Just when I thought that I knew all the tricks that some car dealers play, I discovered a new one in Saturday’s Palm Beach Post.
The ad screamed “GET UP TO $12,000 OFF”. The new cars featured in the ad showed many discounts over $3,000 and $4,000. Then I found the gimmick. The discount was off of “List” price, not the manufacturer’s suggested retail, or MSRP. Most people, including me, use the terms list price and MSRP interchangeably. However, MSRP is a legal term deriving from a law sponsored by U.S. Senator Monroney, about 40 years ago. The Monroney label is required by law to be displayed on all new vehicles showing the manufacturer’s retail price, MSRP.
The purpose of this law was to offer the consumer some basis for comparison of prices between different car dealers. Before this law was passed, a car dealer could post any price he wished on the window of a new car. If he posted a price with a markup of $10,000, he could advertise a $5,000 discount and still make a $5,000 profit.
The ad I am referring to in Saturday’s Palm Beach Post shows discounts from “list” price, but defines it in the very fine print at the bottom of the ad as being “MSRP plus installed options”. There it is! The giveaway is “plus installed options”, if your eyes are good enough to read the fine print (I had to use my magnifying glass). By jacking up the MSRP with “installed options”, a car dealer has circumvented the law sponsored by Senator Monroney. This dealer can now advertise huge discounts, limited only by how high a markup he wants to put in his “installed options”. There is no law limiting the markup in an installed option. Dealers commonly install options with very low cost with high perceived value to the too trusting or careless customer. Some examples are undercoating, paint sealant, fabric protector, stripes, theft insurance, and rust proofing.
I came across another surprise in The Stuart News. If you have read my past columns, you know about “dealer fees” aka “dealer prep”, doc fees, and a few other misleading names. This charge is simply additional profit to the dealer disguised as a state or federal fee like sales tax or license and registration. The amounts range from $495 to $895. State law requires that this “fee” be included in all advertised prices and my surprise was that there are some dealers ignoring this law. The prices advertised in The Stuart News in the ads I am referring to disclosed in the very fine print “all prices plus tax tag & dealer fee”. This is a violation of state law. Unfortunately, it is impossible for the Attorney General’s office to police all of the car ads in the state every day.
Dealer fees, dealer prep, doc fees, etc. are bad enough even when they are included in the advertised price. The tactic employed by dealers to get around the law requiring that the dealer fee be included, it to switch the prospective buyer to another car. This is easily done by these means: (1) Pay the salesman no commission or a minimal commission on the advertised car. (2) Make the color and accessories of the advertised car very unattractive. (3) Have only 1 or 2 cars available at that advertised price. (4) Limit the time a buyer can buy that specific car by fine print saying “price good on date of publication only”. (4) Simply telling you that the car has already been sold. How are you to know? Many states like California make dealer fees illegal. In my opinion they should be made illegal in Florida. Please write your legislator on this issue.
Your best defense against this kind of thing is to choose the dealership you buy your car from with great care. Find a dealership that has a good reputation with the Better Business Bureau, Count Office of Consumer Affairs, and the Attorney General’s Office. Preferably choose a dealer who has been in business for a longer time. Ask friends, neighbors or relatives who may be driving a model that you are interested in how their experience was with that dealer.
Saturday, October 28, 2006
TELL YOUR CAR DEALER TO BE NICE
About seventeen years ago a car dealer in Dallas, Texas wrote a book entitled Customers for Life. His name is Carl Sewell and the book describes in detail why treating your customers with care, courtesy, respect and dignity is the surest way to success in the retail automobile business. When I first read this book many years ago, I wished that I had written it myself. I learned a lot from Customers for Life and it had a major impact on my business and my life.
If you would like a free copy of this book, just go to my Web site, EarlStewartToyota.com. Click on the link under the picture of the book where it says “complimentary copy click here”. Some of the chapters in the book are “The customer will tell you how to provide good service, if the customer asks, the answer is always yes, there’s no such thing as after hours, under-promise and over-deliver, and you can’t give good service if you sell a lousy product. When you read this book, you should have a pretty good idea of how you should expect to be treated by your car dealer, or any retail business establishment.
Remember that Carl Sewell is not just a “nice guy”, but also a very shrewd businessman. He learned that by treating customer so nicely and fairly that he actually exceeded their expectations, these customer continued to buy from him “for the rest of their lives”; Hence the title, Customers for Life. Back in 1990 he calculated that the average customer for life bought $517,000 in cars and service from him over their lifetime. Adjusted for inflation, that would amount to closer to $1,000,000 today. Furthermore these customers referred their friends, neighbors, and relatives. Also, Carl Sewell did not have to spend any advertising money to persuade them to buy from him. It is no wonder that he is one of the largest volume and most profitable car dealers in the USA.
Carl also believes in treating his employees with the same courtesy, care, and respect that he treats his customers. Have you ever been embarrassed in a retail business when a boss chewed out a subordinate in front of you? Chapter 13 is entitled “Who’s more important? Your customer or your employee? A: Both. When you enter a car dealership where the employees are more like team mates and genuinely care for each other and their supervisors you can practically feel it in the air. You feel more comfortable and trusting and more confident that, if they treat each other like this, you will be treated similarly. This is a direct quote from Customers for Life. “It’s very rare to see a manager who treats his customers one way and his employees another. And it’s awfully hard for employees to treat customers well if the boss treats them badly.”
After you read Customers for Life, why not loan it to your car dealer? Remember that this is not a “do-gooder” kind of a book. The message is that a businessman can be more successful and profitable by employing the recommendations of this book. Loaning your car dealer this book would be doing him a favor. Most car dealers should have heard of Carl Sewell. He is one of the most successful car dealers in the county and his book is considered by manufacturers and dealers to be the “bible” for customer satisfaction. If they haven’t heard about Carl Sewell, feel free to use me as a reference. Reading Customers for Life had a major positive impact on my success and the reputation I enjoy as a car dealer.
If you would like a free copy of this book, just go to my Web site, EarlStewartToyota.com. Click on the link under the picture of the book where it says “complimentary copy click here”. Some of the chapters in the book are “The customer will tell you how to provide good service, if the customer asks, the answer is always yes, there’s no such thing as after hours, under-promise and over-deliver, and you can’t give good service if you sell a lousy product. When you read this book, you should have a pretty good idea of how you should expect to be treated by your car dealer, or any retail business establishment.
Remember that Carl Sewell is not just a “nice guy”, but also a very shrewd businessman. He learned that by treating customer so nicely and fairly that he actually exceeded their expectations, these customer continued to buy from him “for the rest of their lives”; Hence the title, Customers for Life. Back in 1990 he calculated that the average customer for life bought $517,000 in cars and service from him over their lifetime. Adjusted for inflation, that would amount to closer to $1,000,000 today. Furthermore these customers referred their friends, neighbors, and relatives. Also, Carl Sewell did not have to spend any advertising money to persuade them to buy from him. It is no wonder that he is one of the largest volume and most profitable car dealers in the USA.
Carl also believes in treating his employees with the same courtesy, care, and respect that he treats his customers. Have you ever been embarrassed in a retail business when a boss chewed out a subordinate in front of you? Chapter 13 is entitled “Who’s more important? Your customer or your employee? A: Both. When you enter a car dealership where the employees are more like team mates and genuinely care for each other and their supervisors you can practically feel it in the air. You feel more comfortable and trusting and more confident that, if they treat each other like this, you will be treated similarly. This is a direct quote from Customers for Life. “It’s very rare to see a manager who treats his customers one way and his employees another. And it’s awfully hard for employees to treat customers well if the boss treats them badly.”
After you read Customers for Life, why not loan it to your car dealer? Remember that this is not a “do-gooder” kind of a book. The message is that a businessman can be more successful and profitable by employing the recommendations of this book. Loaning your car dealer this book would be doing him a favor. Most car dealers should have heard of Carl Sewell. He is one of the most successful car dealers in the county and his book is considered by manufacturers and dealers to be the “bible” for customer satisfaction. If they haven’t heard about Carl Sewell, feel free to use me as a reference. Reading Customers for Life had a major positive impact on my success and the reputation I enjoy as a car dealer.
Saturday, October 14, 2006
BUY OR LEASE YOUR NEW CAR AT THE RIGHT TIME OF THE YEAR
The total cost of a new car consists of many factors including initial purchase price, maintenance and repairs, and insurance. One of the most often overlooked and biggest costs of owing a car is depreciation. Some makes and models of cars depreciate more than others. By choosing the right make and model you can minimize depreciation. You can also minimize depreciation by properly maintaining your car, protecting it from the elements, and selecting the best color. One important factor in depreciation that is most often overlooked is the time of year that you buy or lease your car.
You should always buy your new car as soon as possible after that year model is introduced. Some would disagree, arguing that you can buy a car for less at the end of the model year. Even if this were so (and I don’t agree with this), the savings would not offset the increased cost of depreciation that you inherit by buying a new car that is a year old. If you follow the advice I have given in my previous columns on the smartest way to buy a new car, you can usually buy a new car for close to the same price at the beginning of the model year as at the end.
There was a time when virtually all makes of cars were introduced in the last quarter of the calendar year preceding the model year. If you bought a new model in September, you could be assured that you got it at the right time to minimize your depreciation. Nowadays, new models are introduced at almost any time and the introductions are nearly unpredictable. It’s not unheard of for a manufacturer to actually skip a model year entirely, selling last year’s model for another year. Or, sometimes a manufacturer will introduce a new model as much as two years before the calendar date of that model year. You should be sure you know exactly when that model year you are contemplating buying was introduced. You don’t want to buy a model year that was introduced 6 or 8 months ago
If you are leasing your car, you should also try to lease it as soon as possible after that year model is introduced. Also, when deciding on the length of the lease, your lease should end when the new model that you will lease or buy next is introduced. You don’t have to lease a car for a full one, two, three, or four years. You can lease a car for 39 months, for example, which may assist you in having your lease terminate at just the right time to buy or lease your next car.
Be sure you know how many more years the make and model you select will remain before it is replaced by a major model change. The life cycle of a particular model varies between manufacturers from as short as 3 years to as long as 6 or 7 years. Your car will retain its value considerably more if it is still within its current product cycle when you trade it in. You need to be especially wary when a specific model is discontinued entirely. Research this carefully and time your purchase or lease as early in the product cycle as possible.
If you are buying a brand new model at the beginning of its product cycle, be sure that you are buying from a manufacturer that has a very good reputation for quality. You can get a pretty good idea of the quality of the new model by researching the reliability of the previous year model. It is true that a brand new model can experience some bugs during the early months of its first year. If you are nervous about this, it might pay to wait for 3 or 4 months after a brand new model is introduced to see if problems in the form of recall campaigns or otherwise do occur.
You should always buy your new car as soon as possible after that year model is introduced. Some would disagree, arguing that you can buy a car for less at the end of the model year. Even if this were so (and I don’t agree with this), the savings would not offset the increased cost of depreciation that you inherit by buying a new car that is a year old. If you follow the advice I have given in my previous columns on the smartest way to buy a new car, you can usually buy a new car for close to the same price at the beginning of the model year as at the end.
There was a time when virtually all makes of cars were introduced in the last quarter of the calendar year preceding the model year. If you bought a new model in September, you could be assured that you got it at the right time to minimize your depreciation. Nowadays, new models are introduced at almost any time and the introductions are nearly unpredictable. It’s not unheard of for a manufacturer to actually skip a model year entirely, selling last year’s model for another year. Or, sometimes a manufacturer will introduce a new model as much as two years before the calendar date of that model year. You should be sure you know exactly when that model year you are contemplating buying was introduced. You don’t want to buy a model year that was introduced 6 or 8 months ago
If you are leasing your car, you should also try to lease it as soon as possible after that year model is introduced. Also, when deciding on the length of the lease, your lease should end when the new model that you will lease or buy next is introduced. You don’t have to lease a car for a full one, two, three, or four years. You can lease a car for 39 months, for example, which may assist you in having your lease terminate at just the right time to buy or lease your next car.
Be sure you know how many more years the make and model you select will remain before it is replaced by a major model change. The life cycle of a particular model varies between manufacturers from as short as 3 years to as long as 6 or 7 years. Your car will retain its value considerably more if it is still within its current product cycle when you trade it in. You need to be especially wary when a specific model is discontinued entirely. Research this carefully and time your purchase or lease as early in the product cycle as possible.
If you are buying a brand new model at the beginning of its product cycle, be sure that you are buying from a manufacturer that has a very good reputation for quality. You can get a pretty good idea of the quality of the new model by researching the reliability of the previous year model. It is true that a brand new model can experience some bugs during the early months of its first year. If you are nervous about this, it might pay to wait for 3 or 4 months after a brand new model is introduced to see if problems in the form of recall campaigns or otherwise do occur.
Saturday, October 07, 2006
EIGHT STEPS TO ENSURE THAT YOU ARE BUYING THE BEST CAR FOR THE BEST PRICE
(1) Consumer Reports Subscribe to Consumer Reports, go to the library and read past issues, or check out Consumer Reports online. There are other objective sources of information on cars, but this is the best. They accept no advertising from anybody and their sole goal is rigorously and objectively testing merchandise that consumers buy. You can very quickly find the best make car for the model and style you want to buy. Consumer Reports rates cars by performance, cost of operation, safety, and frequency of repair.
(2) Test Drive the car you have chosen This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy it from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.
(3) Carefully choose the accessories you want There are some accessories that enhance the value of your car and some that don’t or may even lower it. Generally speaking you should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.
(4) Carefully choose your car’s color Color is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.
(5) Arrange your financing Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.
(6) Shop your trade-in If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.
(7) Shop for the best price on the Internet Go to the manufacturer’s Web site. The addresses are all very intuitive. Toyota is www.toyota.com and Pontiac is www.pontiac.com. You can type in your zip code and get the Web sites of all of your local dealers. Depending on how far you are will to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag added.
(8) Offer your favorite, or nearest, dealer the right to meet this price. If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.
You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section, watch car dealer’s TV ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.
(2) Test Drive the car you have chosen This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy it from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.
(3) Carefully choose the accessories you want There are some accessories that enhance the value of your car and some that don’t or may even lower it. Generally speaking you should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.
(4) Carefully choose your car’s color Color is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.
(5) Arrange your financing Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.
(6) Shop your trade-in If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.
(7) Shop for the best price on the Internet Go to the manufacturer’s Web site. The addresses are all very intuitive. Toyota is www.toyota.com and Pontiac is www.pontiac.com. You can type in your zip code and get the Web sites of all of your local dealers. Depending on how far you are will to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag added.
(8) Offer your favorite, or nearest, dealer the right to meet this price. If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.
You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section, watch car dealer’s TV ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.
Wednesday, September 27, 2006
BEWARE OF DIRECT MAIL CAR ADVERTISING
Of course, you should be careful of all advertising…newspaper, TV, and radio, but direct mail can be especially deceptive. The reason this is so is because direct mail usually “falls beneath the radar” of the regulators. There are so many ads in violation of rules and laws that the regulators are overwhelmed. They focus on the most visible ads, often the ones that they see themselves in the newspaper or on TV. Direct mail represents a very small percent of total advertising. One reason for this is that it is considered by many advertising agencies to be too expensive and relatively ineffective. I believe that the only way to make direct mail effective for many advertisers is to use deception.
I have a couple of direct mail pieces on my desk and will cite some examples of this deception. “We will buy back your present vehicle for up to $5,000 over current Kelly Blue Book Value on trade towards the purchase of a Brand New Toyota or Pre-Owned model.***” The asterisk is for the very fine print disclosure on the back of the letter which reads: On select models. Discounts and rebates will vary from model to model. Of course, with the two words “up to” in front of the $5,000, no disclosure is really necessary. Buying back your present vehicle for $1 over current Kelly Blue Book Value is technically “up to”$5,000.
Attached to the letter is a something that looks like a check made payable to the recipient for $8,207. Here we go again with the “up to”. “You can apply this registered voucher for a discount ‘up to’ $8,207 off MSRP on a new Toyota.” Of course there is another asterisk which states “on select models”.
But there’s more! “Just for attending this event, you will receive 5 “golden” $1 coins as a gift, and you may have won $100, $250, $50, or possibly even $4,500 cash!” We, of course, have another asterisk which says that your odds of winning anything are 1 in 25,000. I often wonder who responds to these ads, not understanding the difference between a “golden coin” and a gold coin. Or, who really thinks they have a reasonable chance to win anything.
It’s not over yet! “Every application for credit will be immediately submitted and processed for approval and on-the-spot delivery REGARDLESS OF PAST CREDIT HISTORY”. Of course, the operating key word here is “submitted”. There is no guarantee of “approval”. They will simply “submit” your application to the bank and if you have bad credit, the bank will reject your application.
“During this weekend event, any new Toyota or used vehicle could be purchased with ZERO cash down!” The key word here is “could” instead of “can”. Of course, there is the old asterisk, which, if you can find and then read the fine print, it says with approved credit. You have to have a very high Beacon score to buy a new or used car with zero down payment. Less than 1% of car buyers would have this high a Beacon score. There is also a phrase which says “CASH DOWN IS NOT SUGGESTED”. This dealer might not suggest it but I can almost guarantee the bank will not only suggest it but demand it.
“Due to overwhelming response and customer request, I would like to again offer you a personal invitation to receive 80% of base original MSRP for the car you are currently driving.” This promise doesn’t even have an asterisk. Of course the base MSRP excludes accessories. Sometimes an offer is so ridiculous that you wonder who would ever believe it. Ask yourself how any car dealers could promise to pay 80% of the new base MSRP on a used car that they have never seen. They don’t know how many miles are on the car, whether it has been wrecked, or even if the car will still run.
Direct mail claims like those above, unfortunately do work. People actually come in and buy cars. Unfortunately these ads prey on those who are uneducated, have difficulty reading English, or are simply gullible.
I have a couple of direct mail pieces on my desk and will cite some examples of this deception. “We will buy back your present vehicle for up to $5,000 over current Kelly Blue Book Value on trade towards the purchase of a Brand New Toyota or Pre-Owned model.***” The asterisk is for the very fine print disclosure on the back of the letter which reads: On select models. Discounts and rebates will vary from model to model. Of course, with the two words “up to” in front of the $5,000, no disclosure is really necessary. Buying back your present vehicle for $1 over current Kelly Blue Book Value is technically “up to”$5,000.
Attached to the letter is a something that looks like a check made payable to the recipient for $8,207. Here we go again with the “up to”. “You can apply this registered voucher for a discount ‘up to’ $8,207 off MSRP on a new Toyota.” Of course there is another asterisk which states “on select models”.
But there’s more! “Just for attending this event, you will receive 5 “golden” $1 coins as a gift, and you may have won $100, $250, $50, or possibly even $4,500 cash!” We, of course, have another asterisk which says that your odds of winning anything are 1 in 25,000. I often wonder who responds to these ads, not understanding the difference between a “golden coin” and a gold coin. Or, who really thinks they have a reasonable chance to win anything.
It’s not over yet! “Every application for credit will be immediately submitted and processed for approval and on-the-spot delivery REGARDLESS OF PAST CREDIT HISTORY”. Of course, the operating key word here is “submitted”. There is no guarantee of “approval”. They will simply “submit” your application to the bank and if you have bad credit, the bank will reject your application.
“During this weekend event, any new Toyota or used vehicle could be purchased with ZERO cash down!” The key word here is “could” instead of “can”. Of course, there is the old asterisk, which, if you can find and then read the fine print, it says with approved credit. You have to have a very high Beacon score to buy a new or used car with zero down payment. Less than 1% of car buyers would have this high a Beacon score. There is also a phrase which says “CASH DOWN IS NOT SUGGESTED”. This dealer might not suggest it but I can almost guarantee the bank will not only suggest it but demand it.
“Due to overwhelming response and customer request, I would like to again offer you a personal invitation to receive 80% of base original MSRP for the car you are currently driving.” This promise doesn’t even have an asterisk. Of course the base MSRP excludes accessories. Sometimes an offer is so ridiculous that you wonder who would ever believe it. Ask yourself how any car dealers could promise to pay 80% of the new base MSRP on a used car that they have never seen. They don’t know how many miles are on the car, whether it has been wrecked, or even if the car will still run.
Direct mail claims like those above, unfortunately do work. People actually come in and buy cars. Unfortunately these ads prey on those who are uneducated, have difficulty reading English, or are simply gullible.
Friday, September 08, 2006
The “Check Engine Light” Just Came On!
Imagine for a minute that you and your family are on the expressway on a Sunday afternoon, driving to your favorite vacation spot. All of a sudden, your red check-engine light comes on! What are you supposed to do? You are hundreds of miles away from home and it is very unlikely that you will find dealers’ service departments for your make of car open on Sunday. Should you keep on driving? Your only alternative under these conditions is to try and find a motel for the night and find a dealer the next morning.
Unfortunately, the answer is that you should not continue to drive the vehicle any further than you absolutely have to. The problem that caused the check engine light could be any one of hundreds. Potentially, it could be a very serious problem that could be made more serious (and more expensive) by driving the car. It could also be something so inconsequential as you failed to twist the gas cap tightly enough the last time you filled the tank. I have never completely understood why car manufacturers don’t enhance the warning system to differentiate between small problems that can wait and those that could be catastrophic. What a shame it would be to ruin a family’s vacation because they failed to screw down their gas cap tightly or some other minor problem that could have waited weeks to address! My guess is that the reason manufacturers do not enhance their check engine light computer system is simply because of the increased cost. I’ll bet that the cost of a motel overnight would be a lot more than the manufacturer would have had to spend to make the stay unnecessary.
The vast majority of the time the check engine light comes on, it is not serious enough to rush to your dealer. The problem is that you can’t say for sure if this is one of those times. In fact, the service advisors in many dealerships are so used to check engine lights coming on for minor problems like loose gas caps that they often mistakenly advise customers not to worry about it and to bring the car in “when you get a chance”. This works 90%+ of the time, but that 10% when it is serious can be very expensive. In fact, if the car is under warranty and you continue to drive the car when the check engine light comes on, you could void your warranty. If your check engine light comes on, pull over to a safe place and check to be sure your gas cap is screwed on tightly. That is the problem more than half of the time. If that doesn’t make the light go out, bring the car to your dealer ASAP.
The dealer has a diagnostic machine, called a “scan tool” which deciphers the trouble codes stored in your car’s computer. This code doesn’t necessarily tell the technician exactly what the problem is. Usually it just indicates an “area of concern”. He must do further diagnostic tests to determine the exact problem. Often there are more than one problem and symptom. Sometimes a problem will cause the check engine light to go on and then the problem “goes away”. If the problem does not reoccur during a certain number of times that you start the engine, the trouble code is removed from memory. Most of the reasons your check engine light will come on are environmentally related. If our cars did not have to meet such tight emission standards, you would practically never have a check engine light go on. This is one of the prices we are paying for clean air.
All too often, the check engine light will come back on right after you have had your car worked on for that very reason. Many people immediately assume that the dealer did not fix the car right the first time and charged them for work that wasn’t necessary. This can be the case if the dealer’s technician was careless or wasn’t properly trained. But, not infrequently, the technician can do everything right and the light still comes back on after the repair is made. This is because there are often multiple problems that contribute to the symptom causing the check engine light to go on. Or, there could be a completely new problem unrelated to the first. Remember that there are hundreds of reasons that this one red light can come on. It takes a very well trained, conscientious technician to come up with the right fix.
The best thing you can do is to choose the dealer to whom you trust your car with great care. You do not have to have your car serviced at the dealer from whom you bought your car, but you should use a dealer franchised to service that make of car. Check with the Better Business Bureau, County Office of Consumer Affairs, and the State Attorney General’s office on the track record of the service department you choose. Ask friends and neighbors who drive your make of car where they have their car serviced how satisfied they are.
Unfortunately, the answer is that you should not continue to drive the vehicle any further than you absolutely have to. The problem that caused the check engine light could be any one of hundreds. Potentially, it could be a very serious problem that could be made more serious (and more expensive) by driving the car. It could also be something so inconsequential as you failed to twist the gas cap tightly enough the last time you filled the tank. I have never completely understood why car manufacturers don’t enhance the warning system to differentiate between small problems that can wait and those that could be catastrophic. What a shame it would be to ruin a family’s vacation because they failed to screw down their gas cap tightly or some other minor problem that could have waited weeks to address! My guess is that the reason manufacturers do not enhance their check engine light computer system is simply because of the increased cost. I’ll bet that the cost of a motel overnight would be a lot more than the manufacturer would have had to spend to make the stay unnecessary.
The vast majority of the time the check engine light comes on, it is not serious enough to rush to your dealer. The problem is that you can’t say for sure if this is one of those times. In fact, the service advisors in many dealerships are so used to check engine lights coming on for minor problems like loose gas caps that they often mistakenly advise customers not to worry about it and to bring the car in “when you get a chance”. This works 90%+ of the time, but that 10% when it is serious can be very expensive. In fact, if the car is under warranty and you continue to drive the car when the check engine light comes on, you could void your warranty. If your check engine light comes on, pull over to a safe place and check to be sure your gas cap is screwed on tightly. That is the problem more than half of the time. If that doesn’t make the light go out, bring the car to your dealer ASAP.
The dealer has a diagnostic machine, called a “scan tool” which deciphers the trouble codes stored in your car’s computer. This code doesn’t necessarily tell the technician exactly what the problem is. Usually it just indicates an “area of concern”. He must do further diagnostic tests to determine the exact problem. Often there are more than one problem and symptom. Sometimes a problem will cause the check engine light to go on and then the problem “goes away”. If the problem does not reoccur during a certain number of times that you start the engine, the trouble code is removed from memory. Most of the reasons your check engine light will come on are environmentally related. If our cars did not have to meet such tight emission standards, you would practically never have a check engine light go on. This is one of the prices we are paying for clean air.
All too often, the check engine light will come back on right after you have had your car worked on for that very reason. Many people immediately assume that the dealer did not fix the car right the first time and charged them for work that wasn’t necessary. This can be the case if the dealer’s technician was careless or wasn’t properly trained. But, not infrequently, the technician can do everything right and the light still comes back on after the repair is made. This is because there are often multiple problems that contribute to the symptom causing the check engine light to go on. Or, there could be a completely new problem unrelated to the first. Remember that there are hundreds of reasons that this one red light can come on. It takes a very well trained, conscientious technician to come up with the right fix.
The best thing you can do is to choose the dealer to whom you trust your car with great care. You do not have to have your car serviced at the dealer from whom you bought your car, but you should use a dealer franchised to service that make of car. Check with the Better Business Bureau, County Office of Consumer Affairs, and the State Attorney General’s office on the track record of the service department you choose. Ask friends and neighbors who drive your make of car where they have their car serviced how satisfied they are.
Friday, September 01, 2006
Translating Misleading Car Ads
In previous columns I have recommended that you avoid reading most cars ads in the newspaper and in direct mail. Most TV and radio car ads are similarly misleading. My suggestion is that you carefully choose the precise year, make, and model you want with the precise accessories and get at least 3 legitimate bids from car dealers on the Internet or, next best, at the dealerships. However, if you do find yourself perusing the large number of car ads in the local paper, here are some translations of common misleading ads. I took these straight from a local paper.
20% to 40% OFF MSRP. Never buy a car based on how big a discount you are quoted. Always calculate the price you are willing to pay based on an accurate understanding of the cost of that vehicle. Different makes and models have different markups and factory incentives can cause the true markup to vary widely. What sounds like a big discount may also pay the dealer too big a profit.
LIQUIDATION SALE. Most of the time you pay just as much for a car during a “sale” as you do without a sale. The only exceptions are factory incentives which do have an expiration date. A “sale” is what advertisers refer to as a “call to action”. They are looking for something that will motivate you to come in today, rather than procrastinate. It doesn’t seem to matter if the motivation is untrue.
UP TO $15,000 OFF. Many dealers have an additional markup on top of the manufacturer’s suggested retail price, MSRP. They commonly label this a “Market Adjustment Addendum”. This can be thousands of dollars. Discounting a car thousands of dollars means nothing if the dealer just added a “Market Adjustment Addendum” for an amount equaling or exceeding the discount.
STK#62029A. When you see a number like this next to the price of a new car, it means that that is the only car you can buy for that price. The number is the stock number for that specific car which is supposed to tell you that this is the only car at this price. Many of these ad cars are of undesirable colors and accessories. They are advertised below cost and the loss is charged to advertising if they have to sell one. You chances of buying one of these are slim and none.
CREDIT PROLEMS ARE NO PROBLEM. This type of ad is particularly insensitive and distasteful. It is meant to attract people who have such bad credit that they think they cannot obtain financing. Unfortunately, there are people whose credit is so bad that no lender will offer them financing. These people are disappointed and embarrassed when they learn the truth that “credit problems can be, in fact, big problems”.
MINIMUM $10,000 TRADE-IN ALLOWANCE. This is just like the huge discounts. A trade in allowance means nothing if the car has been marked up high enough to offset the extra trade-in allowance.
WITH ACCEPTABLE CREDIT. This allows dealers to add a fine print disqualifier which is an extremely high Beacon score that disqualifies 99% of the car buying population. It is used in conjunction with very low lease payments or purchase payments. It is a “bait and switch” which affords the dealer the opportunity to raise your payments (and his profits) because your credit is “not acceptable”…to him.
PRICE GOOD ON DATE OF PUBLICATION ONLY. You will find this only in the fine print at the bottom of the page. This is added protection to the dealer, in addition to the stock # mentioned above, that he won’t have to sell you the car at the advertised price.
AS LOW AS or FROM. You will see this in smaller print next to a very big price and a big, pretty picture of the car. This is a further “C.Y.A.” for the dealer so that he doesn’t have to sell that car at that price.
WE’LL BEAT ANY OTHER DEALER’S PRICE OR THE CAR IS FREE. Some claims are so outlandish that I hesitate to bother warning you about them. Applying the old saying “if it sounds too good to be true, it probably isn’t” should protect most people from this kind of ad.
I could go on and on, but I hope I have already made my point. Car dealers’ ads are the absolutely worst way to decide which car you should buy and what price you should pay. When you respond to most car dealers’ ads, they are in control. You must take control and let the dealer respond to your carefully thought out and researched choice of year, make, model, accessories, and what price you offer to pay him.
20% to 40% OFF MSRP. Never buy a car based on how big a discount you are quoted. Always calculate the price you are willing to pay based on an accurate understanding of the cost of that vehicle. Different makes and models have different markups and factory incentives can cause the true markup to vary widely. What sounds like a big discount may also pay the dealer too big a profit.
LIQUIDATION SALE. Most of the time you pay just as much for a car during a “sale” as you do without a sale. The only exceptions are factory incentives which do have an expiration date. A “sale” is what advertisers refer to as a “call to action”. They are looking for something that will motivate you to come in today, rather than procrastinate. It doesn’t seem to matter if the motivation is untrue.
UP TO $15,000 OFF. Many dealers have an additional markup on top of the manufacturer’s suggested retail price, MSRP. They commonly label this a “Market Adjustment Addendum”. This can be thousands of dollars. Discounting a car thousands of dollars means nothing if the dealer just added a “Market Adjustment Addendum” for an amount equaling or exceeding the discount.
STK#62029A. When you see a number like this next to the price of a new car, it means that that is the only car you can buy for that price. The number is the stock number for that specific car which is supposed to tell you that this is the only car at this price. Many of these ad cars are of undesirable colors and accessories. They are advertised below cost and the loss is charged to advertising if they have to sell one. You chances of buying one of these are slim and none.
CREDIT PROLEMS ARE NO PROBLEM. This type of ad is particularly insensitive and distasteful. It is meant to attract people who have such bad credit that they think they cannot obtain financing. Unfortunately, there are people whose credit is so bad that no lender will offer them financing. These people are disappointed and embarrassed when they learn the truth that “credit problems can be, in fact, big problems”.
MINIMUM $10,000 TRADE-IN ALLOWANCE. This is just like the huge discounts. A trade in allowance means nothing if the car has been marked up high enough to offset the extra trade-in allowance.
WITH ACCEPTABLE CREDIT. This allows dealers to add a fine print disqualifier which is an extremely high Beacon score that disqualifies 99% of the car buying population. It is used in conjunction with very low lease payments or purchase payments. It is a “bait and switch” which affords the dealer the opportunity to raise your payments (and his profits) because your credit is “not acceptable”…to him.
PRICE GOOD ON DATE OF PUBLICATION ONLY. You will find this only in the fine print at the bottom of the page. This is added protection to the dealer, in addition to the stock # mentioned above, that he won’t have to sell you the car at the advertised price.
AS LOW AS or FROM. You will see this in smaller print next to a very big price and a big, pretty picture of the car. This is a further “C.Y.A.” for the dealer so that he doesn’t have to sell that car at that price.
WE’LL BEAT ANY OTHER DEALER’S PRICE OR THE CAR IS FREE. Some claims are so outlandish that I hesitate to bother warning you about them. Applying the old saying “if it sounds too good to be true, it probably isn’t” should protect most people from this kind of ad.
I could go on and on, but I hope I have already made my point. Car dealers’ ads are the absolutely worst way to decide which car you should buy and what price you should pay. When you respond to most car dealers’ ads, they are in control. You must take control and let the dealer respond to your carefully thought out and researched choice of year, make, model, accessories, and what price you offer to pay him.
Six Most Common Questions Asked by Car Buyers
At my dealership every other month we invite all of those who recently purchased a used or new vehicles from us to our “New Owners’ Event”. Our customers enjoy a buffet dinner and meet my customer relations manger, service manager, parts manager, top technician, and me. There is a lot of Q & A and here are the six most frequently asked questions with my answers.
(1) What grade of gasoline I should use? Use the grade of gasoline recommended by your manufacturer. Most cars run just fine on regular, but higher compression engines, and all V-8’s, require high test. There is absolutely no value to using a higher test, more expensive gas than your car’s manufacturer recommends.
(2) What brand of gasoline should I buy? I recommend that you stick with major national brands and avoid the independents. If you buy from Sunoco, Amoco, Mobil, etc, you are far less likely to get contaminated gasoline. Condensation and debris in your gas can cause some very expensive repairs. I also recommend that you buy your gas from the same gas station as often as possible. If you do have a problem, you will know exactly where it happened. Gas stations that do a high volume and regularly refill their tanks are less likely to have condensation or debris in their tanks.
(3) If I don’t put very many miles on my car, do I still need to bring it in every 6 months for service? The first recommended service is usually after 6 months or 5,000 miles. Even if you have driven only 1,000 miles in 6 months, you should bring it in to have your oil changed, your tires checked, and your car inspected. Time is as big a cause of wear on your car as is mileage, especially in South Florida with our high humidity, heat, and salt air.
(4) How often should I check my tire pressure? Having the correct tire pressure is one of the most underrated maintenance requirements on a car. Not only will maintaining correct tire pressure maximize the life of your tires, but it will increase your gas mileage, and make your car safer to drive by improving the braking and handling. Check your tire pressure at least one every month.
(5) How important is it to have my car serviced by the dealer rather than an independent garage? If you have a trusted mechanic or you are a competent “do-it-yourselfer” there is nothing wrong with having routine maintenance, like oil changes and tire rotations, done outside of your car dealership. I do recommend that you bring it to your dealer for checkups periodically and always for any kind of repair. Today’s automobile “is not your father’s automobile”. It is a very sophisticated, highly complex, computerized machine. Factory authorized dealers must invest hundreds of thousands of dollars in computerized diagnostic machinery and maintain a staff of highly trained technicians who specialize in that make of car.
(6) Should I use regular or synthetic oil? As long as you change your oil at least every 5,000 miles or 6 months (whichever comes first), you cannot go wrong with either. Synthetic oils are much more expensive than regular oils and are touted by some to be superior. I have heard pundits on both sides of this issue. If you choose to use synthetic oil because you believe it is better, be sure that you still change your oil at least every 5,000 miles or 6 months.
(1) What grade of gasoline I should use? Use the grade of gasoline recommended by your manufacturer. Most cars run just fine on regular, but higher compression engines, and all V-8’s, require high test. There is absolutely no value to using a higher test, more expensive gas than your car’s manufacturer recommends.
(2) What brand of gasoline should I buy? I recommend that you stick with major national brands and avoid the independents. If you buy from Sunoco, Amoco, Mobil, etc, you are far less likely to get contaminated gasoline. Condensation and debris in your gas can cause some very expensive repairs. I also recommend that you buy your gas from the same gas station as often as possible. If you do have a problem, you will know exactly where it happened. Gas stations that do a high volume and regularly refill their tanks are less likely to have condensation or debris in their tanks.
(3) If I don’t put very many miles on my car, do I still need to bring it in every 6 months for service? The first recommended service is usually after 6 months or 5,000 miles. Even if you have driven only 1,000 miles in 6 months, you should bring it in to have your oil changed, your tires checked, and your car inspected. Time is as big a cause of wear on your car as is mileage, especially in South Florida with our high humidity, heat, and salt air.
(4) How often should I check my tire pressure? Having the correct tire pressure is one of the most underrated maintenance requirements on a car. Not only will maintaining correct tire pressure maximize the life of your tires, but it will increase your gas mileage, and make your car safer to drive by improving the braking and handling. Check your tire pressure at least one every month.
(5) How important is it to have my car serviced by the dealer rather than an independent garage? If you have a trusted mechanic or you are a competent “do-it-yourselfer” there is nothing wrong with having routine maintenance, like oil changes and tire rotations, done outside of your car dealership. I do recommend that you bring it to your dealer for checkups periodically and always for any kind of repair. Today’s automobile “is not your father’s automobile”. It is a very sophisticated, highly complex, computerized machine. Factory authorized dealers must invest hundreds of thousands of dollars in computerized diagnostic machinery and maintain a staff of highly trained technicians who specialize in that make of car.
(6) Should I use regular or synthetic oil? As long as you change your oil at least every 5,000 miles or 6 months (whichever comes first), you cannot go wrong with either. Synthetic oils are much more expensive than regular oils and are touted by some to be superior. I have heard pundits on both sides of this issue. If you choose to use synthetic oil because you believe it is better, be sure that you still change your oil at least every 5,000 miles or 6 months.
The Internet Price is the Lowest Price for a New Car
Ten years from now, I believe that at least 75% of all new cars will be purchased over the Internet. Right now it is less than 20%. The reason is simply that that Internet price is usually your lowest price and more and more car buyers are figuring that out every day. Dealers must give their best price to a prospect inquiring over the Internet because that dealer probably will have only that one chance to sell the car. If they try “the old negotiating game” the Internet prospect will simply choose the lowest price from several other quotes he gets. When my friends ask me to advise them on how to get the best price on a new car, I always tell them to use the Internet. If they ask me for the best price on my product, Toyota, I give them my Internet price.
I am not suggesting that you don’t visit your local dealer to see, touch, smell, and drive the new vehicles you are considering. This is very important. You can’t make a valid, final decision on which new vehicle is best for you by solely reading data and looking at pictures on the Internet, Consumer Reports, or any other source. Research of that nature is important, but you should finalize your decision with visits to the dealers to actually experience the vehicle.
Once you have made your final decision on the year, make, model, color, and accessories, you are ready to sit down at your PC and choose the dealer from whom you will buy this specific vehicle. If you are not handy with a PC, ask a friend or relative who is. First, go to the manufacturer’s Web site like www.ford.com, www.toyota.com, www.chevrolet.com, etc. You will be able to type in your zip code to find all of the dealers of that make within a given radius, usually about 40 miles, giving you 3 or 4 dealers. To expand the radius, choose another zip code further from yours. The dealers within your radius will show their Web site addresses. Click on their Web site and ask for a quote on the specific car you have selected. Most Web sites have a page for what is called a “quick quote”. You type in the year, make, model, color, and accessories. It will also ask you for your name, telephone number, address, if you have a trade (check “no”), whether you are ready to buy now (yes), and other questions. All you really need to fill out is year, make, model, and accessories and your email address. If you prefer not to be contacted by phone, don’t fill in the phone number. If they require it before you can submit your request, type in any 10 digits so that the Web page will allow you to. If you can’t find a “quick quote” page, just email your request to their Internet sales department.
Depending on your PC and typing skills this whole process should take less than half an hour. Think of all the time, gasoline, shoe leather, and especially aggravation you are saving compared to visiting as many dealerships in person. The time it will take to get back quotes varies from dealership to dealership. You may get some back within a few minutes, some will take a few hours, and some may take a day or two. Believe it or not, some might not respond at all. There are even a few dealers who will not quote a price on the Internet, but try to lure you into their store with false promises. Ignore them. I recommend that you get a minimum of 3 valid price quotes on your specific vehicle. It’s so easy to get quotes, why not get a half dozen or so? You are not necessarily even limited by driving distances. If the best price is from a dealer who is too far away, show that quote to a dealer nearer you and ask him if he will match it.
There are some things that you must be careful about. Be sure that that the price you get is an “out the door” price. That is a price which excludes only federal, state, and local fees and taxes which are usually just for tax and tag. Most dealers in Florida tack on a fee or fees of their own which are variously referred to as “dealer fee”, “delivery fee”, “documentary fee”, etc. This is illegal in many states, but not in Florida. These fees vary from around $500 to $900. Be sure that this fee which is just profit to the dealer is included in your “out the door” price. Also be absolutely certain that you are comparing “apples and apples”. When you select your low bid, double check that this dealer is quoting you on the same year, make, model, and accessories as the other dealers. A good double-check is to compare the MSRP. The MSRP, manufacturer’s suggested retail price, will be identical on identically equipped cars of the same model and year. Also, be sure that the car you have the price on will be there when you come in. Give them deposit on your credit card to hold the car for you.
Internet car buyers are the wave of the future. The retail car business is going through rapid changes and the old fashioned, price-haggling way of buying cars is slowly but surely becoming obsolete. If you haven’t already, now is the time to join the ranks of the smart, sophisticated car buyers.
I am not suggesting that you don’t visit your local dealer to see, touch, smell, and drive the new vehicles you are considering. This is very important. You can’t make a valid, final decision on which new vehicle is best for you by solely reading data and looking at pictures on the Internet, Consumer Reports, or any other source. Research of that nature is important, but you should finalize your decision with visits to the dealers to actually experience the vehicle.
Once you have made your final decision on the year, make, model, color, and accessories, you are ready to sit down at your PC and choose the dealer from whom you will buy this specific vehicle. If you are not handy with a PC, ask a friend or relative who is. First, go to the manufacturer’s Web site like www.ford.com, www.toyota.com, www.chevrolet.com, etc. You will be able to type in your zip code to find all of the dealers of that make within a given radius, usually about 40 miles, giving you 3 or 4 dealers. To expand the radius, choose another zip code further from yours. The dealers within your radius will show their Web site addresses. Click on their Web site and ask for a quote on the specific car you have selected. Most Web sites have a page for what is called a “quick quote”. You type in the year, make, model, color, and accessories. It will also ask you for your name, telephone number, address, if you have a trade (check “no”), whether you are ready to buy now (yes), and other questions. All you really need to fill out is year, make, model, and accessories and your email address. If you prefer not to be contacted by phone, don’t fill in the phone number. If they require it before you can submit your request, type in any 10 digits so that the Web page will allow you to. If you can’t find a “quick quote” page, just email your request to their Internet sales department.
Depending on your PC and typing skills this whole process should take less than half an hour. Think of all the time, gasoline, shoe leather, and especially aggravation you are saving compared to visiting as many dealerships in person. The time it will take to get back quotes varies from dealership to dealership. You may get some back within a few minutes, some will take a few hours, and some may take a day or two. Believe it or not, some might not respond at all. There are even a few dealers who will not quote a price on the Internet, but try to lure you into their store with false promises. Ignore them. I recommend that you get a minimum of 3 valid price quotes on your specific vehicle. It’s so easy to get quotes, why not get a half dozen or so? You are not necessarily even limited by driving distances. If the best price is from a dealer who is too far away, show that quote to a dealer nearer you and ask him if he will match it.
There are some things that you must be careful about. Be sure that that the price you get is an “out the door” price. That is a price which excludes only federal, state, and local fees and taxes which are usually just for tax and tag. Most dealers in Florida tack on a fee or fees of their own which are variously referred to as “dealer fee”, “delivery fee”, “documentary fee”, etc. This is illegal in many states, but not in Florida. These fees vary from around $500 to $900. Be sure that this fee which is just profit to the dealer is included in your “out the door” price. Also be absolutely certain that you are comparing “apples and apples”. When you select your low bid, double check that this dealer is quoting you on the same year, make, model, and accessories as the other dealers. A good double-check is to compare the MSRP. The MSRP, manufacturer’s suggested retail price, will be identical on identically equipped cars of the same model and year. Also, be sure that the car you have the price on will be there when you come in. Give them deposit on your credit card to hold the car for you.
Internet car buyers are the wave of the future. The retail car business is going through rapid changes and the old fashioned, price-haggling way of buying cars is slowly but surely becoming obsolete. If you haven’t already, now is the time to join the ranks of the smart, sophisticated car buyers.
Thursday, August 10, 2006
Should I buy a Hybrid Car?
With gas over $3 a gallon and the belief that it will rise over $4 by year end, everybody is talking about hybrid cars. Just in the past week, I have been asked to speak before the Rotary Club of Palm Beach and the Kiwanis Club of Lake Park/North Palm Beach about hybrid cars. I think that I was asked because Toyota sells 80% of the hybrid vehicles in the USA and my dealership sells more hybrids than any Toyota dealer in the USA (except California where they have special emission laws).
You should approach making the decision on whether or not to buy a hybrid car the same way you would any other specific model. Just like there are good gasoline powered cars and bad ones, the same applies to hybrid cars. Some hybrid vehicles don’t even get very good gas mileage. The level of technology used in hybrid cars varies from manufacturer to manufacturer. Toyota was the first to begin investing in hybrid technology and built their first hybrid, the Prius, in 1997. Nissan was among the last to realize that hybrids are the wave of the future, and will introduce their first hybrid, the Altima, later this year (licensing the technology from Toyota).
The hybrid question I get asked the most is “will I save enough money on gas to justify the additional cost of a hybrid?” My answer is “yes, if you buy the right hybrid from the right dealer”. One very important consideration is the Federal investment tax credit available on hybrids. The amount varies from model to model. The highest tax credit is $3,150 on the Toyota Prius. This credit lowers the price you pay for the Prius by exactly $3,150. Other hybrid models have lower tax credits. The federal government calculates the tax credit based on the fuel efficiency and the Prius is rated the highest at 60 mpg in the city. The other important consideration is what you pay for the hybrid. Most dealers are making up their hybrid vehicles over MSRP. That’s because of their high demand and low supply. The third factor on whether the premium cost of a hybrid over a gasoline car is justified is based on the resale value of the hybrid. The better, higher demand hybrid vehicles retain their value in the used car market better than their gasoline powered counterparts. This means that, when you go to trade that hybrid in on your next car, the trading difference is smaller.
Hybrid cars get better gas mileage in stop and go city driving then they do on the highway. This is because the electric motor is utilized more often in this type of driving and the hybrid battery is charged each time you step on the brakes. This is called regenerative braking and converts the heat of friction from braking to electrical energy. You also charge your battery when you simply take your foot off the accelerator because the deceleration of the electric motor (which actually drives the
You should approach making the decision on whether or not to buy a hybrid car the same way you would any other specific model. Just like there are good gasoline powered cars and bad ones, the same applies to hybrid cars. Some hybrid vehicles don’t even get very good gas mileage. The level of technology used in hybrid cars varies from manufacturer to manufacturer. Toyota was the first to begin investing in hybrid technology and built their first hybrid, the Prius, in 1997. Nissan was among the last to realize that hybrids are the wave of the future, and will introduce their first hybrid, the Altima, later this year (licensing the technology from Toyota).
The hybrid question I get asked the most is “will I save enough money on gas to justify the additional cost of a hybrid?” My answer is “yes, if you buy the right hybrid from the right dealer”. One very important consideration is the Federal investment tax credit available on hybrids. The amount varies from model to model. The highest tax credit is $3,150 on the Toyota Prius. This credit lowers the price you pay for the Prius by exactly $3,150. Other hybrid models have lower tax credits. The federal government calculates the tax credit based on the fuel efficiency and the Prius is rated the highest at 60 mpg in the city. The other important consideration is what you pay for the hybrid. Most dealers are making up their hybrid vehicles over MSRP. That’s because of their high demand and low supply. The third factor on whether the premium cost of a hybrid over a gasoline car is justified is based on the resale value of the hybrid. The better, higher demand hybrid vehicles retain their value in the used car market better than their gasoline powered counterparts. This means that, when you go to trade that hybrid in on your next car, the trading difference is smaller.
Hybrid cars get better gas mileage in stop and go city driving then they do on the highway. This is because the electric motor is utilized more often in this type of driving and the hybrid battery is charged each time you step on the brakes. This is called regenerative braking and converts the heat of friction from braking to electrical energy. You also charge your battery when you simply take your foot off the accelerator because the deceleration of the electric motor (which actually drives the
Wednesday, August 09, 2006
UNDERSTANDING YOUR NEW CAR WARRANTY
When you buy your new car your salesman will tell you that it has a “bumper to bumper” warranty. The most common coverage is for 3 years or 36,000 miles whichever should first occur. “Bumper to bumper” warranty sounds like it means that everything is covered. Unfortunately this is not the case. For example, your tires are not covered at all by the car manufacturer but under a separate warranty by the tire manufacturer.
It can be tedious, but the only way to completely understand your warranty is to actually read it. All warranties now are required to use the word “limited” unless there are absolutely zero exclusions and this, to the best of my knowledge, is never the case.
Some of the most common items that are mistakenly believed to be included in warranties are tires, rental car coverage, maintenance, and faded or damaged paint from various kinds of air contaminants.
I don’t know why all car manufacturers choose to exclude tires from their “bumper to bumper” warranties. After all, they choose the tire manufacturer just like they choose the manufacturer of other components on your car which they don’t manufacture themselves like the sound systems. The owner of a car has an established relationship with the service department of the dealership because she is bringing her car back every 5,000 miles or so for factory recommended maintenance. In most cases, she doesn’t even know who the tire dealer is. It would be far more customer friendly for the manufacturer to allow her dealer to handle warranty claims on tires. My suggestion is to ask your dealer’s service advisor or service manager to “broker” the warranty claim on your tires on your behalf. The dealership is more likely to have an established relation ship with a tire store and they can be your advocate.
New car warranties virtually never provide for a free rental car unless the vehicle must be tied up overnight for repairs. All too often, car salesman will promise you a “free loaner” anytime your car is in for service. Verify this with the service department before you rely upon it. There are extended service contracts which you can buy in addition to your new car warranty which will provide rental car coverage.
A new car warranty covers only “repairs” not maintenance items. A very common request is that a front end alignment be performed under warranty. Your alignment should have been checked before your car was delivered. If your car goes out of alignment after delivery, it is usually considered owner’s maintenance. Brakes are another item often misunderstood as being covered under warranty. Brake wear is almost always a maintenance item. Only a mechanical defect in your brakes is covered under warranty.
It can be tedious, but the only way to completely understand your warranty is to actually read it. All warranties now are required to use the word “limited” unless there are absolutely zero exclusions and this, to the best of my knowledge, is never the case.
Some of the most common items that are mistakenly believed to be included in warranties are tires, rental car coverage, maintenance, and faded or damaged paint from various kinds of air contaminants.
I don’t know why all car manufacturers choose to exclude tires from their “bumper to bumper” warranties. After all, they choose the tire manufacturer just like they choose the manufacturer of other components on your car which they don’t manufacture themselves like the sound systems. The owner of a car has an established relationship with the service department of the dealership because she is bringing her car back every 5,000 miles or so for factory recommended maintenance. In most cases, she doesn’t even know who the tire dealer is. It would be far more customer friendly for the manufacturer to allow her dealer to handle warranty claims on tires. My suggestion is to ask your dealer’s service advisor or service manager to “broker” the warranty claim on your tires on your behalf. The dealership is more likely to have an established relation ship with a tire store and they can be your advocate.
New car warranties virtually never provide for a free rental car unless the vehicle must be tied up overnight for repairs. All too often, car salesman will promise you a “free loaner” anytime your car is in for service. Verify this with the service department before you rely upon it. There are extended service contracts which you can buy in addition to your new car warranty which will provide rental car coverage.
A new car warranty covers only “repairs” not maintenance items. A very common request is that a front end alignment be performed under warranty. Your alignment should have been checked before your car was delivered. If your car goes out of alignment after delivery, it is usually considered owner’s maintenance. Brakes are another item often misunderstood as being covered under warranty. Brake wear is almost always a maintenance item. Only a mechanical defect in your brakes is covered under warranty.
BUYING A CAR WHEN YOU HAVE A CREDIT PROBLEM
There are fewer things more sensitive or embarrassing than having to share your personal credit problems with a stranger. Having credit problems can also put many buyers in a weakened and defensive position when buying a car. Many people with bad, or too little, credit feel like the car dealer is somehow “doing them a favor” by selling them a car and getting them financed. Make no mistake about it. A car dealer is probably making more money selling a person with bad credit a car than one with good credit. If you have a credit problem, go about buying a car with the same care and due diligence as if you had the very best credit. Shop and compare your financing, your interest rate, and your trade-in allowance. Get at least three quotes on each of these.
Lenders who specialize in lending to those with bad credit are known as “special finance” lenders. Many of these lenders charge the dealer a large upfront fee, as much as $2,500. Legally, the dealer is not supposed to add this fee to the price of the car you buy but, in the real world, the price of the car is usually higher as the result of this fee. In addition to an upfront fee, the interest rates are very high from special finance lenders. Because they anticipate a much higher amount of repossession losses, they must make more on each transaction. Don’t automatically accept a dealer’s opinion that you must finance through such a lender. There are many conventional banks these days that loan to people with bad credit. Their interest rates are lower and they don’t charge large upfront fees.
There is much fraud in special finance lending. Credit applications are falsified to show more time on the job, higher incomes, etc. W-2 forms and check stubs are counterfeited. Buyer’s orders show accessories and equipment that do not really exist on the car. Hold checks or promissory notes are misrepresented as cash down payment. Co-signers signatures are forged. Confederates pose as employers, answering pay phones to verify employment. These falsifications are performed by finance managers, salesmen, brokers for special finance lenders (who are paid on commission) and the customers themselves. If you sign a credit application, be sure that you know all of the information on that application is accurate. Be sure that you understand and agree to all parts of the transaction including down payments, accessories on the car, etc. Never be a party to falsifying information to a lender to obtain a loan. This is a criminal offense.
Advertisements aimed at people with bad credit usually exaggerate with claims like, “We finance everyone”, “Wanted, good people with bad credit”, “No credit, no problem”, and, my favorite, “No credit application refused” (it doesn’t say your loan won’t be refused, just your application). My advice is to ignore these kinds of ads and these kinds of dealers. Their strategy is to take advantage of people with bad credit who they believe will buy any car, pay any amount of interest, and any profit to the dealers as long as the dealer can get them a loan.
Lenders who specialize in lending to those with bad credit are known as “special finance” lenders. Many of these lenders charge the dealer a large upfront fee, as much as $2,500. Legally, the dealer is not supposed to add this fee to the price of the car you buy but, in the real world, the price of the car is usually higher as the result of this fee. In addition to an upfront fee, the interest rates are very high from special finance lenders. Because they anticipate a much higher amount of repossession losses, they must make more on each transaction. Don’t automatically accept a dealer’s opinion that you must finance through such a lender. There are many conventional banks these days that loan to people with bad credit. Their interest rates are lower and they don’t charge large upfront fees.
There is much fraud in special finance lending. Credit applications are falsified to show more time on the job, higher incomes, etc. W-2 forms and check stubs are counterfeited. Buyer’s orders show accessories and equipment that do not really exist on the car. Hold checks or promissory notes are misrepresented as cash down payment. Co-signers signatures are forged. Confederates pose as employers, answering pay phones to verify employment. These falsifications are performed by finance managers, salesmen, brokers for special finance lenders (who are paid on commission) and the customers themselves. If you sign a credit application, be sure that you know all of the information on that application is accurate. Be sure that you understand and agree to all parts of the transaction including down payments, accessories on the car, etc. Never be a party to falsifying information to a lender to obtain a loan. This is a criminal offense.
Advertisements aimed at people with bad credit usually exaggerate with claims like, “We finance everyone”, “Wanted, good people with bad credit”, “No credit, no problem”, and, my favorite, “No credit application refused” (it doesn’t say your loan won’t be refused, just your application). My advice is to ignore these kinds of ads and these kinds of dealers. Their strategy is to take advantage of people with bad credit who they believe will buy any car, pay any amount of interest, and any profit to the dealers as long as the dealer can get them a loan.
Friday, July 21, 2006
NEGOTIATING TO BUY A CAR
Buying a new or used car is one of the last bastions of the negotiated price. In some countries, negotiation is fairly commonplace in retail stores, but in America virtually all products are sold at a fixed price. Some of us are simply not comfortable negotiating and most of us are not very good at it.
As I have said in previous columns, the best way to buy a new or used car in on the Internet. You can do your research on which car is the best to suit your needs, get guidance on what kind of price you can expect to pay, and finally get quotes from several dealerships on that specific car. However, everybody is not “Internet savvy” and if you are not, you may find it necessary to walk into a car dealership and negotiate for the lowest price.
If you are not comfortable with negotiation, the best advice I can give you is to bring someone along with you who is. Car sales people and sales managers are trained experts in negotiation. This is how they make their living. Here are some tips for you if you decide that you want to negotiate the best price on a car.
(1) If you have a trade-in, keep that separate from the negotiation. Negotiate the best price on the car you are buying and then negotiate the best price you can get for your trade-in. Don’t fall for the old “over allowance” on your trade-in ruse. This is where the dealer makes up the price of car you are buying higher so that he can make you think you are getting more for your trade-in.
(2) Never buy a car on payments alone. Always negotiate the best price you can for the car you are buying and then calculate your best payment when you have negotiated for the best interest rate.
(3) Be sure you understand how the dealer arrived at his retail price. Federal law dictates that a Monroney label be affixed to every vehicle with a manufacturer’s suggested retail price. Many dealers mark that up with another label, often referred to as a “Market Adjustment Addendum”. This markup can be several thousands of dollars.
(4) Expect the first price you are given to be substantially higher than what you can buy the car for. Sales people and sales managers are trained to “start high because you can always come down”. Don’t be afraid to offer substantially less than the initial asking price. You should look at just like the car salesman does, but the reverse…”start low because you can always go higher”. If the salesman excepts your first offer, you probably offered too much. In fact, shrewd car sales people are trained to always ask for more money, even if the offer is good one. This is because they don’t want to “scare off the customer” by telegraphing to the customer that he “left some money on the table”.
(5) If the sales person asks you for a deposit before he will begin negotiating, determine whether the deposit is refundable. Florida law requires a nonrefundable deposit be disclosed in writing on the receipt. If this is printed on your receipt, insist that this be waived in writing on your buyer’s order. If the dealer will not agree to this, be warned that he may be able to keep your deposit if you change your mind about buying the car.
(6) Be prepared for a lot of “back and forth” when the salesman takes your offer back to the manager. When you get close to finding a mutually acceptable price, the manager himself will often come to talk to you. Don’t be intimidated stick to your guns even when they tell you this is “positively, absolutely the lowest price”. Even if you think you do have the lowest price, a great strategy is to get up, walk out of the showroom, and get into your car to drive away. This will often precipitate an even better price. When you try this, the worst case scenario is that you really do drive home, but you can always return and buy the car the next day for the last price they quoted you. They may tell you that you have to buy today, but nine times out of ten that is a bluff. The only exception is when there are factory rebates and incentive expiring.
(7) The last day of the month really is a good time to buy a car. The salesman’s bonus money is maximized, the factory incentives are in effect, the managers are desperate to make their quotas, and it is the one time of the month when the buyer has the best edge in negotiation.
Caveat emptor “let the buyer beware” could have been written specifically for what you can expect when you walk into a car dealership to negotiate the best price. You are up against experts who negotiate for living. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
As I have said in previous columns, the best way to buy a new or used car in on the Internet. You can do your research on which car is the best to suit your needs, get guidance on what kind of price you can expect to pay, and finally get quotes from several dealerships on that specific car. However, everybody is not “Internet savvy” and if you are not, you may find it necessary to walk into a car dealership and negotiate for the lowest price.
If you are not comfortable with negotiation, the best advice I can give you is to bring someone along with you who is. Car sales people and sales managers are trained experts in negotiation. This is how they make their living. Here are some tips for you if you decide that you want to negotiate the best price on a car.
(1) If you have a trade-in, keep that separate from the negotiation. Negotiate the best price on the car you are buying and then negotiate the best price you can get for your trade-in. Don’t fall for the old “over allowance” on your trade-in ruse. This is where the dealer makes up the price of car you are buying higher so that he can make you think you are getting more for your trade-in.
(2) Never buy a car on payments alone. Always negotiate the best price you can for the car you are buying and then calculate your best payment when you have negotiated for the best interest rate.
(3) Be sure you understand how the dealer arrived at his retail price. Federal law dictates that a Monroney label be affixed to every vehicle with a manufacturer’s suggested retail price. Many dealers mark that up with another label, often referred to as a “Market Adjustment Addendum”. This markup can be several thousands of dollars.
(4) Expect the first price you are given to be substantially higher than what you can buy the car for. Sales people and sales managers are trained to “start high because you can always come down”. Don’t be afraid to offer substantially less than the initial asking price. You should look at just like the car salesman does, but the reverse…”start low because you can always go higher”. If the salesman excepts your first offer, you probably offered too much. In fact, shrewd car sales people are trained to always ask for more money, even if the offer is good one. This is because they don’t want to “scare off the customer” by telegraphing to the customer that he “left some money on the table”.
(5) If the sales person asks you for a deposit before he will begin negotiating, determine whether the deposit is refundable. Florida law requires a nonrefundable deposit be disclosed in writing on the receipt. If this is printed on your receipt, insist that this be waived in writing on your buyer’s order. If the dealer will not agree to this, be warned that he may be able to keep your deposit if you change your mind about buying the car.
(6) Be prepared for a lot of “back and forth” when the salesman takes your offer back to the manager. When you get close to finding a mutually acceptable price, the manager himself will often come to talk to you. Don’t be intimidated stick to your guns even when they tell you this is “positively, absolutely the lowest price”. Even if you think you do have the lowest price, a great strategy is to get up, walk out of the showroom, and get into your car to drive away. This will often precipitate an even better price. When you try this, the worst case scenario is that you really do drive home, but you can always return and buy the car the next day for the last price they quoted you. They may tell you that you have to buy today, but nine times out of ten that is a bluff. The only exception is when there are factory rebates and incentive expiring.
(7) The last day of the month really is a good time to buy a car. The salesman’s bonus money is maximized, the factory incentives are in effect, the managers are desperate to make their quotas, and it is the one time of the month when the buyer has the best edge in negotiation.
Caveat emptor “let the buyer beware” could have been written specifically for what you can expect when you walk into a car dealership to negotiate the best price. You are up against experts who negotiate for living. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
Saturday, July 15, 2006
COPING WITH INSURANCE COMPANIES AND BODY SHOPS
I guess one of the worst things that can happen to us in our driving experience is to be involved in an accident. Hopefully there are no injuries, but we still have to cope with our insurance company and maybe the other party’s insurance company. We also have to select a body shop or accept the one recommended by our insurance company.
After you notify your insurance company of your accident, your first big decision is to select a body shop. This is every bit as important as selecting the right doctor or dentist, except they are working on your car, not your body or teeth. Most of the time your insurance company will recommend a body shop. Consider their recommendation, but also do your own due diligence. If you choose the body shop, that body shop is working for you and is your advocate, not your insurance company’s. Remember that your insurance company is the one paying for your repairs and one of their very important considerations is the cost of repairing your car. They, of course, are interested in a quality repair too, but cost is, at least, an equal consideration. Your number one concern should be quality, not cost. Your insurance company may tell you that it’s OK to have your car repaired at the body shop of your choice, but they “won’t guarantee the repairs”. A reputable body shop will guarantee their own repairs and you don’t need two guarantees. I strongly recommend that you give first consideration to a body shop owned by a franchised dealer of the make of your car. This body shop will have an advantage of faster availability of factory parts, more experience repairing your make and model, and the technicians will usually be better trained in repairing your make of car.
Obviously, a car that has been damaged and repaired is worth less than one that has not been repaired. Even with a quality repair, a late model car with substantial repairs could be worth thousands of dollar less when you trade it in. This sad fact is a very good reason you should be sure that your car is ruled a “total” by your insurance company if it meets their criteria. A car that will cost 70% of its current market value to repair is usually considered a total and your insurance company should replace your car, not repair it. If it’s a close call resulting in a decision to repair the vehicle, you should get a second opinion. This is the time when it’s good to have a body shop that you chose that is beholding to you and not your insurance company.
Your insurance policy will dictate the parts the insurance company may use in repairing your car. It is highly desirable to use OEM parts (parts manufactured by the company that built your car) as opposed to “after-market” parts often manufactured in Taiwan or another foreign county. These parts are copies of OEM parts and much cheaper than the genuine parts. They may not fit as well or have the correct tolerances. You should find out before you purchase your policy if it will provide for OEM parts. If your insurance company won’t authorize OEM parts, ask if you can pay the difference. It is worth the investment.
It is very difficult to forecast accurately the time it will take to complete a major repair. This is because there is usually hidden damage that is impossible to detect until the car has been disassembled. When hidden damage is detected, the body shop must call your insurance company’s adjustor to authorize supplemental work. This work may require parts that were not anticipated in the initial repair and they have to be ordered. There is no one to blame for this; it’s just a fact of collision repair. The bottom line is to expect delays when your car is having a major repair. A quality body shop will “under promise and over deliver” by building in some extra time to allow for the inevitable supplemental repairs.
Be sure you understand what degree of rental reimbursement coverage you have. It varies from policy to policy. Some policies have no rental car reimbursement whatsoever, some have partial, and some complete. In a major repair, you can be without your car for over a month.
In summary, choose your insurance company carefully and read your policy carefully before you commit. Choose your body shop just as carefully. You need a quality body shop owned by the franchised dealer for your make of car that will be an advocate for your interests, more than your insurance company’s.
After you notify your insurance company of your accident, your first big decision is to select a body shop. This is every bit as important as selecting the right doctor or dentist, except they are working on your car, not your body or teeth. Most of the time your insurance company will recommend a body shop. Consider their recommendation, but also do your own due diligence. If you choose the body shop, that body shop is working for you and is your advocate, not your insurance company’s. Remember that your insurance company is the one paying for your repairs and one of their very important considerations is the cost of repairing your car. They, of course, are interested in a quality repair too, but cost is, at least, an equal consideration. Your number one concern should be quality, not cost. Your insurance company may tell you that it’s OK to have your car repaired at the body shop of your choice, but they “won’t guarantee the repairs”. A reputable body shop will guarantee their own repairs and you don’t need two guarantees. I strongly recommend that you give first consideration to a body shop owned by a franchised dealer of the make of your car. This body shop will have an advantage of faster availability of factory parts, more experience repairing your make and model, and the technicians will usually be better trained in repairing your make of car.
Obviously, a car that has been damaged and repaired is worth less than one that has not been repaired. Even with a quality repair, a late model car with substantial repairs could be worth thousands of dollar less when you trade it in. This sad fact is a very good reason you should be sure that your car is ruled a “total” by your insurance company if it meets their criteria. A car that will cost 70% of its current market value to repair is usually considered a total and your insurance company should replace your car, not repair it. If it’s a close call resulting in a decision to repair the vehicle, you should get a second opinion. This is the time when it’s good to have a body shop that you chose that is beholding to you and not your insurance company.
Your insurance policy will dictate the parts the insurance company may use in repairing your car. It is highly desirable to use OEM parts (parts manufactured by the company that built your car) as opposed to “after-market” parts often manufactured in Taiwan or another foreign county. These parts are copies of OEM parts and much cheaper than the genuine parts. They may not fit as well or have the correct tolerances. You should find out before you purchase your policy if it will provide for OEM parts. If your insurance company won’t authorize OEM parts, ask if you can pay the difference. It is worth the investment.
It is very difficult to forecast accurately the time it will take to complete a major repair. This is because there is usually hidden damage that is impossible to detect until the car has been disassembled. When hidden damage is detected, the body shop must call your insurance company’s adjustor to authorize supplemental work. This work may require parts that were not anticipated in the initial repair and they have to be ordered. There is no one to blame for this; it’s just a fact of collision repair. The bottom line is to expect delays when your car is having a major repair. A quality body shop will “under promise and over deliver” by building in some extra time to allow for the inevitable supplemental repairs.
Be sure you understand what degree of rental reimbursement coverage you have. It varies from policy to policy. Some policies have no rental car reimbursement whatsoever, some have partial, and some complete. In a major repair, you can be without your car for over a month.
In summary, choose your insurance company carefully and read your policy carefully before you commit. Choose your body shop just as carefully. You need a quality body shop owned by the franchised dealer for your make of car that will be an advocate for your interests, more than your insurance company’s.
“RED FLAGS” TO WATCH FOR WHEN BUYING A CAR
The “Big Sale Event”. If you look in today’s newspaper, you will find that most car dealers in your area are having a sale of some kind. It may be because of a current holiday, “too large an inventory” of cars, to “reduce their taxes”, “the manager is out of town”, or some other nefarious lure. Advertising 101 says that you should give the prospective buyer a “motive to act”. Unfortunately it doesn’t matter whether the motive is real or not. The fact is that most car dealers do not sell their cars for less during “sales events” than they do at any other time. I point this out so that you don’t rush your buying decision. If you don’t buy a car during the tight time constraints of a phony sales event, you can negotiate just as good a price the next day. The exceptions to this are legitimate rebates offered by the manufacturer. These often expire at the end of the month which is one reason why the “last day of the month” really can be the best time to buy a car”.
“The Price I’m giving you is only good for today”. If a salesman or sales manager tells you that, it is probably only a tactic to push you into buying the car. The only exception would be the expiration of a factory rebate. Once again, this is simply a tactic to push you into buying before you have a chance to do your comparative price shopping.
“Take the car home tonight and see how you like it”. Driving the car you are considering buying home can be a good thing. It will give you a lot better idea about how the car performs, etc. However, there are two reasons the car salesman offers this. One is that you must leave the vehicle you might be trading in with the car dealer. This means that you cannot shop prices with other dealers. The second reason is the psychological impact of parking that new car in your driveway where your family and neighbors can see it. The slang expression for this is “the puppy dog”. If you were to take home a little puppy from the pet store, you and your children would fall in love with her and could not return her the next day.
“You must give me a deposit before I can give you a price”. This has to be one of the most insulting ways that some car salesmen have of intimidating a prospective buyer. It’s amazing how many people actually succumb to this which allows the salesman an element of control….you can’t leave until they give you your money back. If confronted with this ultimatum, simply walk away.
“Are you ready to buy a car today”? Often times, if you say no to this question, the salesman will tell you to come back when you are ready to buy. He will tell you to shop around and come back with your best price so that he can beat it. The salesman is afraid that, if he does give you his best price, you will go somewhere else and that salesman will beat it. Of course, that is the whole idea of competition and that is exactly what you want to do. If the salesman is afraid to give you a price because his competitor will beat it, it must not be the best price!
“Make me an offer and I will take it to my manager for approval”. This is a very common tactic which you have probably already encountered. It is not unethical. It is simply part of negotiating. I point this out so that you are fully aware that this is part of the negotiating game. Be aware, that no matter what price you offer, the manager will ask you for more money. Even if you offered a high price that would be a very large profit for the dealer, the manager would ask you for more money. The psychology behind this is that if you suddenly accepted the offer, you may frighten the customer by thinking he had offered too much (which he would have). When you negotiate, you must be well versed on what is a good price for that car. Start out below the best price you think you can buy it for. If you cannot negotiate a price close to your best price, get up and leave. Continue this process with another car dealer.
The “really big” discount”. The other day a friend showed me direct mail advertising piece from a new car dealer with a coupon good for $2,000 discount on any car in his inventory. This is very common for newspaper and TV ads too. Federal law requires new cars to have a price sticker on the window named the Monroney label. A discount from this suggested retail price gives you a fair basis for comparison. Unfortunately, most car dealers today, increase the suggested retail price substantially with the use of an addendum to the Monroney sticker often referred to as a “Market Adjustment Addendum”. This “adjustment” can be several thousands of dollars. Be sure you know what the asking price is for the car when you have been offered a “big discount”.
The best protection from all of the above is to find a car dealer that you can trust. Ask your friends about their experiences with dealers and call the Better Business Bureau and the County Office of Consumer Affairs. All things being equal choose the dealership that has been in business a long time and an owner or general manager who will make himself accessible to you and all of his customers.
“The Price I’m giving you is only good for today”. If a salesman or sales manager tells you that, it is probably only a tactic to push you into buying the car. The only exception would be the expiration of a factory rebate. Once again, this is simply a tactic to push you into buying before you have a chance to do your comparative price shopping.
“Take the car home tonight and see how you like it”. Driving the car you are considering buying home can be a good thing. It will give you a lot better idea about how the car performs, etc. However, there are two reasons the car salesman offers this. One is that you must leave the vehicle you might be trading in with the car dealer. This means that you cannot shop prices with other dealers. The second reason is the psychological impact of parking that new car in your driveway where your family and neighbors can see it. The slang expression for this is “the puppy dog”. If you were to take home a little puppy from the pet store, you and your children would fall in love with her and could not return her the next day.
“You must give me a deposit before I can give you a price”. This has to be one of the most insulting ways that some car salesmen have of intimidating a prospective buyer. It’s amazing how many people actually succumb to this which allows the salesman an element of control….you can’t leave until they give you your money back. If confronted with this ultimatum, simply walk away.
“Are you ready to buy a car today”? Often times, if you say no to this question, the salesman will tell you to come back when you are ready to buy. He will tell you to shop around and come back with your best price so that he can beat it. The salesman is afraid that, if he does give you his best price, you will go somewhere else and that salesman will beat it. Of course, that is the whole idea of competition and that is exactly what you want to do. If the salesman is afraid to give you a price because his competitor will beat it, it must not be the best price!
“Make me an offer and I will take it to my manager for approval”. This is a very common tactic which you have probably already encountered. It is not unethical. It is simply part of negotiating. I point this out so that you are fully aware that this is part of the negotiating game. Be aware, that no matter what price you offer, the manager will ask you for more money. Even if you offered a high price that would be a very large profit for the dealer, the manager would ask you for more money. The psychology behind this is that if you suddenly accepted the offer, you may frighten the customer by thinking he had offered too much (which he would have). When you negotiate, you must be well versed on what is a good price for that car. Start out below the best price you think you can buy it for. If you cannot negotiate a price close to your best price, get up and leave. Continue this process with another car dealer.
The “really big” discount”. The other day a friend showed me direct mail advertising piece from a new car dealer with a coupon good for $2,000 discount on any car in his inventory. This is very common for newspaper and TV ads too. Federal law requires new cars to have a price sticker on the window named the Monroney label. A discount from this suggested retail price gives you a fair basis for comparison. Unfortunately, most car dealers today, increase the suggested retail price substantially with the use of an addendum to the Monroney sticker often referred to as a “Market Adjustment Addendum”. This “adjustment” can be several thousands of dollars. Be sure you know what the asking price is for the car when you have been offered a “big discount”.
The best protection from all of the above is to find a car dealer that you can trust. Ask your friends about their experiences with dealers and call the Better Business Bureau and the County Office of Consumer Affairs. All things being equal choose the dealership that has been in business a long time and an owner or general manager who will make himself accessible to you and all of his customers.
Monday, July 03, 2006
What to do if you are Treated Badly by a Car Dealer
Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.
Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.
If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.
The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.
Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.
Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.
Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.
If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.
The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.
Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.
Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.
Tuesday, June 27, 2006
Should I lease or buy my next car?
Unfortunately, as with most things, there is no simple answer to this question. However, it is important that you evaluate both options because one or the other usually will have a significant cost advantage.
The most important factor in deciding between a lease and a purchase is the vehicle you choose. If you are buying a used vehicle, you can pretty much rule out a lease as a viable alternative. The reason for this is that banks and other leasing institutions do not offer favorable money factors or residuals on used cars. This translates into you paying more for the lease. Ironically, residuals should be relatively higher for used cars. The residual is the percentage of the depreciated value of the car remaining at the end of the lease. A used car experiences the largest portion of its depreciation when it is driven off the showroom floor. But banks and leasing institutions are leery of used cars because they have to rely too heavily on the dealer for their true condition and most used cars have no new car warranty remaining.
If you are buying a new car, the most attractive leases will usually be with makes and models having the highest resale values. You can check this by comparing the cost of the new car with the wholesale value of a 2, 3, or 4 year old model. A good Web site for this is www.kbb.com, the Web site for Kelly Bluebook. This is how the banks and other leasing companies calculate their residuals. The makes with the higher residuals and resale values are your more popular makes, those that don’t employ excessive rebates and incentives, and those that don’t sell large numbers of cars to rental and leasing companies. Generally speaking, these are mostly your Japanese makes, some European, and even some domestic cars that are in high-demand and low supply like the Chevrolet Corvette or Pontiac Solstice.
If you decide to purchase a new car that has a high resale value which makes it makes it a good candidate for leasing, be sure that you get lease quotes from several banks and/or leasing companies. The money factor (equivalent of the interest rate in a purchase) and residuals will vary. You should shop your financing if you are buying and shop your lease rates/residuals if you are leasing.
Many people think there is a “tax advantage” to leasing. This is not true. You can deduct only that portion of the usage of a car that is for business whether you lease or buy. For a lease that represents part of the lease payment and for a purchase that represents part of the depreciation.
Here are some things to be careful of if you lease: (1) Your insurance cost will be considerably higher. (2) Do not opt for a lease term beyond the time you want to drive the car. You may be tempted by lower payments on lease terms from 60 to 72 months, but don’t do this! You are obligated to pay the leasing company for many more months than you want to keep the car and you will have to pay a very large sum of money to get out of the lease early. (3) Never allow a dealer to switch you from a purchase to a lease at the last minute simply because they offer you a lower payment. This is common tactic to raise the profit on the transaction. Remember, at the end of the lease you own nothing, but after the last payment of a purchase, you own the car so naturally, your lease payment will be lower than a purchase payment. (4) Be sure you understand how many miles per year you will be allowed in your lease without a charge per mile. Most leases are for 12,000 miles per year. If you drive more miles per year, you could be confronted with a very large surprise charge at your lease termination. (5) When you sign your lease, there will be a “fee” commonly labeled a “lease acquisition fee”. Part of this fee goes to the leasing company but part may go to the dealer and is negotiable. Ask him to waive his portion of the lease acquisition fee because it is part his profit on the lease.
The cost of a car is total cost of the car during the time you drove it. If you lease, that is the sum of the payments. If you buy it, it is the total cost of the depreciation plus interest. Of course you have extraneous costs like maintenance, insurance, repairs, and fuel, but (except for insurance), these are the same for a lease and purchase. Too many people look only at the purchase price of the car. A higher priced car with a higher resale or residual value can actually cost you less than the lower priced car.
The most important factor in deciding between a lease and a purchase is the vehicle you choose. If you are buying a used vehicle, you can pretty much rule out a lease as a viable alternative. The reason for this is that banks and other leasing institutions do not offer favorable money factors or residuals on used cars. This translates into you paying more for the lease. Ironically, residuals should be relatively higher for used cars. The residual is the percentage of the depreciated value of the car remaining at the end of the lease. A used car experiences the largest portion of its depreciation when it is driven off the showroom floor. But banks and leasing institutions are leery of used cars because they have to rely too heavily on the dealer for their true condition and most used cars have no new car warranty remaining.
If you are buying a new car, the most attractive leases will usually be with makes and models having the highest resale values. You can check this by comparing the cost of the new car with the wholesale value of a 2, 3, or 4 year old model. A good Web site for this is www.kbb.com, the Web site for Kelly Bluebook. This is how the banks and other leasing companies calculate their residuals. The makes with the higher residuals and resale values are your more popular makes, those that don’t employ excessive rebates and incentives, and those that don’t sell large numbers of cars to rental and leasing companies. Generally speaking, these are mostly your Japanese makes, some European, and even some domestic cars that are in high-demand and low supply like the Chevrolet Corvette or Pontiac Solstice.
If you decide to purchase a new car that has a high resale value which makes it makes it a good candidate for leasing, be sure that you get lease quotes from several banks and/or leasing companies. The money factor (equivalent of the interest rate in a purchase) and residuals will vary. You should shop your financing if you are buying and shop your lease rates/residuals if you are leasing.
Many people think there is a “tax advantage” to leasing. This is not true. You can deduct only that portion of the usage of a car that is for business whether you lease or buy. For a lease that represents part of the lease payment and for a purchase that represents part of the depreciation.
Here are some things to be careful of if you lease: (1) Your insurance cost will be considerably higher. (2) Do not opt for a lease term beyond the time you want to drive the car. You may be tempted by lower payments on lease terms from 60 to 72 months, but don’t do this! You are obligated to pay the leasing company for many more months than you want to keep the car and you will have to pay a very large sum of money to get out of the lease early. (3) Never allow a dealer to switch you from a purchase to a lease at the last minute simply because they offer you a lower payment. This is common tactic to raise the profit on the transaction. Remember, at the end of the lease you own nothing, but after the last payment of a purchase, you own the car so naturally, your lease payment will be lower than a purchase payment. (4) Be sure you understand how many miles per year you will be allowed in your lease without a charge per mile. Most leases are for 12,000 miles per year. If you drive more miles per year, you could be confronted with a very large surprise charge at your lease termination. (5) When you sign your lease, there will be a “fee” commonly labeled a “lease acquisition fee”. Part of this fee goes to the leasing company but part may go to the dealer and is negotiable. Ask him to waive his portion of the lease acquisition fee because it is part his profit on the lease.
The cost of a car is total cost of the car during the time you drove it. If you lease, that is the sum of the payments. If you buy it, it is the total cost of the depreciation plus interest. Of course you have extraneous costs like maintenance, insurance, repairs, and fuel, but (except for insurance), these are the same for a lease and purchase. Too many people look only at the purchase price of the car. A higher priced car with a higher resale or residual value can actually cost you less than the lower priced car.
Saturday, June 17, 2006
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 and www.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 $10,000 ACV.
With competitive bids on the car you are buying, the interest rate on your financing, and your trade-in ACV you are sure to minimize the total cost of that new or used car.
The absolute worst thing you can do is to tell the dealer “all I care about is keeping my payments under “$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 and www.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.
Friday, June 16, 2006
CHOOSING AND MAINTAINING YOUR TIRES
When most people buy a car, they often overlook one part of the car that can affect the safety and cost of operation as much as any other part of the car.
When you buy a new car today, you can specify almost every option and accessory except the make of tire that comes on the car. This is predetermined by the auto manufacturer. Most new car buyers just assume that you are getting a good set of tires because you are buying a new car. This is not always true. You will remember the negative hoopla a few years ago regarding Firestone tires and rollovers on Ford Explorers. This controversy lasted over a year and hundreds of thousands of new car buyers were still buying new vehicles with Firestone tires that were in dispute. The only alternative a buyer had was to refuse to buy the car unless the dealer switched the tires. Some people did exactly this and let somebody else end up with those tires on her new truck.
You should research the safety history of the tire brand you are contemplating buying just like you would research the safety history of the car you buy. As with anything you buy, the Internet has a lot of information. One site that I highly recommend is www.nhtsa.gov. This is the Web site for the National Highway and Traffic Safety Administration and it can answer all of your questions about tires. Consumers Report is also a great source of unbiased information because they accept no advertising.
Auto manufacturers equip new vehicles with tires that will help the vehicle give the quietest and smoothest ride. However, the same tires that will do this are also the softest and most prone to wear. Auto manufacturers also tend to equip their cars with well known brands, like Firestone, Goodyear, BF Goodrich and Michelin. You are paying more for the brand name than you are for the quality and performance. Sumitomo and Yokohama are two Japanese tires that are priced considerably below the well known brands and will give you over twice the tread wear. The tread wear index is molded into the tire. A tire with a tread wear index of 600 will give you twice the wear of one with a 300. The difference in ride and level of quietness is virtually indistinguishable. Using an average cost of $1,000 for 4 tires, you can see how much you can save over 3 or 4 years with tires having twice the tread wear.
There is another code molded into all tires which tells the age of the tire. After 4-5 years, a tire may develop dry rot, a deterioration that could cause a blowout. Be sure that your tires are less than two years old to be on the safe side.
The only part of your car that is not covered by the manufacturer’s warranty is the tires. They are covered by the tire manufacturer. If you have a problem with your tires while they are under warranty, ask your car dealer’s service department to handle the claim for you. They should be familiar with the tire warranty and your tires; also they likely have an established relationship with the tire dealer.
Keeping your tires inflated to the pressure recommended by the tire manufacturer (found in your owner’s manual and tire information placard (Tire placards are permanent labels attached to the vehicle door edge, doorpost, glove-box door, or inside of the trunk lid). You should check your tire pressure at least once very month when your tires are cold (an hour after you have stopped driving). You tires lose air naturally and you must regularly add air. Under inflated tires will cause excessive tire wear on the sides of your tires and are unsafe because of inferior braking and handling. Under inflated tires also lower your gas mileage up to 3 miles per gallon. You should also have your tires rotated and checked for balance every 5,000 miles. Your alignment should be checked once a year and right away if you hit a pothole, curb, or other obstacle.
Replace your tires when the tread depth reaches 2/32”. This is the standard recommended by the Federal Highway Safety and Traffic Administration. The tread is measured on that part of your tire that meets the road. You may see wear on the sides of your tires due to under inflation or misalignment. This can be a safety consideration when turning corners. When your tires are properly inflated, as long as you have at least 2/32” tread depth where “the rubber meets the road” your tires are perfectly safe.
The bottom line is to choose your make and type of tire carefully. When you buy a car, make it part of the deal that you get the best tires on your car. Maintain your tires carefully especially regarding proper inflation. I even recommend that you buy an inexpensive tire gauge to keep in your glove box.
When you buy a new car today, you can specify almost every option and accessory except the make of tire that comes on the car. This is predetermined by the auto manufacturer. Most new car buyers just assume that you are getting a good set of tires because you are buying a new car. This is not always true. You will remember the negative hoopla a few years ago regarding Firestone tires and rollovers on Ford Explorers. This controversy lasted over a year and hundreds of thousands of new car buyers were still buying new vehicles with Firestone tires that were in dispute. The only alternative a buyer had was to refuse to buy the car unless the dealer switched the tires. Some people did exactly this and let somebody else end up with those tires on her new truck.
You should research the safety history of the tire brand you are contemplating buying just like you would research the safety history of the car you buy. As with anything you buy, the Internet has a lot of information. One site that I highly recommend is www.nhtsa.gov. This is the Web site for the National Highway and Traffic Safety Administration and it can answer all of your questions about tires. Consumers Report is also a great source of unbiased information because they accept no advertising.
Auto manufacturers equip new vehicles with tires that will help the vehicle give the quietest and smoothest ride. However, the same tires that will do this are also the softest and most prone to wear. Auto manufacturers also tend to equip their cars with well known brands, like Firestone, Goodyear, BF Goodrich and Michelin. You are paying more for the brand name than you are for the quality and performance. Sumitomo and Yokohama are two Japanese tires that are priced considerably below the well known brands and will give you over twice the tread wear. The tread wear index is molded into the tire. A tire with a tread wear index of 600 will give you twice the wear of one with a 300. The difference in ride and level of quietness is virtually indistinguishable. Using an average cost of $1,000 for 4 tires, you can see how much you can save over 3 or 4 years with tires having twice the tread wear.
There is another code molded into all tires which tells the age of the tire. After 4-5 years, a tire may develop dry rot, a deterioration that could cause a blowout. Be sure that your tires are less than two years old to be on the safe side.
The only part of your car that is not covered by the manufacturer’s warranty is the tires. They are covered by the tire manufacturer. If you have a problem with your tires while they are under warranty, ask your car dealer’s service department to handle the claim for you. They should be familiar with the tire warranty and your tires; also they likely have an established relationship with the tire dealer.
Keeping your tires inflated to the pressure recommended by the tire manufacturer (found in your owner’s manual and tire information placard (Tire placards are permanent labels attached to the vehicle door edge, doorpost, glove-box door, or inside of the trunk lid). You should check your tire pressure at least once very month when your tires are cold (an hour after you have stopped driving). You tires lose air naturally and you must regularly add air. Under inflated tires will cause excessive tire wear on the sides of your tires and are unsafe because of inferior braking and handling. Under inflated tires also lower your gas mileage up to 3 miles per gallon. You should also have your tires rotated and checked for balance every 5,000 miles. Your alignment should be checked once a year and right away if you hit a pothole, curb, or other obstacle.
Replace your tires when the tread depth reaches 2/32”. This is the standard recommended by the Federal Highway Safety and Traffic Administration. The tread is measured on that part of your tire that meets the road. You may see wear on the sides of your tires due to under inflation or misalignment. This can be a safety consideration when turning corners. When your tires are properly inflated, as long as you have at least 2/32” tread depth where “the rubber meets the road” your tires are perfectly safe.
The bottom line is to choose your make and type of tire carefully. When you buy a car, make it part of the deal that you get the best tires on your car. Maintain your tires carefully especially regarding proper inflation. I even recommend that you buy an inexpensive tire gauge to keep in your glove box.
Thursday, June 15, 2006
Always get an “Out the Door” Price
Many states have laws prohibiting car dealers from adding “fees” onto the prices they quote you. Unfortunately, Florida is not one of these states. The state law in Florida requires only that the dealers disclose on the buyers’ order that this additional charge is not a local, state, or federal fee, but is actually just profit to the dealer.
Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.
Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.
Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.
My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.
Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.
Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.
Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.
My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.
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