growing, you may not be able to sign up with TrueCar in the future.  TrueCar will sign up only a limited number of the franchises of one make in a particular market. By the way, TrueCar also won’t sign you up unless you agree to play by the rules and they will enforce the rules. Hiding dealer fees and dealer installed accessories when you quote the price, bait and switch, and all those other shenanigans are strictly forbidden. But don’t be afraid, because you will sell more cars and have happier customer because, as Scott Painter says, “The truth sells.”

With Car Insurance Companies Profit Comes First; You’re Second

“Like a good neighbor, State Farm is there. You’re in good hands with Allstate. Saving people money for over 75 years (GEICO). Think easier; think Progressive. Nationwide is on your side.”  You’ve heard all of these slogans thousands of times and seen the warm and fuzzy ads on TV too many times. I can tell you from personal experience owning and operating body shops for 46 years, insurance companies are not like good neighbors.

Insurance companies are the most profitable companies on Earth, but you can’t always tell that by their tax returns or financial statements. Insurance companies are sheltered from paying taxes like other corporations must do because they can, and are required, to “reserve” large amounts of cash contingent to paying claims. Then they take those huge hoards of cash and wisely invest them in stocks, bonds, real estate, etc. so that they can grow those cash reserves. When you pay a monthly premium to your car insurance company, they don’t pay any income tax on that. They invest it and grow that premium, compounding it over the years. Only after years of accumulating your premiums and growing that cash through investments do insurance companies begin to pay income taxes. This continuous, compounding tax deferral is how Warren Buffet made the bulk of his vast fortune.

How did insurance companies come to win this great tax advantage over all other corporations? They can afford to pay the best and most powerful lobbyist, in Washington D.C. and all fifty states. When a big insurance company says “jump” our elected officials say “how high”. For a politician to vote against a bill that Big Insurance wants is political suicide.

I have nothing against profit and I applaud those companies that make large profits. Under our capitalist system and the free market place, those companies that can provide the best products and services and satisfy the customers the best should prosper. I have a problem with companies that make their large profits by distorting the tax code to favor their companies over others and that earn greater profits by exploiting their customers and associates.

Collision insurance companies pay body shops less than $50 per hour to repair your car after it has been damaged in a collision. Car manufacturers pay mechanical service departments over $100 to fix your car when it has a mechanical problem, more than twice what insurance pays for body repair. Mechanical and body repair technicians are typically paid a commission based on the amount of labor they perform. This commission is a percentage of what the insurance company or manufacturer pays the service department or body shop. It follows that body repair technicians earn far less than their mechanical technical counterparts.

Now, here’s the rub! Body repair technicians are at least as well trained and skilled as mechanical repair techs. In fact, there is a greater shortage of good body repair techs than mechanical. One would think that the laws of supply and demand would command a higher wage for body repair techs, or at least the same as mechanical techs. But they make much less. This is where you come into the picture. Let’s say your car has been in a bad accident incurring thousands of dollars in damages. You want it repaired right, not just so it looks as good as it did before, but, more importantly, so it’s as safe as it was before. You want to be sure that the technician who repairs your car knows and cares what he’s doing! You’ve heard the expression, “You get what you pay for.” This means that if you hire a plumber to fix your clogged sink because he agreed to charge you half the hourly rate of what all the other plumbers were charging, it’s likely that the problem wasn’t corrected the it should have been.

The reason that body repair technicians are paid so little is because the insurance companies mandate it. About 95% of all auto repair work is paid for by insurance. Insurance companies largely control which body shops repair the vehicle of the insured. Each insurance company has a list of “preferred body shops”. If body shops are not on the preferred lists of any insurance companies, it’s very likely that they won’t be able to remain in business. One of the requirements to be on that list is to charge the insurance company what they say you can charge. The insurance companies claim to arrive at these hourly rates by market studies, but the studies are bogus and rigged to come up with an hourly rate far below what it should be.

The body shops and the insurance companies know that it’s impossible to repair cars safely and properly at the hourly rate they pay so they “do what they have to do” to get around that rate. The insurance companies force the body shops to use cheap after-market or used parts when new original manufacturer’s parts should be used. Insurance companies also “look the other way” when body shops repair or straighten a metal part that should have been replaced, but cost more. Most of the damage that’s done to a car in a collision is below the surface and invisible after the repair is completed. This means that all visible evidence of substandard and unsafe repairs is hidden. The customer comes in to pick up her car and it “looks great”. She may never how many short cuts were taken so that the car could be repaired for what the insurance company was willing to pay.

My advice to you if you have a car in need of body repair is be sure that you choose the body shop, not your insurance company. Check out this body shop carefully, just like you’d check out a doctor or dentist for yourself or a family member. Ask for referrals, check with the BBB, and the County Office of Consumer Affairs. Google the company and check out their online ratings. Your insurance companies will try hard to persuade you to use their “preferred shop”. They will tell you that they won’t guarantee the repair unless you take it here. If you pick a good body shop, that shop will give you as good, or better, guarantee on their work than the insurance company. Be sure that the body shop you choose is on your side and not the insurance company’s. Explain that you want new parts, not used, rebuilt, or after-market. If the insurance company objects, stand shoulder to shoulder with your body shop and demand that the repair be done properly and safely. If the insurance company still gives you a hard time, tell them that you will take them to court and they will usually back down. Some body shops will do this for you, but you have to assign your rights to litigate on your behalf to that body shop.

If this sounds like too much trouble, it’s not as bad as it sounds. Insurance companies know that they are doing the wrong thing and they don’t like to go to court or attract attention. You will be surprised how often people like you who have the courage to stand up to Big Insurance will find them backing down.

How to File a Car Dealer Complaint With the Florida Attorney General

www.FileAComplaintFloridaAttorneyGeneral.com

Some of my regular readers will recall that I testified before the Florida Senate Commerce Committee a few years ago. My purpose was to introduce legislation to make the dealer fee illegal in Florida. The bill never got out of the senate committee because it was “shot down” by the Florida Automobile Dealers Association, FADA, which is referred to as and pronounced fah-dah.  For those who don’t already know, FADA is a powerful lobby for the car dealers. They have a lot of money because car dealers make a lot of money and can donate a lot of money to their political action committees, PAC’s. In full disclosure, I have donated to FADA political action committees in the past and continue to do so. That’s because they protect car dealers against harmful action by the auto manufacturers, but I abhor the way FADA protects car dealers that advertise and sell cars in deceptive, unethical, and even illegal ways.

A big reason that I was defeated in that effort was that the attorneys at the hearing representing the Florida Attorney General (AG) told the panel of senators that they received relatively few complaints on car dealers charging dealer fees. In fact, they received many more complaints on other businesses like storm shutter installers and paving contractors. The AG lawyers said they had to focus their limited resources on those businesses that had the most number of complaints. Of course, the lawyers from FADA completely concurred with that excuse.

Hence, I’m writing this article on “How to file a car dealer complaint with the Florida Attorney General”. There’s no question in my mind that most car owners in south Florida have a “beef” with a car dealer that they bought, leased, or serviced their car with. In fact, it’s not just south Florida, it’s the entire country. The Gallup organization conducts a national poll every year asking us which businesses we consider the most honest and ethical. Car dealers finish last almost every year (Congressmen are usually next to last).

I’m not sure why more victims of car dealers don’t file complaints with the regulatory agencies. I do know why car dealers do not receive as much negative publicity as they deserve and that’s because the local media is afraid of them. Car dealers are the largest local advertisers and they spend a huge amount of money on advertising that newspapers and TV and radio stations rely on. You may know that car dealers banded together to force Seaview Radio (WSVU in North Palm Beach) to cancel my consumer advocate show, Earl Stewart on Cars, which had been on the air for 7 years. They told the owners and management of Seaview that they would not advertise unless my show was canceled. Perhaps it’s the lack of reporting by our local media on how car dealers deceive car buyers with their advertising and sales practices that makes for so few complaints being filed.

If everyone who reads this column/blog who has been wronged by a car dealer will take the time to file a complaint with the Florida Attorney General’s office, I’m confident that we will see some immediate action. Because of my role as an advocate for car buyers, I hear from dozens of victims of car dealers every month. If those same people would also file a complaint, car dealers would rise on the priority list of companies that are ripping of Florida consumers so that the AG would be able to allocate their limited resources to control and curtail unethical, deceptive, and illegal advertising and sales practices by car dealers.

Please click on this link, www.FileAComplaintFloridaAttorneyGeneral.com and file a complaint. You may also call the Office of Citizen Services at 850 414-3990 or the Fraud Hotline at 866 966-7226. I know you’ve complained to your friends and neighbors and maybe even to me. But now it’s time to complain to somebody who can stop these car dealers from taking advantage of you.

Dealer Installed “Options”, Not Optional

I’ve written many articles about the infamous “Dealer Fee”. There’s another very common trick that most dealers use that is equally prevalent, deceptive and called “dealer installed options”.

Dealer installed options are products that have very low cost and value that have huge markups. Typically they are preinstalled on all of the dealer’s cars in inventory, with the exception of a few “ad cars”. These ad cars are ordered in small quantities, stripped of factory accessories and often without even an automatic transmission. They are typically ordered in the least desirable color and trim. The advertised car also either pays no commission to the salesman or a very small one. Typically only one car is available and when you ask to see it, the salesman will tell you that it’s been sold.

The advertisement will sometimes say, “Many cars are available at similar prices” or words to the effect that there is more than one, but they are all priced higher than the one car advertised. The dealers will put a stock number in the fine print. This is the stock number of the advertised car and is the dealer’s defense for having only one car (which was just sold) at that low price. Even if you are able to read the fine print, seeing something like “#6339A” is not something that would give anyone a clue that this means there’s only one car available at this price.

I recently sent a mystery shopper in to investigate an advertisement by a South Florida dealer who was advertising a new 2014 Toyota Corolla for $14,988. The shopper was told by the salesman that this offer was for only one Corolla and it was a stick shift. When she asked to see the car, the salesman said the car was “unavailable”. Then the salesman explained that all of their other Corollas had an additional charge of $897. This was for “dealer installed options” consisting of pin stripes ($199), floor mats $299), and nitrogen in the tires ($399). The dealer’s approximate cost for these items is about $100, about a 900% markup! There was also a charge of $24.99 for an “electronic filing fee” and $75 for a “Tag Agency Fee”. These sound like state fees but they are not, only costs from subletting to outside private companies being passed along to the car buyer for more profit to the dealer. The bottom line is that the car advertised for $14,988 really cost $15,985, almost a thousand dollars more!

What I’ve described above is the rule, not the exception, with most South Florida car dealers. The only way to avoid this sort of thing is to insist on a bottom line price. The only charge you should pay in addition to an advertised or quoted price is state sales tax and fees for the license tag and registration. You can check with the Florida Department of Motor Vehicles to confirm what a tag and registration costs. Costs the dealer may claim he incurs for obtaining these like “electronic filing fee” and “tag agency fee” are bogus charges which simply reimburse the dealer for his normal operating expenses. When you pay a dealer for his expenses, you are paying him a higher price and profit on the car. The law requires that this be disclosed as a dealer fee and included in all advertised prices.

As far as “dealer installed options” go, the safest bet is just don’t buy them. Make it clear from the beginning that you insist that all options or accessories be factory installed. If a dealer won’t agree to this, don’t buy a car from him. If there is an option the factory doesn’t offer that you want to buy, be extra careful to compare prices on that option with others who offer the same thing. The only reason dealers install options on cars is because they can mark them up exorbitantly as in the “900%” example above. Also, remember that dealer-installed options are not warranted by the manufacturer of the car and their quality is not as high.

By getting at least three out-the-door prices on the exact same year, make, model car you want with identical MSRP’s you are assured of getting a good price. Don’t be fooled by “dealer list” which many dealers quote you to make you think it’s the manufacturer’s suggested retail price, MSRP. Also, do the same thing with getting the best price on your trade-in and the best rate on your financing. Shop your trade-in just like you want to sell it without buying another car. Be sure you check interest rates with your bank or credit union and another bank just be sure.

Shame on Consumer Reports!

Consumer Reports (CR) is considered to be the journalistic icon of consumers’ rights in America. I have written columns for this blog and Hometown News. I’ve advocated on my radio show for Consumer Reports. I considered them the single most reliable source for consumers selecting the best products and sellers of those products, and I still do. Since 1936 Consumer Reports has set the example for unbiased, scientific evaluations and opinions on virtually every product Americans buy. They report, not only on products and services, but those who sell those products and services. They accept no advertising or any other consideration from companies. In fact, they will not even allow a company to use their name if they have endorsed a product of that company. When Consumer Reports recommends a product, you can be sure that it is their honest belief that that the product is a good one. Everyone is entitled to one honest mistake and I have to believe that this was the case with Consumer Reports.

Consumer Reports offers an auto-buying service to its members and charges $12 to give their members “Consumer Reports bottom line price” to buy any new car. They sublet this to an outside car buying service, TrueCar, which provides this data. In fact, TrueCar provides this service directly to car buyers for no charge at www.TrueCar.com, whereas CR chargers $12 for each car you want to get the “best” price on.  In full disclosure, I’m a member of TrueCar’s national dealer council. I’ve written about TrueCar in Hometown News and my blog, highly recommending them, just as I have Consumer Reports. TrueCar, as a result of my advising and urging, will be moving soon to require all car dealer members of the TrueCar program to more clearly disclose the “true”, bottom line price.

Consumer Reports is inadvertently leading their members who purchase what they believe to be the “bottom line price” a price which is actually much higher than the bottom line. In the example above, the “estimated dealer price” of $22,253 with “estimated savings: $4,782” on a new 2014 Toyota Prius, is actually $23, 252, almost one-thousand dollar higher! The estimated savings are only $3,783, not $4782.

The extra $999 that the dealer adds to the bottom line price is disclosed in the pricing that CR gives their members, but it’s disclosed in the fine print and below the focal point of their documentation which states, “This is your Estimated Dealer Price” and the price is featured in bold print and color. Some might say that as long as the extra dealer profit not included in the “bottom line” price is disclosed in the fine print, CR’s done nothing wrong. First of all, this is not the way Consumer Reports does business. CR is vehement against fine print ads that trick buyers. This issue was actually brought to my attention by a very well educated, intelligent consumer who was tricked by this very CR “bottom line” price. She brought it to the attention of her mother (who happened to be my wife) because she thought my price (I’m a Toyota dealer) was higher than the other two dealers’ prices. If an intelligent woman that is a college graduate, and investment banker can be duped by Consumer Reports’ “bottom line price, what chance has the average consumer?

Florida law requires that that dealer fees aka “Dealer Processing Fees” and many other names be included in the advertised price of the vehicle. I’m not a lawyer, but I think a good argument could be made that this information emailed to a prospective car buyer could be construed to be an advertisement. This particular dealer adds $999 to the Consumer Reports’ “bottom line price”, but he could add as much as he likes. In fact, Florida law has no cap on the amount of fees (by names limited only by the imagination of car dealers) that dealers can add to their quoted prices. The phrase, dealer fee, is used only for convenience; other fee names commonly used are dealer prep, pre delivery inspection, tag agency, electronic filing, administrative, doc., documentary, notary and closing, etc. If a dealer thought he could get away with hit, he could charge a million dollar dealer fee and Florida would deem that legal! Florida requires that the dealer disclose on the invoice the following: “This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles, and preparing documents related to the sale”. The truth be known, added cost to the price of a product is defined as “profit” so the disclosure should simply read this charge represents profit to the dealer, period.

I know that Consumer Reports is not aware of any of this and hopefully they will read this blog or Hometown News column and realize that they are inadvertently aiding and abetting dealers in unfair and deceptive advertising and sales practices. If you are a subscriber/member of Consumer Reports or have used their auto-buying service, please consider calling and or emailing them on this subject. Maybe you should send them a copy of this column.

Your Car May Have a Serious Problem The Manufacturer Won’t Tell You About

Last night I received an email from a reader of this column asking my advice about her 2003 Toyota Camry. She has owned and driven this car since she bought it new more than 10 years ago. She takes very good care of her cars and her Camry performed flawlessly. She has had her cars serviced regularly by an independent mechanic for 15 years who she knows and trusts. A short time ago, while her husband was driving this car the starter malfunctioned, the a/c quit, the car overheated, and the needle was buried in the hot range.  This all happened at the exact same time. She took the car to her independent mechanic and he and he replaced a cooling fan in the a/c, gave her a new ignition coil, and also did something with the radiator since all the coolant was gone from it.  The bill was almost $1,200.00.

Well, you may have already guessed what comes next. When her husband picked the car up from the mechanic, he only drove 10 to 15 mile and the car quit again, doing all the exact same things.  He managed to get it back to the mechanic who also was completely baffled by what happened. At his point, her mechanic did what he should have done before he made the previous repair. That is to check with the manufacturer of that make car through the Internet or a local dealer. When he did check, he found that there was something called a “Technical Service Bulletin” issued on this year and model Toyota Camry, TSB SB-0015-11 which exactly describes the conditions that occurred with the car, and the recommended fix.

Obviously, the woman who emailed me wanted to know why Toyota had not advised all owners of the year and model of this Technical Service Bulletin. If she had known, she could have taken precautionary measures when the described symptoms occurred or even taken it to her mechanic or a Toyota dealer for an inspection. Now she’s wasted $1,200 and is faced with replacing her engine. Of course, this makes no economic sense on an 11 year old vehicle.

Technical Service Bulletins, TSB’s, are sent only to dealers of the manufacturer of that make car, not to independent service departments or mechanics. They are not made public and not shared with owners of the model the TSB is issued on. One might ask, what’s the difference between a TSB and a “recall”? The manufacturers take the position that recalls are for widespread problems with a particular model or a safety issue. For this particular TSB, my Toyota representative said he had experienced only two occurrences. But this is only for his territory in part of South Florida. He doesn’t know how many problems have occurred worldwide. As far as safety issues are concerned, in my opinion, that’s a matter of opinion. Is it a safety issue if your engine blows up while you’re driving 75 mph on the turnpike in heavy traffic? Some would say, yes.

In my opinion, owners of models affected by TSB’s should be notified as a precautionary measure even if only a few cars of that model are affected. I think there are three reasons manufacturers don’t do this. First, no manufacturer likes to tell people when they’re having problems with a car they manufactured. As you know, sometimes manufacturer’s wait so long to notify their customers of product defects that the National Highway Traffic Safety Administration, NHTSA, has to order them to do so. The second reason is that if they told the owners of that model of a particular problem, the owner might bring her car into a dealer and have the problem fixed under warranty. Whereas, if the car fails at a later date and is out of warranty, it costs the manufacturer nothing. The third reason is that manufacturers are very concerned about dealers who will use any excuse to repair a car. They’re afraid that the dealer will take advantage of the manufacturer or the customer (depending whether the car is under warranty or not) and do work on the car that isn’t needed. This is only my opinion and all manufacturers will vehemently deny this.

My advice is to check with the car dealer that services your make of car and ask him if there are any Technical Service Bulletins issued on the model and year you own. You should be sure that your dealer does a thorough check. Dealers often overlook TSB’s because there are so many of them and such a small percent of models and years under the TSB actually have a problem that materializes. You can also check directly with the manufacturer for this information and even find it on the Internet. Googling the symptoms your car is experiencing and your car’s year, make and model brings up lots of good information including TSB’s. Your problem with getting information on the Internet is not getting enough; it’s getting too much. I Googled TSB’s on 2003 Toyota Camrys and came up with 58 TSB’s, including TSB SB-0015-11.

I suppose some car owners might agree with the manufacturer’s philosophy and not want to be worried about TSB’s. If the chances are small that your specific year, make and model will have that problem, why worry about it? This is why people are divided over whether genetic testing for inherited diseases is a good thing. Speaking for myself, I would always rather be warned about a potential problem even if it probably won’t materialize.

Car Dealers of South Fla Beware! The FTC Is Coming to Town

Earlier this month, the Federal Trade Commission held a press conference in California, announcing “Operation Steer Clear”. This is a national effort to rid the U.S. of deceptive auto dealer ads and sales practices. So far they’ve gone after car dealers in only six states and have charge only ten car dealers, but this is just the beginning. Below are charges brought against the first dealers charged by the Federal Trade Commission in “Operation Steer Clear”:

1.     Advertising a vehicle sale price with a footnote disclosure indicating that an additional amount was required in order to get the advertised price;

2.     Prominently advertising an attractive monthly payment with a footnote disclosure indicating that the attractive payment is only for the first few months, and thereafter, the payment substantially increase;

3.     Promoting “$0 Down” deals with a footnote disclosure indicating that acquisition fees and dealer fees were due at lease inception;

4.     Promoting a “0% Interest” rate with a footnote disclosure reflecting that the attractive interest rate was limited – a limitation that would render it insufficient to finance the promoted vehicles;

5.     The failure to give away prizes to individuals who were purportedly entitled to them; and

6.     Miscellaneous Truth-in-Lending and Truth-in-Leasing violations.

What should be frightening to most of the car dealers of South Florida is that they are currently committing all of the above violations and many more. The newspaper, TV, Internet, and radio advertisements routinely violate all of these rules many dealers commit many, if not all of these, in a single advertisement.

You might ask how they have been able to get away with it this long and the answer is lack of local and state regulation enforcement. Apparently this is not just a Florida problem, but a national problem which is why the Federal Trade Commission became involved.

Basically, all the Federal Trade Commission rules say is that you aren’t allowed to trick somebody into coming into a car dealership by making them believe they can buy the car for less money than they really can. But, if you watch, read, or listen to 95% of the car dealerships in South Florida, this is exactly what is going on. Even the car dealers who don’t like to do this are drawn into it out of self-defense. If a car dealer advertises an honest price, the other dealers advertise the same car for less by tricking the customer. The honest dealer loses the sale and the next time he advertises his mission is to out-lie the other car dealers.

My advice to Florida car dealers is to clean up their act before the Federal Trade Commission comes to town. Making the national news because of sleazy advertising and being prosecuted and fined by the FTC is not good for your image or your business. Auto manufacturers and car dealers associations should also take preemptory measures to ward off an attack by the FTC. Car manufacturers look the other way when they see their dealers running illegal and unethical ads. They are afraid to make their dealers stop for fear that the competitive makes won’t and they will lose market share. The car dealer associations are aware of the problem and would like to do something about it, but unfortunately there are too many dealers who run the associations that have their head in the sand (or another place I won’t mention in the interest of good taste). 

I know car dealers in most of the 50 states and I can say for a certainty that South Florida is the worst “playground” for illegal and unethical advertising and sales practices in the USA. South Florida provides all of the ingredients for the “perfect storm” for car dealers to cheat their customers:

(1) Virtually no enforcement of state laws applying to car dealer advertising and sales practices.

(2) The 2^nd largest volume car market in the USA with all franchises represented.

(3) A very powerful, well financed lobbying group, the Florida Auto Dealers Association (FADA) to keep the legislators and regulators “in their place”.

(4) Lots of potential victims…a very large elderly population, a large population of recent immigrants or first generation Americans whose first language is not English.

(5) A media environment dependent on car dealer advertising for survival. The newspapers, TV stations, and radio stations are afraid to tell the truth about what’s going on for fear of car dealers boycotting them, stopping their advertising. Local car dealer are the biggest advertisers. Without them, most newspapers, TV stations, and radio stations couldn’t survive. Those regular readers of my column know that my wife, Nancy and I were “fired” from the consumer advocate radio show we did for seven years on WSVU, Seaview Radio in North Palm Beach. This was after several car dealers threatened to not advertise unless they canceled out show, Earl Stewart on Cars.

Time has just about run out and I’m optimistically forecasting that by this time next year we will see a significantly positive change in South Florida car dealer advertising and sales practices. If you would like to speed the process, To file a complaint in English or Spanish, visit the FTC’s online https://www.ftccomplaintassistant.gov/#&panel1-1  or call 1-877-FTC-HELP (1-877-382-4357).

SHOP YOUR FINANCING AND TRADE-IN WHEN BUYING A CAR

If you have read my earlier columns you know how important it is to get several competitive prices from different car dealers on the car you are buying. Equally important is to get at least 3 prices/bids on your financing and the true value of your trade-in.

The absolute worst thing you can do is to tell the dealer “all I care about is keeping my payments under “$X per month” and not know what the interest rate, terms, or products are included in the payments. Part of the profit a dealer makes on his cars is called “F&I income” and averages from $500 to as much as $2,000 per car sold. You can do your homework and buy your car at a very good price, but by not shopping your financing you can pay the dealer thousands of dollars in finance profits.

Credit unions are often the best source of funds for buying a car. Because they get special tax breaks from the government not available to banks, they usually have the lowest finance rates. Even if you don’t belong to a credit union, there are several you can join for a nominal fee. You should also get a financing quote from the bank you do business with. Also, give the dealer that you are buying from an opportunity to beat the rates you were quoted. Sometimes he can. 

When you are taking delivery of your car, you will be asked to consider buying products like extended warranties, maintenance plans, road hazard insurance, GAP insurance, roadside assistance, credit life insurance, etc. My suggestion is that you do not make a snap decision on these products at the last minute. You should get complete information on each product and determine if it has value for you. You may already have coverage for some insurance products in policies you already own. With extended warranties and maintenance be sure you understand what is covered and what is not covered and what the deductibles are.

You should get at least 3 bids on the value of your trade-in. You can get some pretty good guidance from Kelly Bluebook, www.kbb.com andwww.edmunds.com. Make an appointment to drive your trade-in to show the used car manager at a dealer who is franchised to sell the make you own. A Chevrolet dealer will likely pay you more for a Chevrolet trade-in than a Ford dealer would. That’s because people generally will shop for a used Chevy from a Chevrolet dealer. Get one or two more bids from other dealers in the same make. If you are near a CarMax store, you should take your car there too. They regularly buy cars like this for their inventory. The price you will be quoted is referred to as the ACV which stands for “actual cash value”. This is the wholesale value of your trade in.

Don’t confuse the ACV with the trade-in allowance that the dealer you are buying from gives you. The trade-in allowance includes part of the markup on the vehicle you are purchasing. You have probably read ads saying “MIMIMUM $4,000 ALLOWANCE ON ALL TRADES”. It’s not hard to offer thousands more on a trade-in than its ACV (true wholesale value) when you mark up the new car several thousand dollars more. Be sure that you explain that want to compare the ACV of your trade-in. Tell them you want the markup on the price of the car you are buying discounted, not added on to the ACV of your trade. Remember, however, that if you sell your trade-in to another party, you lose the advantage of deducing the trade-in from the price your sales tax in calculated on. At 6%, you would pay an extra $600 in sales tax for a trade-in with a $10,000 ACV.

With competitive bids on the car you are buying, the interest rate on your financing, and your trade-in ACV you are sure to minimize the total cost of that new or used car.

The Owner of the Car Dealership is Accountable

Congress passed a law a few years ago that really “shook up” publicly owned companies. It’s called Sarbanes-Oxley, named after the Congressmen who sponsored the bill. Basically this law says that the CEO and other high echelon management of a public owned company cannot get off the hook from wrong doings because he claims he didn't know what his employees were doing. I believe the same rules should apply to all businesses, even if their stock is not publicly held. The boss should always be held accountable for the actions of his employees and this should apply especially for car dealerships.

Most of the employees that the customer comes into contact with in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.

What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title.  When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.

The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.

If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.

Beware the Phony Monroney

This blog post originally ran five years ago. It’s important that I run it again today because violation of this Federal law, especially its intent, which is to inform car buyers of the official retail price suggested by the car manufacturer, is rampant by most car dealers. The US Senator who drafted this law, Mike Monroney, said this about his law, “The dealer who is honest about the so-called ‘list price’ cannot compete with the one who ‘packs’ several hundred dollars extra into it so he can pretend to give you more on the trade-in.” Senator Monroney said this in 1958 and the only thing that has changed is that dishonest dealers are now charging severalthousand dollars extra. As I write this, the national average price of a gallon of gas is over $4 and climbing. Car dealers are marking up fuel efficient cars, especially, hybrids by thousands of dollars. They add  their dealer window sticker, identical in style to the Monroney label right next to it so that it’s virtually indistinguishable. Then, to add insult to injury, they remove the both labels before delivery which is illegal. 

“Phony Monroney” should not be confused with “Boney Maroney” (I got a gal named Boney Maroney. She’s as skinny as a stick of macaroni). That song was first recorded by Larry Williams during my high school years, 1956-1958. You will appreciate this lame attempt at humor only if you are about my age, 73.

The Monroney label is the window sticker that is mandated by federal law to be affixed to every new vehicle sold in the United States up until the time the new owner takes delivery. The name, Monroney, derives from Senator Michael Monroney’s law passed by Congress in 1958. Prior to the proposal of this bill, there was often a large discrepancy between the showroom price and the actual price of a new vehicle.  The fact was that existing price tags did not tell the full story.  Most customer-quoted prices were for "stripped-down" models and did not include additions for preparation charges, freight charges, federal, state, and local taxes, or optional factory-installed equipment requested by the purchaser. These hidden charges were used by some dealers to increase the selling price while giving the new vehicle buyer an inflated idea of their trade-in allowance.  This price confusion led to a slump in auto sales during the early 1950's.  Senator Monroney's bill was designed to prevent the abuse of the new vehicle list prices, but would not, however, prevent dealers and buyers from bargaining over vehicle prices.

Well, as you might expect, car dealers have figured out a way to evade this very good law. An alarmingly large number of dealers use a label that is designed to look almost identical to the official Monroney label. It has the same coloring, fonts, type size and layout. This “phony Monroney” is affixed right next to the genuine article. Unless you really look close and read all of the fine print, you will have no idea that you are looking at a counterfeit Monroney label. This phony Monroney includes extra charges to artificially inflate the manufacturer’s suggested list price, MSRP.

One of the most egregious of these charges is an addition of pure markup just for profit which has a variety of names. Some of these are “Market Adjustment”, “Additional Dealer Markup”, “Adjusted Market Value”, “ADM”, “Market Adjustment Addendum” and “Market Value Adjustment”. This is simply an amount that the dealer adds to the manufacturer’s suggested retail price. It is virtually always used in high-demand, low supply cars. I have seen these labels with charges as much as $10,000 added to the MSRP. Additions of $1,500 to $3,995 are common. Dealers also use the counterfeit labels to price dealer-installed accessories, which are OK, as long as the accessories are not marked up higher than the manufacturer marks them up.

When customers confuse the phony Monroney with the real one, this distorts their point of reference for comparing prices between different dealerships. One manufacturer’s Monroney labels are consistent. A 2014 Honda Accord with the same factory accessories will have the same MSRP at every Honda dealership you visit. But if dealers fool you into thinking their label is part of the Monroney, you are not comparing “apples and apples”.  This can adversely affect a good buying decision in a number of ways. Some buyers focus mainly on how big a trade-in allowance they can get for their old car. If one dealer has the same car marked up $3,000 more than another dealer, he can offer you $3,000 more for your trade and still make the same profit as the other dealer. Some buyers focus on how big a discount they get from “sticker”. It’s easy to give a higher discount if you have artificially inflated the MSRP by thousands of dollars.

My advice to you is carefully inspect the sticker on the new car you are contemplating buying. Read it completely and especially the fine print. If there is a second label on the car, it is possible that it is fair. This would be for purposes of adding an item, installed by the dealer like floor mats or stripes, priced the same as the manufacturer charges. If that second label includes a markup over MSRP for no reason other than profit for the dealer, make sure that you adjust for that number in your comparisons for discounts and trade-in allowance. Some dealers also add a second markup to these labels and that is the infamous “dealer fee” also sometimes called “doc fee” and “dealer prep”. Some dealers do not put this on the phony Monroney but print it on their buyer’s orders and program it into their computers.

QUICK REFERENCE GUIDE TO FINE PRINT IN CAR ADS

If you look down at the bottom of virtually every car advertisement in your local newspaper, you will see some fine print. Sometimes you literally cannot read the print because it is so small. The disclaimers you read below were taken from today’s PB Post. I didn’t make any of these up. Basically what these disclaimers do is to totally negate the validity of all of the prices and payments the car dealers are advertising. The prices and payments are always much higher when you factor in the almost invisible fine print.

Combining a very short lease term with a high down payment. Nothing sells cars like low monthly payments. A car dealer can make a monthly lease payment as low as he wants by both reducing the number of months of the lease and increasing the down payment. I’m looking at an ad in the PB Post right now advertising an SUV for $19,999 or just $199 per month. In the fine print it says 27 month lease and $3,000 down plus a $799 dealer fee.

"Plus dealer installed options" The price you see advertised in the paper is not the full price. This loophole allows the dealer to tack on thousands of dollars in overpriced accessories to the price that was advertised. Dealers often charge well over one thousand dollars for floor mats, adhesive pin stripes, and flimsy plastic door edge guards.

"Advertised offer good on select in-stock vehicles only" Dealers often advertise just one car at a price below their cost. They don’t pay the salesman a commission if he sells that vehicle. The chances of that car being available for you to buy are “slim and none”. Even if the car was still there, the salesman would do everything in his power to sell you a different car that he could earn a commission on.

"Owner Loyalty Rebate". Manufacturers offer special cash rebates to current owners of their car. These rebates are not available to you if you don’t currently own that particular make of car. For example, if you own a Honda, and want to buy a Toyota, you don’t qualify for a Toyota loyalty rebate. That price you see advertised won’t be available. Other exclusionary rebates are College Graduate rebates and Military rebates. These are great for recent graduates and service men and women, but do not apply to the majority of consumers. It is also very common to see dealers combine all three: loyalty, college graduate and military rebates, making it virtually impossible for any consumer to take advantage of.

"Price …plus, tax, tag, and fees". The red flag word here is “fees”. The fees these dealers refer to is a “dealer fee” which is synonymous for dealer profit. Most people think it’s a federal or state tax of some kind. It’s nothing more than more money for the dealer that is not disclosed in the price of the car.

"Offers expire date of publication or may be cancelled at any time without notice". This simply means that the prices, payments, etc. you have read have no validity whatsoever. The prices are not good tomorrow, but they aren’t even any good today because the dealer can cancel the offer without notice.

"Not responsible for typographical errors". This is just one more way for a dealer to explain why they can’t sell you the car for the advertised price…We don’t have to honor that price because it was a “typographical error”.

"Vehicle Art for illustrations only". This means that that car you are looking at with the really great looking wheels might not have those wheels on the one you buy. Or, maybe it doesn’t even have those alloy wheels you see in the picture.

"Minimum trade based on dealer list price". The dealer list price is not the same thing as the manufacturer’s suggest price. Dealers add markups to the Monroney label also known as MSRP or manufacturer’s suggested retail price. They label this markup (often on a sticker designed to imitate the official federal Monroney label). Dealer markups of $3,000 and much more are common on such “counterfeit Monroney” labels. In this case, the dealer has marked up the MSRP far enough so that he can offer a minimum $10,000 trade-in allowance.

“$4,000 Trade Equity Required” This is another deceptive way to advertise a super low car payment. How many of us have $4,000 in equity in our trades? Certainly not the majority of consumers!

My advice to you is to ignore all car dealers’ newspaper advertising. Most car ads are designed to “get you in the door” so that they can sell you some other car than the one advertised so that they can make more money. If you must respond to a dealer’s newspaper ad, please be sure you break out your magnifying glass and carefully read the fine print.

What is the “true” cost of that new car?

It is 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 hundreds 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 principals.

You probably have heard about “holdback”. That is an amount of money added into the invoice of a car ranging from 1% to 3% of the MSRP which is returned to the dealer after he has paid the invoice. Some manufacturers include the cost of regional advertising in the invoice which offsets the dealer’s advertising costs. Another fairly 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 expense which reimbursed 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 his financial statement and some are. Technically a dealer could say that the cost he showed you reflected all of the profit (by definition of his financial statement), but the fact would remain that more money would come to back to him after he sold you the car. To me, that’s called profit.

Besides holdbacks and reimbursements for expenses, you must contend with customer and dealer incentives when trying to figure out the cost of that new car. You will probably 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 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 “dealer fee”, “dealer prep fee”, “doc fee”, “dealer inspection fee”, etc. which is added to the price you were quoted by the salesman.. It is printed on the buyer’s order and is lumped into the real fees such as Florida sales tax and tag and registration fees. Most dealers in Florida (it is illegal in many states) charge this fee which ranges from $500 to $1,000. If you are making your buying decision on your perceived cost of the car, even if you were right, here is up to $1,000 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 is not completely versed on the cost either. Checking the cost on a good Internet site like www.kbb.com or www.edmunds.com 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 make a decision 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. 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.