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.

Economic Threat to Auto Industry

(Huge Opportunity if You Need to Buy a Car)

“No idea or behavior shift has ever spread more quickly or completely in the history of the planet. In seven weeks, the life of every single person on Earth changed, and the unfolding tragedy and the long slog forward will drive expectations for years. Expectations about being part of a physical community, about the role of government and about what we hope for our future.”

I copied and pasted this introductory paragraph from a blogger I follow religiously…Seth Godin. His words on the Coronavirus describe these times perfectly.

When I woke up this morning, before I had my coffee, I had an eerie feeling…” maybe this is a bad dream!” I know this is an old cliché, but if there was ever a time when it fits perfectly, it’s today. We’ve all had bad dreams that, during the dream, we wondered if this is a dream…usually that’s when you wake up. I’m pretty sure I’m not dreaming.

I’ve mixed emotions about writing on the Coronavirus/COVID-19. This blog/column is entitled “Earl on Cars” and maybe I should be explaining how you can avoid paying too much for your next car. On the other hand, all human beings on our Planet are thinking or talking about survival…physically and/or economically. Today, a car can be important to both your physical and economic wellbeing; so, I’ll advise you on how to buy or lease one during the Corona Crisis and get, not just a good price, but probably the best deal ever on a new or used car.

Auto manufacturers and dealers are as desperate as you. When this crisis passes, there will far fewer auto manufacturers and dealers than today. I’m a car dealer who sells a very popular make of car, Toyota, and my business stinks. Most manufacturers and car dealers aren’t as fortunate as I, and many with less popular makes won’t survive. Sensing this, car dealers and manufacturers will do whatever they can to outsell their competition, if they want to be among the “survivors”.

If you’re a regular reader of mine, you’ve heard me say, “Competition is your friend”. One thing all auto manufacturers have in common is being fiercely competitive. GM must outsell Ford, Toyota must outsell Honda, Mercedes must outsell BMW, etc. Expect the biggest discounts and rebates as well as lowest interest rates and payments. Today is not the time to rush out and buy or lease a car. Time is on your side as the COVID-19 pandemic peaks. Current predictions point to the end of April. Now is a good time to begin your homework…due diligence. Study Consumer Reports to decide exactly what year-make-model vehicle you want to buy. Once you do that, put out some price “feelers” online. Shopping online, you can expand your radius as far as you want to. If you want to buy a Cadillac, you can shop 3 or 4 dealers or 30 or 40! Time is on your side because you won’t be making buying decision until the end of April. This gives you time to “separate the wheat from the chaff”. Some dealers won’t satisfy your demand for an out-the-door price which includes ALL charges including dealer fees, dealer installed accessories, and tax and tag. An out-the-door price is the number you can write on your check, present it to the dealer, and drive the car home. Once you have at least 3 out-the-door prices on the exact year-make-model vehicle, you’re ready to strike at the end of April…the optimum time to buy a car.

On Thursday April 30, contact your “finalists” (at least 3) and let them know you’re going to buy your car from the dealer that reduces his price to you by the most. Reemphasize that their price must be final, out-the-door. At even the mere “hint” of a shenanigan, you’ll vanish, and they’ll never see or hear from you again.

My regular readers know that you should arrange your own financing with your bank or credit union. The only exception is low interest financing offered by the manufacturer. If you have a trade-in, you should have already shopped its value with Carvana, www.WeBuyAnyCar.com, CarMax, and AutoNation. Also, get bids from the used car departments of dealers that sell the same make of car as you’re trade-in.

If you follow these guidelines, I strongly believe that you will get the best deal on your next new or used car that you ever had; but let me close with one big caveat. You’re getting a great deal because car dealers and auto manufacturers are desperate. Desperation inspires both giving you a great discount or tricking you into believing you’re getting a great price when it’s not. Caveat Emptor/Buyer Beware. Good luck, and stay safe.

WORLD CRISES & U.S. LEADERS

Please excuse this column’s deviation from Earl Stewart on Cars automotive theme. I started to write a column on “How not to get ripped off by your car dealer”, but it seemed rather unimportant in view of the Coronavirus threat.

My father, Earl Stewart Sr., was born in 1892. He was an avid Republican and disliked Franklin Roosevelt and Harry Truman.

I’m old enough to remember that he strongly supported Harry Truman in World War II because he was our president and the leader of our country. After the war was over, he regressed to referring to President Truman as “that G.D. Haberdasher”. 😃

He told me that he also supported Franklin Roosevelt during WWI.

The Coronavirus, Covid-19, is potentially a greater threat to humanity than WWI or WWII. As I write this, nobody knows just how many lives will be lost or how much damage it will have on the world economy. We must hope for the best and prepare for the worst.

There’s almost no one alive today who was alive during WWI and very few that were during WWII. History tells us a lot about how the “free world” survived those times. Survival is our strongest instinct and the USA did what had to be done for us and the rest of the free world to survive. Looking back on some of the decisions our leaders made, there’s lots of controversy…Interring Japanese Americans in camps in California, killing millions of innocent civilians in Hiroshima, and Nagasaki, and knowingly sacrificing 37,000 American and allied soldiers during the Normandy Invasion. Arguments are made today on both sides of these and many other issues; but during WWII, there was no time for arguments or even compromise. Time was of the essence and our survival was at stake.

Much of what our leaders did to win those two world wars is still unknown. Censorship and secrecy will keep us from knowing everything done to ensure victory. But the bottom line is that we won and are not a German or Nazi state today…neither is the rest of the world.

Here we are in the 21st century when secrecy and privacy are almost nonexistent. Freedom of speech allows everyone to criticize and object to anything or everything. Everything is subject to debate and decisions are usually based on compromise. During an emergency, a crisis, these rights can slow us down.

To come out of this crisis as quickly as possible, we must decide and act as quickly as possible.Our leaders must put aside personal animosities, and political differences. We should send a message to our politician’s that we U.S. citizens, Democrats and Republicans, will “bury the hatchet” until covid-19 and our shattered economy are history. We can tell our elected leaders, Republicans and Democrats, that we want swift and strong legislation even if one side or the other doesn’t get everything they want. We should all watch our leaders carefully and, when they come up for reelection, remember those that played petti politics with our lives during this crisis and vote accordingly. I’ll vote for the Republican or Democrat who swallowed his or her ego and pride for the sake of winning WWWIII.

There’ll be plenty of time for political attacks and mindless partisanship AFTER we’ve defeated the Coronavirus.

Coronavirus “Catch-22”

Stay Home if You Might Have the Coronavirus

But If You Don’t Go to Work, You Won’t Get Paid

Catch-22 Definition (logic) A catch-22 is a paradoxical situation from which an individual cannot escape because of contradictory rules or limitations.

This column is directed to all businessmen, especially retailers like car dealers, department stores, etc. I’m sure, Mr. Businessman, that you’ve told your employees that they shouldn’t come into your workplace if they have symptoms that might be the Coronavirus. That gets you off the hook because you warned them, but how effective do you really expect this directive to be?

A lot of your employees, either cannot afford to go without a paycheck, or don’t want to. Human nature is such that some will come to work anyway, possibly even concealing their symptoms. Lots of employers don’t provide for sick pay or, if they do, require a doctor’s certificate to qualify. Many employees receive substantially less pay while off sick than they normally earn…especially commissioned employees.

I know what you’re thinking…a lot of my employees will take advantage of my generosity and “have a paid vacations” at my expense when they’re feeling just fine. You’re dead wrong! If you show your employees that you care for them and trust them, they won’t take advantage of you. Oh, maybe one or two will…there’s always a chance that we have a rotten apple in our barrel. But that’s a small price to pay to protect all your employees and customers, not to mention your business.

Sure, you can wait for the federal government to come to the rescue, but you know how long it takes politicians and federal bureaucracy to act. You can count on two things; politicians aren’t going to say or do anything that won’t help them get elected and the Republicans and Democrats can’t agree on anything.

If you truly want to make your workplace safer for your employees and customers, give them an incentive to stay home that they can’t refuse. Pay them as much as they would earn while staying home as they would in on the job. Pay commissioned employees based on their average earnings. Yes, this can get expensive, but not nearly as expensive if one or more employees spreads the virus to your other employees and customers. You’d be forced to close your business.

By the way, a fringe benefit of this is to build confidence in you from your employees and customers. You can’t put a price tag on that…it’s truly priceless. After the Coronavirus is “yesterday’s news”, your company’s brand and your brand as a leader will have grown substantially. I promise you that you’ll recoup, from increased sales and profits, all the costs of paying employees for staying home and then some.

Voted the Best Car Dealer in Palm Beach County

Regular readers of my newspaper columns and blog know I avoid promoting myself and my car dealership, Earl Stewart Toyota, in North Palm Beach, Florida. My weekly radio show (Earl Stewart On Cars), YouTube videos (www.YouTube/EarlonCars, public speaking engagements, and my book (Confessions of a Recovering Car Dealer) represent my efforts as a consumer advocate to help you avoid being ripped off by car dealers.

A year ago, a friend called to congratulate me for winning a contest sponsored by Palm Beach County’s newspaper, The Palm Beach Post, as the Best New Car Dealership and the Best Auto Dealer Service Department in Palm Beach County for 2019. I thought she was kidding because I didn’t even know there was a contest! I don’t advertise in the Palm Beach Post. One of my customers, employees or friends must have nominated my dealership in the contest without my knowledge.

2019 was the first year for this contest which was held again for 2020 and Earl Stewart Toyota won again! You may be wondering why I’m bragging about being the best car dealer when this column is supposed to be written by a consumer advocate giving you advice on how to buy, lease, maintain, or repair your car without being taken advantage of. That’s a fair question, and please allow me to answer it.

I really have two goals as a consumer advocate: (1) Equip you with the awareness, caution, and knowledge to protect yourself from being deceived by car dealers and (2) Set an example for car dealers to prove that ethics, honesty, and transparency with their customers is actually good for business.

There are literally dozens of car dealerships in Palm Beach County selling every make of car available. I have only one dealership. I sell new Toyotas which represent only about 15% of the new cars sold. I’m one of four Toyota dealers in Palm Beach County. Palm Beach Toyota, Southern 441 Toyota, and Delray Toyota are the others. Eighty-five percent of the new cars sold in Palm Beach County are sold by those dozens of other car dealerships that sell everything besides Toyota. Many car dealers in Palm Beach County own multiple dealerships…Schumacher, Napleton, and AutoNation for example. For more people to vote for Earl Stewart Toyota than those car dealers with multiple locations, I must have had car owners that don’t even own a Toyota voting for Earl Stewart Toyota.

At this point in this article, I am addressing all the car dealers in Palm Beach County who were not voted number one. I know you must be upset that you lost to me and you might not understand why a car dealer with only one location in a small town like Lake Park, FL (we’re technically in Lake Park but I use North Palm Beach in my name because so few people know where the small town (population 9,000) of Lake Park is. Logic must tell you that for me to win this contest, I must have received votes from other than Toyota owners that I sold. You must wonder why some of your customers must have voted for me. They voted for a Toyota dealer when they buy Hondas or Chevrolets!

Here’s why they voted for my Toyota dealership even though they like the make of car you sell more. (1) I don’t add over a $1,000 in hidden fees (aka dealer fees) to my advertised prices. (2) I don’t add over-priced, dealer-installed accessories to my advertised prices. (3) I post my lowest, out-the-door price on ever new and used car I sell. (4) I offer a 7-day UNCONDITIONAL moneyback guarantee on every new and used car I sell. (5) I don’t hide from my customers. I give every customer my personal cell phone number and have 5 red phoneslocated around my dealership that connect directly to my personal cell phone. Every Earl Stewart employee must adhere to the Earl Stewart Code. Check it out at www.EarlStewartCode.com.a

Why Do Car Dealers Lie about their Prices?

You probably already know that you can’t buy a new or used car for the advertised price; the out-the-door price always ends up thousands of dollars higher. Car dealers are the only retailers that routinely trick their customers like this, at least to the degree that car prices are understated.

Have you ever wondered why virtually all car dealers do this? Imagine that you owned a Ford, Honda, Chevrolet, or Toyota dealership in Southeast Florida. Each of these car brands has as many as 20 dealers and no fewer than 12 selling the IDENTICAL product. Toyota has 19 car dealerships between Ft. Pierce and Key West. Every Toyota dealer pays Toyota the exact same price for their cars; but Toyota dealers don’t sell those cars to their customers for the exact same price. They mark up each car as much as they can…the highest price that the customer will pay. If a Honda dealer sells 25 identical Honda Accords in a given month, the likelihood is that each sold for a different price; the typical variation in profits on the identical vehicle can range from a few hundred to a few thousand dollars.

Let’s say you owned a Honda dealership. The Honda manufacturer gives you a quota…a minimum number of Hondas you must sell monthly and annually to fulfill your contract allowing you to sell Hondas and often to receive volume cash bonuses. The only way you can do this is to price your Hondas “competitively”. But, you also must maintain a high enough markup on each Honda, so that your dealership remains profitable. This is the “Catch 22” and dilemma of all car dealers. A South Florida Honda dealer has EIGHTEEN other Honda dealers advertising the same cars he sells. If you advertise a Honda Accord for a higher price than most other Honda dealers, you won’t sell enough to meet your quota; if you advertise that Honda Accord for a lower price you’ll sell lots of Accords, but you’ll lose money on every car.

Therefore, all Honda dealers and all car dealers of all makes see only one viable course of action. Advertise their cars at a very low price, lower than their competition (and lower than they can or will sell the car for), so that the customers will come in to buy. Once the customer is in the dealership, the “games begin” to raise the advertised price to a price as profitable to the dealer as he can negotiate. The tools the dealers use to accomplish this are many…hidden profits (aka dealer fees) disguised as government fees, dealer pre-installed accessories, and switching the customer to a different vehicle or a lease rather than a purchase.

Car dealers see themselves as having no choice but to sell cars this way if they’re to remain in business. They blame their actions on the auto franchise system and there is some truth to this. Apple sells you iPhones directly, but Toyota cannot sell you a Toyota directly; car manufacturers MUST sell through their dealers. This system is mandated and entrenched by state law in all 50 states. The manufacturers created the dealer franchise system in the early twentieth century because they couldn’t sell their cars fast enough directly. Once a critical mass of dealers was created by the auto manufacturers, the dealers organized and lobbied their state legislatures to created laws protecting their franchises from the manufacturers. The main reason they did this was because the manufacturers were granting franchise agreements to too many dealers…” over-dealering”. Too many car dealers selling the same car in a market creates too much competition because it drives the prices down. Unfortunately for the dealers, there were (and are) already too many. Today, car dealers are overprotected, enjoying exclusive markets with state laws making it almost impossible to control, much less, eliminate even the most “problem” car dealers.

The auto franchise system is over 100 years old and obsolete, but it’s entrenched and will remain for the foreseeable future. New vehicles will, one day, be sold online directly by the manufacturers and maybe even through Amazon or Walmart. Vehicles will be built to order and delivered within a week. The price you see will be the price you pay, and you will be able to return the car for a full cash refund if you change your mind. Service, maintenance, and repairs on modern vehicles is minimal. Separate service centers will still exist to handle this need. Service centers will also have new vehicles of each model for you to inspect and test drive. Tesla is doing today exactly what I described, except for the one-week delivery time and unconditional moneyback guarantee.

But there’s a larger reason why car dealers get away with their deceptions. That is “because they can”. Auto manufacturers realize they’re stuck with the dealer franchise system and “if you can’t beat ‘em, join ‘em”. Auto manufacturers have huge political lobbying clout and, when you add the car dealers and their associations’ money, state and federal politicians have no choice but to “play ball”. There are about 17,000 franchised car dealers. They have enormous lobbying power nationally through NADA, the National Auto Dealers Association, and they also have enormous lobbying power in all 50 state legislatures. The political donations that Big Auto and Car Dealers give politicians make the NRA look small by comparison.

Never Go Car Shopping Alone

I frequently get phone calls, emails, and texts from car buyers who have already bought a car. The “horse is already out of the barn”, and they want me to give them advice on how to get it back. Most of these car buyers went car shopping and bought their car alone. Most of the complaints are associated with verbal promises by the salesperson, not committed to writing. Bringing at least someone with you when you’re car shopping doesn’t negate the importance of getting all promises in writing, but substantially lowers the chances of a car salesman trying to pull a fast one. The salesman and his manager know that, in court, two people’s word trumps one.

A woman wrote me a letter in response to one of my columns. Her husband had recently passed away and this was the first car she’d bought on her own. The dealer didn’t have the model car with the accessories she wanted and was unable to locate one at another dealership. She didn’t want to decide without seeing the actual car she wanted to buy, but the salesman and manger talked her into signing a buyer’s order, assuring her that she was under no obligation to buy. They also included two accessories that she did not want because “the manufacturer required it”. I’ve heard of distributors ordering cars with certain accessories from the manufacturer which essentially makes them “standard”, but never “$250 floor mats” which was one of the accessories she mentioned. I get a lot of emails, phone calls, and letters from people who made a bad deal in their car purchase and want to know how they can get out of it. This is one of the less egregious, but I chose it because it was a simpler and shorter example.

There is strength in numbers when shopping and negotiating to buy a car. In fact, this applies to any serious decision in life. You might be the sharpest, shrewdest negotiator on the block, but your odds of striking a better deal and not get taken advantage of are enhanced when you have witnesses on your side. Personally, I make a habit of always having at least one partner when I am engaged in a serious, adversarial decision-making process. When meeting with those on the other side, I make it a point to arrive with at least as many people as they have present. One reason is the psychological factor. When you are in an office by yourself with 2 or 3 others, it can be intimidating. Another reason is that you always have people on your side to corroborate what was said. If a salesman or a sales manager makes a verbal promise that can be corroborated by a friend or two, it is far less likely to be broken. It will also hold up in court, if it must come to that. Of course, the better solution is to see that all promises are committed to writing.

Buying a car, especially a new car is often an emotional decision. Having a friend or two with you can help you make more of an analytical, logical decision. Another point of view is always useful when making an important decision. Also, having one or two friends with you slows down the process to a level more easily absorbed and understood by you. A friend will often think of a question you should have asked but forgot.

Ideally you should bring someone with you who is skilled in negotiation and experienced in buying cars. However, if you don’t know someone like that, somebody is better than nobody.

By the way, most car dealers are unhappy when prospective customers bring in advisors and friends. Naturally they feel that way because they recognize their chances of making a fast, very profitable sale are diminished.

DON’T GET FLIPPED TO A LEASE

One of the most popular weapons in car dealers’ arsenals is the infamous “lease flip”. This is car dealer jargon for switching a customer, who originally intended to buy a car, into leasing the car.

Of course the motivation to do this is more profit for the dealer and a bigger commission to the salesman. That’s not to say that leasing a car is always more costly than buying one, but it can be if you’re not careful. And not being careful is exactly what happens when a purchase intender becomes a lessee. You likely did all your homework and due diligence based on a purchase. Suddenly changing to a lease, puts you totally at the mercy of the salesman.

Here’s how it happens. You come into the dealership to buy a car. You may have seen the dealer’s advertisement in the newspaper or TV for a model. More than likely you are prepared to make a down payment and/or trade in your old vehicle. You have a monthly payment in mind because almost everybody has a budget and we usually translate most purchases into whether we can fit them into our monthly budgets. You negotiate the best price you can to buy the car, or maybe the sale price is good enough. Or, more and more often, the advertisement that brought you in showed a leasepayment, not a purchase payment. Dealers use deceptive language like “Drive this car for just $299 per Month” or “Take this Car home for Just $200 per month”. Notice the words buy, own, or purchase are never used.

Now the salesman, or more often the F&I manager/business manager tells you what your monthly payment will be. Let’s say that you have a trade-in worth $15,000 and aren’t going to put any cash down. The F&I [Finance and Insurance] manager tells you your monthly payment will be $427 per month. But that’s way more than you can afford, and you tell him you can’t buy the car because you can’t afford that big a payment. He asks you how much you can afford, and you tell him it must be under $350 per month. Now he has you set up perfectly for the “lease flip”.

“Mrs. Smith, I think I have just the right thing for you. What would you say if I told you that you can drive that new car home today for just $349 per month?” You say with glee, “we have a deal!” Guess what? You’ve just been flipped. If you had bought the car at the advertised price or negotiated a very good price, the dealer probably would have made about $1,000 profit, and the salesman would have made about a $200 commission. Not that you’ve let yourself be flipped to lease, the dealer could be making up to $15,000 and the salesman could be making a $3,000 commission!

I’m not exaggerating. I get calls weekly from victims of lease flips. Many of the callers are elderly and many of them are widows who never bought a car before but had relied on their husbands. There’s no law that limits the profit that a dealer can make when he sells or leases a car. $10,000, $15,000, and even $20,000 profits are made and usually on leases. The dealers can do this by using the trade-in as a capital cost reduction on the lease but allowing less for the trade than it is worth. In the example above, your trade-in may be worth $15,000 but you were allowed only $5,000 to reduce the capitalized costs of the lease. Also, the dealer could have raised the price of the car you negotiated or the sale price to MSRP or even 110% of MSRP which is allowable by the leasing companies.

By manipulating the number of months of the lease and the down payment [capitalized cost reduction], a dealer can give you as low a payment as you ask for and still make an exorbitant profit. Most buyers are so focused on monthly payments that they don’t carefully analyze what they are agreeing to and signing.

The shorter the number of months of a lease, the greater impact the down payment has on the monthly payment. A $5,000 down payment reduces the monthly payment on a 36-month lease by $139 per month, $208 on a 24 month lease, and $417 on 12 month lease.

Incredibly, many victims of the lease flip, never thought about the fact that after the 12, 24, or 36 month term of the lease, they own nothing. After 36 months, a car with a good resale value should be worth at least half of what you paid for it. Many people who have never leased before believe they can bring their lease car back early if they want. Leasing is not renting, and you can bring your car back early only if you make all of the remaining lease payments. If you had bought the car for $30,000 and financed it for 36 months, you would have about $15,000 in equity at the end of 36 months and no monthly payments. You were building equity with every monthly payment in the purchase, but you were building zero equity with your 36 lease payments.

As I said before, don’t let this frighten you from ever leasing a car. Leasing can be a good choice and sometimes the best choice. You can find six articles I’ve written at www.EarlOnCars.com : “Lease a New Car before You Buy It”, “Car Leasing Booby Traps”, “Be Very Careful When Leasing a Car”, “The Lease Acquisition Fee…the Bank’s Gotcha”, “Buy or Lease Your Car at the Right Time of Year”, and “Should I Buy or Lease My Next Car?”

Florida Car Dealers BOGUS Option to Purchase Your Leased Car

As a consumer advocate for auto buyers and Lessees, one of my most frequent complaints is that the car dealer added their hidden fees (aka dealer fees) to the lessee’s option to purchase price granted by the lessor in the lease contract. Below is the verbiage in a typical auto lease contract:

"PURCHASE OPTION AT END OF LEASE TERM. You have the option to purchase the Vehicle “AS IS” at the scheduled termination of this Lease, provided all sums due under this Lease have been paid by you and you notify us 15 days prior to the scheduled termination of this Lease. The price you pay will be the Residual Value (see Section 10) PLUS a purchase option fee in the amount set forth in Section 23. You will owe any official fees and taxes, documentary fees, tag or title transfer charge or fees, or other amounts charged in connection with the purchase of the Vehicle."

When you lease your new car, the salesman tells you that you have the option to purchase that car at the end of the lease. This option price is the “residual value” which is the estimated WHOLESALE value of the car at the end of the lease. Leasing companies also add a fee to this amount, typically about $350, which they say is to cover their costs of allowing you the option. It’s just more profit to the leasing company like their “lease inception fee” and “lease disposition fee”. But the good news is that this phony fee is disclosed (albeit in the fine print).

What is NOT disclosed is the added profit to the car dealer when you turn in your leased car and purchase it back from the leasing company. All car dealers in Florida (except my dealership) add as much as they want to your contractually guaranteed purchase option price. Dealers will tell you that they are adding their dealer fees, which Florida law allows; But they don’t tell you that Florida law requires this added dealer profit be INCLUDED IN THE ADVERTISED PRICE. The only indication of the price of your purchase option is shown in your lease contract and there is no mention of hidden dealer fees. In Florida, there is no limit to the size of a dealer fee, the number of dealer fees, or what the car dealer chooses to NAME his dealer fees. I know car dealers in Florida that charge more than $2,000 in dealer fees and they will add that to your lease purchase option.

I’m not an attorney, but I do have a Juris Doctor degree (JD) from the “Legal School of Hard Knocks”. I know that car dealers are agents for the leasing companies, especially when the leasing companies are owned by the car’s manufacturer. As an agent for the leasing company, dealers have a responsibility to fulfill the intended terms of the lease contract. I also know that under Common Law, all contracts must be entered in GOOD FAITH. It isn’t good faith to surprise the lessee with a $1,000+ added profit to the car dealer.

My advice to you if you’re anticipating buying your leased car, is to check with other dealers of your make to find out if one might consider waiving their dealer fees. Speak to the “higher ups” in the dealership and the leasing companies. They know what they’re doing is wrong and might waive the dealer fees. As a last resort, consult with a real attorney and ask his opinion. I believe that this practice represents a great opportunity for a class action suit against Florida car dealers and leasing companies. If you’re planning on leasing a car, make it part of the “deal” that, should you desire to exercise your lease option, you will not be charged dealer fees. The dealership will agree to that “in a heart-beat” to lease you a new car.

Car Dealers Can Fool Some of the People All of the Time

Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.



However, it doesn’t work that way with unethical car dealers and uninformed car buyers. It’s always been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or act with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.



I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about 17 years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you must do is read some of the car ads online, direct mail, or the newspapers. To the educated, sophisticated buyer, these ads are actually funny, if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.



There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor” …let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they must go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car salesman.



My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.





Best,



Earl

Auto Manufacturers Mandate Dealers to Advertise Higher Prices

Honda was the first auto manufacturer to require their dealers to advertise prices above dealer invoice; in fact, they’ve been requiring this for over thirty years. The industry name for this is Minimum Advertised Price (MAP). This might sound like a good idea if you don’t understand what a car dealer’s invoice truly is and is not. It is NOT the true cost of the vehicle sold to the dealer by the manufacturer. The dealer invoice contains up to several thousands of dollars in profit to the dealer. The manufacturer intentionally hides various sums of money in the dealer invoice that are kicked back to the car dealer at the end of the month, quarter, or year. These amounts go by various names like holdback (typically 2% or 3% of MSRP), advertising, dealer incentives, floorplan interest incentive, and monthly-quarterly-annual incentive bonuses.

Brands with voluntary MAP pricing policies include Subaru, Honda, Acura, Nissan, Infiniti, Toyota, Mazda, and Mercedes-Benz. Interestingly, GM has a MAP pricing policy for its Chevy Performance Parts line, but not its car brands, which are Chevrolet, Buick, Cadillac, and GMC. Historically, for most car dealers, more than half of the vehicles they sell are sold for below invoice. This fact is based on supply and demand. Having a rule that a vehicle must be advertised for more than the average expected markup, simply means that the dealer cannot advertise a competitive price.

When, for many years, Honda was the only manufacturer that required their dealers to advertise higher prices, Honda dealers were the envy of the industry. Dealers of all other makes wished that their manufacturers would invoke the same rule. The reason was that setting a floor on how low advertised prices could be raised their profit margins on Hondas far above the average profit margins on almost all other makes (except luxury cars like Mercedes and BMW).

The manufacturers’ official reason for this rule is to prevent their dealers from advertising prices lower than they will sell the car for. In other words, bait and switch advertising. This sounds like a good and noble reason, but the facts are that bait, and switch advertising exists as prevalently today as it did before the rules for Minimum Advertised Price (MAP) advertised were established. What this rule accomplishes is to decrease price competition between car dealers which has the predictable consequence of increasing the price paid by the consumer.

All the manufacturers have data available to them which compares the advertised prices with the actual transaction prices. They used this data as their reason for MAP; I don’t have access to this data, but I’d bet that there has been no narrowing in the discrepancy between the advertised prices and actual transaction prices since MAP was introduced.

What this all means to you, the car buyer, is that you cannot trust advertising by either the auto manufacturers or dealers. My advice to you is to totally ignore all car dealer and auto manufacturer price advertising. They both are stacking the deck against you in their advertising. The best way to get the lowest price on a new vehicle is by shopping and comparing several dealers’ OUT-THE-DOOR price. An out-the-door price is the price you can write a check for and drive the car home…no hidden fees and no extra charges for dealer installed accessories.

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.

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 blogwww.EarlOnCars.com. 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.



Sincerely,

Earl Stewart

Recovering Car Dealer

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 Toyota.www.earloncars.com 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, https://express.earlstewarttoyota.com/express/2T3H1RFV0KW056087?deal_type=cash. 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, www.EarlStewartToyota.com, 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.

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. http://oncars.blogspot.com/2019/11/earls-suggested-word-track-for-no.html and http://earlstewartteam.com/pdf/outthedoorpriceaffidavit.pdf.

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.”

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 Cars.com 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.

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.

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
https://news.gallup.com/poll/1654/honesty-ethics-professions.aspx.

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 www.EarlOnCars.com. 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.