I’m Sorry, but Your Car Is Out of Warranty

Most everyone has heard these words, “I’m sorry but you’ll have to pay for this repair because your car is out of the manufacturer’s warranty”.  What should you do say or do? Obviously, we’re not talking about cars that are “way out” of warranty. A ten year old vehicle with 200,000 miles that has a 3 year or a 36,000 warranty will not be repaired free by your dealer or manufacturer. However, for cars those that are “close” to being within the warranty time and mileage there is a good chance that you can persuade the dealer/manufacturer to pay at least a portion of the cost of repair. This article is designed to tell you how best to do accomplish this.

The easiest way to have your car repaired at no cost is if you initially brought the vehicle in for a problem while it was still under warranty, the dealer “attempted” to fix it, but did not. When the problem resurfaces, as long as you have in writing and on the record that this happened, you should have no problem getting your car repaired at no charge.

To the lesser degree that your car is out of warranty, the greater is your chance that the factory authorizes a “goodwill” repair. Goodwill is what they call all repairs made at no charge when the car is out of warranty. If your car is only 5 miles out of warranty, this should be very easy to have approved. The further out of warranty, the more difficult this is and the less likely that you will have 100% of the cost paid by the manufacturer. For example, a car that’s 3,000 miles out of a 36,000 mile warranty may be granted just 50% of the cost of the repair under goodwill.

It’s important to understand that the dealer often has no say in whether an out of warranty car can be repaired under goodwill. A good dealer should support your request for goodwill because he gets paid by the manufacturer for doing the repair and this make his customer happy.  A bad dealer might not support your goodwill request because he would like to charge you more for the repair than the warranty will allow. A dealer can charge you anything he wants for parts and labor but the factory allows him only his approved warranty labor rate, markup on parts, and time to complete the repair.  If a dealer is reluctant to support your request for goodwill, be sure to take your request all the way to top. Take it to the service manager, then to the general manager, and then to the owner. If the dealer won’t support you, try taking it to another dealer who will. It’s very important that you have the support of the dealer when you take your request to the manufacturer. Without it, it’s highly unlikely you will get help.

Some dealers are granted the authority to make goodwill adjustments directly as well as making decisions as to whether a repair should be covered under warranty. This can be good and bad. As I said earlier, a dealer can have an ulterior motive for not wanting to repair your car under warranty…he can make more money if he makes you pay. A dealer who is authorized to make warranty/goodwill decisions is so authorized because he has kept his warranty and goodwill costs low. This is bad for the customer if the way he has kept them low is by denying legitimate claims to make himself look good in the eyes of the factory and to avoid a warranty audit. To some service managers, it’s more important to be popular with the factory than with the dealer he works for.  You want a service manager who works for a good dealer and whose loyalty is with that dealer who will be for his customers.

Manufacturers and dealers will favor those customers who have bought cars from them and had their cars serviced with them. The dealer/manufacturer has your entire sales and service history on their computer. If you have bought 2 or more cars of this make and had them serviced regularly by the dealers of that make, they will “stretch” on the warranty coverage and goodwill.

When asking for repairs for your car that is out of warranty, be courteous, factual, and as brief as possible. Never threaten to take your business away, sue, or call the media. Never raise your voice or curse. Dealership and factory employees are just like you…they tend to respond more positively to someone who is courteous and rational. You should put your request in writing, email or regular mail. If things are moving too slowly, it’s a good idea to call the factory 800 customer assistance number. Your request will be referred back to the dealer, but it’s good to be on record with the factory.

When encountering difficulties, go on your PC and Google your repair problem. Google will direct you to chat rooms and other sources of information about people who have the same problem. You will be amazed at the number of people who have had the same problem. Sometimes even your dealer may not be aware that this repair is common among owners of the year, make and model. Knowing this gives you a strong psychological advantage.

When you Google your repair problem, you may find out that the manufacturer has issued a notice to their dealers about this problem. This kind of notice is referred to as TSB or Technical Service Bulletin. Sometime s TSB will authorize the dealer to repair the car under warranty but only if the customer asks! You may even learn that this repair is covered under a recall campaign, but the dealer should have now that when he checked your VIN in his computer.

The bottom line is don’t just take “no” for an answer. Go through the steps that I’ve covered above and you should have a pretty good chance of getting at least some of your repair paid for by the manufacturer.

SHOULD I BUY MY CAR AT THE END OF THE LEASE?

The best thing about making this decision is that you are holding the best hand in the card game between you, the leasing company, and the dealer. That is because you know your car better then they do. You probably have been driving it for close to three years, you know how well you have maintained it, how worn the tires are, whether or not its been wrecked and repaired, and how many dings, dents, or upholstery blemishes there are. You know if it was garaged and how you carefully you drove it. You also know, better than anybody, how well it runs. All of these things determine the value of your car.

Unless you buy a new car, you can not have as much confidence in any other used car that you may buy than your own used lease car. The only assurance that you have when you buy somebody else’s used car is their word or the dealer’s word about how it was driven and maintained. That mean that if you did take very good care of your lease car, drove it carefully, kept it in a garage, waxed and washed faithfully, and maintained it carefully it is worth more to you than anybody else because you are the only one who knows that. And you can never be sure about that for any other used car you might buy.

Given that you like your lease car and want to keep it, the next step is determine its wholesale market value. The leasing company usually is not in the business of selling cars, just leasing them. Getting rid of off-lease cars is expensive and time consuming for them. You have an advantage here too and you should be able to negotiate a good price. Remember, you know your car much better than they do. They will usually give you a price you can buy the car for without even looking at it. Oftentimes they will call you first about buying your lease car before the lease is up. Be careful when this happens because this can mean that they are facing a loss if they have to wholesale your car at the auction. They are calling you to sell you your car for more money than they can get for it at the auction.

That is why you need to establish the current wholesale market value for your car. Car dealers call this ACV, for actual cash value. Check the Internet for information on the value of your car. www.kbb.com, the Web site for Kelly Blue Book is one of the best sources. Consumer Reports can also give you this information. The best check on the wholesale value is to actually drive your car to 3 or 4 car dealerships that are franchised for your make. If you drive a Ford, visit as many Ford dealerships as you can and tell them you want to sell your car. You aren’t misleading them because it’s a lease car. You could exercise your option to buy it from the leasing company and them resell it to the dealer, if the dealer’s offer was higher. If you live near a CarMax store, the largest retailer of used cars anywhere, they buy a lot of used cars over the curb and their prices are usually very competitive.

Now that you are armed with the true market value for your car, you can negotiate the best price with the leasing company. Even if they won’t sell you the car for the ACV, wholesale value, paying as much as $2,000 over wholesale for a car you have absolute confidence in is a good deal. If you can buy it for wholesale or below, you should celebrate!

Another thing to be on the lookout for with the leasing company is when they offer to extend your lease for the same monthly payment you are currently making. That is not a good deal. They are doing this because they will lose money if they sell this car at the auction at the present time. They want you to keep making payments on the car so that their depreciation rate catches up with the residual value. The residual value is the price they guessed your car would be worth in 3 years. If you had leased the car for longer at the onset of your lease, the payments would be lower than they are now. Why should you pay the leasing company the same as they charged you for a shorter lease?

Earl’s & Consumer Report’s Ten Handy Tips on Cars

My regular readers know that I highly recommend Consumer Reports (CR) as the number one source of information on buying, leasing, or servicing your car. What makes CR superior to all others is their objectivity derived from being a not-for-profit corporation. They accept no advertising and all of their revenue derives from subscriptions and donations. When Motor Trend or Car and Driver magazines announce their “Car of the Year” award, the manufacturer inevitably has spent large sums of money advertising their cars in that magazine. CR will not even allow a manufacturer to give them a car to test; they buy the car from the manufacturer at retail! Furthermore, if CR gives a particular car a high rating, they will not even allow the manufacturer to use CR’s name or good report in their advertising. There is absolutely no conflict of interest when you read CR’s opinion on a car. You should always consult CR when choosing which make and model to buy and when determining what a fair price is.

The May issue of CR has ten great tips that can help you make decisions about your present car and in buying your next car.   If you’re a regular reader, you may have already heard me mention most of these tips and I’m flattered that CR agrees with my recommendations. I have added my take and enhanced advice on these CR tips.

(1)   Try before you buy. Never buy a car without trying it out for a reasonable period of time. Over 25% of people who buy cars, never even take a demonstration drive in the car they buy. Often these people are disappointed in some way with their new car but it’s too late because they’ve already signed on the dotted line. You should either rent a car of the same make and model for a few days or ask the dealer to loan you a car so that you can drive it in all conditions that you will be driving it after you buy or lease it.

(2)   Don’t lose radio presets when changing your battery. Just plug in a jump-start battery into your cigarette lighter during the battery change process. This protects other electronic modules from losing data too.

(3)   Car dealers’ direct mail sales are almost always bogus. Car dealers do a large amount of direct mail advertising. These sales are contracted with outside companies that often supply trained hucksters to sell you a car. The premise of the sale is usually a lie. “We desperately need used cars of the same make and model that you are driving” is one of their favorites. Also, direct mail advertising flies under the radar of the regulators. They are far more likely to see TV, radio, and newspaper ads but the direct mail is directed specifically individuals car dealers choose. They don’t include the state Attorney General on their direct mail list. J

(4)   Don’t bother using nitrogen in your tires. It’s hard to believe that car dealers are still tricking customers into paying money to put nitrogen in their tires. CR tested the effectiveness of nitrogen on tire gas mileage and tire longevity and found it to be worthless. I conducted my own test even before CR did. Nitrogen is worthless in your tires mainly because that regular air is already 78% nitrogen.

(5)   Don’t be timid about filing a complaint on your car dealer. Too many people are either too embarrassed or too shy to notify the manufacturer, county office of consumer affairs, BBB, the DMV or the state AG after they’ve been ripped off by a car dealer. When you remain silent you allow and encourage that dealer to continue doing the same thing he did to you to others.

(6)   Leather seats are a good investment. There are lots of worthless accessories and options you should avoid like nitrogen and pain sealant. Not only does leather look, feel, and smell luxurious in your car it actually enhances the resale value. Another bonus is that it’s actually easier to clean than cloth interiors. But, beware of “dealer installed” leather. Try to always opt for factory leather. If you buy the dealer installed leather, look carefully at exactly what you’re buying and see how it differs from the factory installed.

(7)   Be wary of being among the first to buy that new model. It’s always safer to wait a year before buying a brand new model with a major redesign. Unfortunately the manufacturers often rush a new model to market without getting out all of the bugs.

(8)   Synthetic oil is now recommended by most manufacturers. This is one of CR’s recommendations that I don’t endorse 100%. They suggest you find out before you buy a new car if synthetic oil is recommended, suggesting that you might want to buy another make that recommends fossil oil because it’s less expensive. When synthetic oil first came out it was about twice the cost of regular oil. But the price is coming down as the sales volume grows. Also, the recommended interval to change oil with synthetic is twice as long. Synthetic oil will inevitably be recommended in all cars soon. It is consistent with today’s very tight tolerance engine designs and it does improve your gas mileage slightly. Also, if you choose, you may still use regular oil instead of synthetic but you must change your oil twice as often.

(9)   Consider leasing, not buying, that electric, hybrid or plug-in hybrid. Battery technology is improving so quickly that you could end up with a hybrid or plug-in with an obsolete battery. Your resale value would plummet. Tesla just announced a leasing program for their electric vehicle out of desperation because buyers are afraid they will end up with an obsolete car. If you want to buy a Tesla (which I don’t recommend), by all means lease, don’t buy one.

(10)                       Pass up factory built-in navigation. These factory navigation systems are way over-priced, $1,500 to $2,500, and many of them aren’t as accurate or don’t have as many features as the Garmin you can buy at Costco for $250. You can mount a Garmin or Tom Tom GPS on your dash and have everything the factory navigation does and more. Smart phones today also have great navigation capability.  

OPEN LETTER TO FLORIDA CAR DEALERS: ELIMINATE THE DEALER FEE

 

This column originally ran in October of 2006 and I thought the timing was very appropriate to run this column again. The current President of the Senate, Ken Pruitt formed a Senate Investigation committee to investigate the dealer fee and the results have been sent to the Florida legislature. In a nutshell, the recommendation is that the legislature ban or at least cap dealer fees as they have in other states. If you want to read the entire text of the Senate’s recommendation, you can click on www.EarlStewart.com and then “Results of Florida Senate Dealer Fee Investigation”. By the way, dealer fees are just as rampant as they were in 2006 and dealers are actually increasing the amount they charge. You can pick up a copy of the Sun Sentinel, Palm Beach Post, Stuart News, or any other South Florida newspaper and find illegal ads by dealers who do not include their dealer fees in their advertised prices. Those who do comply with the law, include the price in just one car [disclosed covertly by an alpha-numeric code which means this stock number is the only one available that price]. You come in for the advertised car and it has “already been sold but they have another one just like it”. What they don’t tell you is that their dealer fee can now legally be added to advertised price because it isn’t the same car that was advertised.

 

After reading this column, please contact your state legislator and voice your opinion about this “dealer license to steal”. I have invited Senator Jeff Atwater to appear on my radio talk show on Saturday, February 9. Jeff Atwater is to be the next President of the Senate, the most powerful politician in Tallahassee. We need to convince Jeff Water to pass legislation banning or at least capping it. I expect Senator Atwater will be able to come on my show, WSVU, Seaview AM 960. I’ve spoken to his assistant, Sherry, several times. In our last conversation, she gave me the date of February 9. There was one conflict. He had an appointment at 9:30 AM and my show is from 9 to 10. But she was optimistic it could be moved. If he can’t come in, she said he will call in. You can email Senator Atwater at Jeff@SenatorJeff.com and you can call him at 561 625-5102.

 

 

 

Dear fellow Florida car dealer,

 

 I started in the retail car business in 1968, about 38 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.

 

Virtually every car dealer in Florida adds a charge to the price of the cars he sells, variously referred to as a “dealer fee”, “documentary fee”, “dealer prep fee”, etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It has been made illegal in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to nearly a thousand. Florida law requires that, if you charge a dealer fee to any customer, you must charge all customers. It also requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You don’t always do this and you get around the law by limiting the number of advertised vehicles (as few as one).

 

 The argument that I hear from most car dealers, when I raise this issue, is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But, most car buyers are totally unaware that they are paying this. Who reads all of the voluminous paperwork associated with buying a car? The few who notice it assume it is an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on every car, which would not be true if you were to make the decision to not charge the dealer fee to anyone. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not.

 

The reason you charge this fee is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $895 in profit that the customer is not aware of or believes is an “official fee”, you can actually quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that profit by several hundred dollars.

 

This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the law permits you to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman often won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.

 

If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But, I have evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscience, mislead my customers. Just because everybody else was doing the same thing did not make it right.

 

Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But, when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!

 

Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I am well aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me, not you. And, I’m also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this.

 

Sincerely,

 

Earl Stewart

100% GUARANTEED CREDIT APPROVAL BULL FEATHERS!

You can’t help but hear, see, and read car dealers’ advertising that they can get you financed in a new or used car no matter how bad your credit is. Why they would make such a patently untrue claim is not only evil but amazing. It’s amazing because they wouldn’t keep running the same advertisements if the ads didn’t work.

Banks don’t knowing lend money to people that have real bad credit. What does a dealer accomplish by spending lots of money on advertising that brings people into his dealership with bad credit?

You may have heard of “purse seining”. It’s a method of commercial fishing that uses a huge net to encircle the fish. Tuna are commonly caught using this method but, in the process, thousands of other fish and marine animals are simultaneously trapped in this giant net. Porpoises, turtles, and other species of fish are scooped up along with the thousands of tuna that are caught in a single effort of purse seining. Environmental groups like Green Peace strongly oppose purse seining because so many “non-tuna” fish and sea mammals are killed in the process.

A dealer advertising that he can finance you in a car, no matter how bad your credit, is “purse seining”. As you know, we are slowly emerging from the greatest recession since the Great Depression. Record numbers of people have bad credit and record numbers of banks have tightened their lending even on people with average credit. This increases the number of “fish” for unethical, greedy car dealers to purse sein for. They cast out their giant nets knowing that they will attract far more people with bad credit that no bank will lend money to than people who will qualify for a loan.

Nine out of ten respondents to ads like 100% Guaranteed Credit Approval, Credit Amnesty for All, All Credit Applications Accepted, Bad Credit is No Problem, No Credit Application Refused, or Bankruptcies and Foreclosures Are No Problem will be turned away. These people are being lied to and if they question the truth of the advertisement they will be told things like “We didn’t say we guaranteed we would accept your credit; we said your credit application”. Or, they might say, “We will approve your credit on this $30,000 new Jeep Wrangler if you will give us a $29,000 down payment.” They legally cover themselves in the fine print. This fine print is totally illegible in TV ads, undecipherable in radio ads, and requires a magnifying glass to read in newspaper ads. They are technically granting you credit approval even if the down payment they require is 99% of the price of the car.

Those nine out ten who are rudely rejected are the “fish” that are “accidentally on purpose” caught up in the giant net, the purse sein. About one out of ten who was lured into the dealerships by these lies does buy a car. But who are these ten percent, why do they respond, and how are they able to buy a car? They respond for the same reason the 90% who cannot get financed responded and these people are the reason the dealers continue to advertise like this. They fall into four categories.

The first category consists of those who merely “think” they have bad credit but really don’t. There are some people who have always had near perfect credit and when they get one or just a few credit blemishes, like one past 30 day payment, they assume that they have bad credit now. These people are thrilled when the dealer is able to obtain financing and often will agree to pay a higher or buy a car that they didn’t really want because they dealer had “done them a favor”.
The second category is the group that does have bad credit but also has ample cash. They would prefer to finance the car but can and will pay cash if they have to, and they quickly find out that they have to. This same person will put a much larger down payment down and finance such a small portion that the bank will approve the loan.

The third category is the group that is willing to falsify a credit application which is a federal crime. Often these kinds of people have visited several dealers and have learned exactly what facets of their credit caused them to be rejected. They will falsify these facets such as income being too low by fabricating 1040’s or paycheck stubs. Sometimes they will have someone with good credit front for them to buy the car. This is called a “straw purchase”.

The fourth category is the group who can be duped by the dealer into signing a credit application that the dealer has falsified. Now when I say “the dealer”, it is really the dealer’s agent, the Finance and Insurance Manager. The dealer may or may not what is going on. The buyer is just as guilty as the dealer if he signed the credit application but sometimes the Finance and Insurance Manager forges the signatures.

The 90% of the fish who are thrown back into the sea are forgotten about. Usually they aren’t even shown the courtesy of a phone call telling them that their credit was turned down. They leave the dealership with hope in their heart often calling repeatedly to find out if their loan has been approved. Usually their calls are ignored. This is the part that angers me the most. There are few things more sensitive than a person’s credit rating. How embarrassing and humiliating it must be to those poor souls who have already led their friends, neighbors, and relatives to believe their credit was approved and they bought and financed a car.

In many cases, they actually drive the car home but are called later demanding that the car be returned immediately because their credit was rejected. This practice is referred to as either the spot delivery or the yo-yo delivery. I wrote about this in a previous column, “Don’t Be Spotted or Yo-Yoed”.

NEGOTIATING TO BUY A CAR

This post originally ran in 2006. As you might expect, nothing has changed in those years any more than anything have changed in the way car are retailed in more than half a century. Well, that’s not entirely accurate. My dealership eliminated the negotiating way of selling cars this year, 2013, after a trial experiment beginning in November of 2012. And, to be fair, CarMax, the largest retailer of used cars in the world also offers customers their one and lowest price without the need to haggle.

Why don’t more car dealers go to one price? It’s very simple. Car dealers know that if they give you their lowest price, you will compare that price with their competition and you will buy from the dealer that gives you the lowest price. Car dealers don’t want you to compare their price because they want to sell you their car at a higher price. When a customer asks for a price on any of my cars, I give it to her even if she calls on the phone or emails me over the Internet. Why don’t I worry that she will compare my price and buy from a dealer with a lower price. The truth is that I do worry and that’s why I post my lowest price on every car. But even then, sometimes the customer does find a lower price from another dealer and I lose the sale because it’s impossible for one seller to always have the lowest price. That’s the way the retail marketplace is supposed to work. It’s the way virtually all other products are sold except for automobiles. 

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.

Bait & Switch Advertising (Read the Fine Print)

BAIT & SWITCH ADVERTISING

(READ THE FINE PRINT)

  

All car dealers pay the manufacturers the same prices for their new cars. Dealers will lead you to believe that volume dealers pay less, but this is not true. So, when a car dealer advertises a price for a new car in the newspaper, he has no price advantage over his competition.

Virtually all of  the prices for new cars you see advertised in the newspaper are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is actually helping his competitor sell a car. 

Most of the new car prices advertised in the newspaper are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone.

Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.

If you read my last column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $500 to almost $1,000 that are added to the agreed upon price of the car by most dealers in Florida. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back on that dealer fee.

As you can guess, the salesman’s commission on an advertised car is either zero or very small. Having a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.

My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you have to, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.

The only way to get the best price on a new car is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. Use Consumer Reports magazine, the Internet (www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library.

Automotive Technology Extends the Driving Life of Seniors

Last week I was invited to address the annual convention of the Florida Association of Computer Users Group (FACUG) at the Club Med in Port St. Lucie Florida. The topic the president of the their club, Sam Wexler, asked me to speak on was what new technology and anticipated technology was there that would allow drivers in their seventies, eighties, and beyond to continue driving their cars safely.

After researching this, I was struck by how much technology was already in place and available today that most people, including me, are unaware of. The new technology which is on the horizon is absolutely amazing. Also, as I looked back on the many technological developments we’ve seen since 1908, with the introduction of the Model T Ford, I was made a aware of how far we’ve already come.

You might say that I took this topic personally. A couple of years ago I had the bad experience of a rogue cop anonymously reporting me to the Florida Department of Traffic Safety and Motor Vehicles (FHSMV) as an incompetent driver. I didn’t know for sure who had reported me but when I learned that the cop who ticked me for speeding was married to a woman who I had recently fired and who had sued me for unlawful termination, I was very suspicious. I was later able to confirm my suspicions when I sued the cop and the town and the judge ordered the FHSMV to release the name of person who reported me. I was required by the FHSMV to be evaluated physically and mentally and take a driving and written test to keep my license. I passed all of the tests “with flying colors”. But, I’ll never forget how worried I was and how much sleep my wife and I lost anguishing over “what if” I should lose my driving privileges. Long before this incident, I wrote an article entitled “Grandma’s and Grandpa’s Freedom Machine” which discussed how vitally important the right to drive is for seniors and how much we fear losing it.

Think of the technological improvements that have been made since the introduction of the first practical, mass production car, the Model T Ford. That car had zero options and accessories. I dare say that very few older people would be physically capable of regularly driving a Model T Ford today. Today we take power steering, power brakes, and automatic transmission for granted. How about power windows and door locks, seat belts, air-conditioning, air bags, tilt steering wheels, cruise controls, etc. Technology we already have has added many years to the driving lives of seniors.

I’m embarrassed to tell you that I didn’t even realize that there are many new innovations that are already standard on cars today that I did not realize until I researched this subject. And I’m not talking about “far out stuff” you can only get on luxury cars. I’m talking about innovations that allow seniors do drive safer and longer than ever before available now on low and medium price cars like Toyota Camrys and Ford Fusions. Here are some of them.

Blind Spot Monitor. This technical marvel uses sub-millimeter radar to monitor those blind spots that exist on all make and model cars. When you turn on your turn signals to change lanes this device lights up warning indicators on your side view mirrors to tell you “Don’t change lanes because there’s a car alongside you that you cannot see!”

Rear Cross Traffic Alert (RCTA). This same invention, sub-millimeter radar, tells you if another car is approaching as you are backing out of your parking place at the shopping mall or your home driveway. If RCTA detects an imminent collision, a warning will sound and LED’s will light up in the interior rear view mirror to further alert the driver.

Pre-collision System.  This also uses sub-millimeter radar and predicts and braces for collision before impact. When the pre-crash collision system detects an obstruction (such as a leading vehicle) and determines a high possibility of collision, it increases the braking force when the driver hits the brakes. If it determines the collision is unavoidable, the pre-crash brake activated to decrease the impact speed. At the same time the pre-crash seatbelt retracts to restrain the driver to help reduce injury.

Anti-Lock Brake System (ABS). Helps prevent brakes from locking. The ABS (Anti-lock Brake System) monitors the speed of each wheel to detect locking. When it detects sudden braking, it will release braking pressure for a moment and then provide optimum braking pressure to each wheel. By repeating this process in a short period of time, it enhances steering control during sudden stops. As a result, it will also help improve the ability of stopping the vehicle. ABS only supports the driver's control of the vehicle, and it is not a substitute for it. It is the driver's responsibility to drive at the appropriate speed depending on the condition of the road and to keep a generous distance from the car ahead of you. 

Brake Assist (BA). Studies show that nearly half of all drivers do not step on the brake quickly and strongly enough to stop the vehicle in case of an emergency.  When Brake Assist detects an attempted panic stop, it supports drivers by strengthening the power. Brake Assist will detect attempted panic braking based on the force that is applied to the brake pedal and how fast the driver is stepping on the pedal. When the system recognizes sudden braking, it will add additional pressure to the brake. When your foot is released during Braking Assist, braking power lessens and regulates the brakes with ease. 

Vehicle Stability Control (VSC). Helps prevent wheels from slipping sideways when cornering or sudden steering. VSC is a system that helps prevent side skids and help stabilize the vehicle while turning on a curve. According to the National Highway Traffic Safety Administration's (NHTSA) report, vehicles equipped with VSC compared to those without can effectively reduce single-vehicle accidents by 35% for automobiles and 67% for Sport Utility Vehicles (SUV). When the vehicle senses a loss of traction or a slip, braking is automatically applied to all 4 individual wheels and engine power is reduced to help secure the safety of the vehicle. For example, if the steering wheel refuses to turn from over-speeding (under-steering), the vehicle will take control to steer toward the inner curve. Also, when the vehicle begins to spin from abrupt steering handling (over-steering), the vehicle will take control to steer toward the outer curve.

Traction Control (TRAC). When you are starting the vehicle or accelerating on a wet surface, you could lose control of the wheel because of wheel spin. TRC will help prevent such events from happening. TRC continually monitors the condition between the tires and the surface of the road. When it detects wheel spin, the system applies brakes or slows down the engine to regulate spinning and help ensure proper contact of tires. This helps prevent the car from becoming unstable.

Park Assist. Ultrasonic rear parking sensors mounted across the rear bumper can help drivers to be more aware of obstacles out of their range of vision when reversing. By listening to the beeping, you'll know if you are getting too close to the object behind you.

Dynamic Laser Cruise Control. The DLCC system is designed to help control the distance between the vehicle and the traveling vehicle ahead based on the driving lanes, the vehicle traveling ahead, and vehicle speed. The vehicle-to-vehicle distance control mode is controlled by a laser sensor and distance control Electronic Control Unit (ECU).

Automatic high beam. If you have your high beams on, the headlights will lower automatically when encountering vehicles coming from the opposite direction.

Rain-sensing windshield wipers. Activate the wipers when rain is detected. The driver can adjust the sensitivity to his or her liking. The rain sensors will also automatically disengage cruise control when rain is detected.

Safety Connect: Similar to GM’s OnStar System. It has the following features:

Automatic Collision Notification - In the event of airbag deployment or a severe rear-end collision, the 24/7 response center will be automatically notified. The response center agent will attempt to speak with the vehicle’s occupants, and will advise local emergency services of the situation, requesting dispatch of emergency services to the vehicle’s location if necessary.

Emergency Assistance Button - In the event of an emergency, touch the Emergency Assistance button and you'll be connected to our 24/7 response center (within range, location and coverage). They’ll contact local providers and dispatch emergency services to your vehicle's location if needed.

Roadside Assistance – if you run out of gas, get a flat, need a jump start or require a tow truck, the 24/7 Safety Connect response center can help with Toyota roadside assistance via the SOS button.

Stolen Vehicle Notification - In the event that an enrolled vehicle is stolen, once a police report is filed and the 24/7 response center is notified by the vehicle’s owner, the response center agents can assist the authorities in locating the vehicle, using GPS technology. That means the vehicle is more likely to be recovered quickly, which may help minimize damage.

Smart Stop Technology (SST). In emergency situations, this new system overrides manual operation when both the accelerator and brake pads are pressed simultaneously. The system only engages when the accelerator is pressed before the brake pad at speeds over five mph, in certain conditions. In other words, if the car begins to accelerate on its own, you can kill the engine by simultaneously depressing the brake.

Electronic Brake-force Distribution (EBD). An electronic brake force distribution system uses sensors to monitor the condition of the road and the vehicle's weight distribution to determine where the most brake force is necessary. It automatically increases or decreases force accordingly.

Advanced Airbag Systems. Advanced airbag technologies tailor airbag deployment to the severity of the crash, the size and posture of the vehicle occupant, belt usage, and how close that person is to the actual airbag. It uses multi-stage inflators that deploy less forcefully in stages in moderate crashes than in very severe crashes. Occupant sensing devices let the airbag control unit know if someone is occupying a seat adjacent to an airbag, the mass/weight of the person, whether a seat belt or child restraint is being used, and whether the person is forward in the seat and close to the airbag. Based on this information and crash severity information, the airbag is deployed at either a high force level, a less forceful level, or not at all.

Backup Camera. When the vehicle is put into reverse, a rear facing camera is activated and the view directly behind and to the sides of the vehicle is displayed on a monitor. Graphical guidelines are displayed on the camera image to help the drive guide the vehicle in reverse.

Remember, everything I just covered is available now in many affordable cars. You should investigate what is available in which makes and models before you make a purchase decision.

Now, if you’re just a youngster, say only 65 years old, you can forget about ever having to stop driving your car for as long as you live. The driverless car is almost a reality. You may be able to buy one in as soon as five years! Google has driverless cars on roads today in several states including Florida. If you want to be amazed, just click on this link, http://youtu.be/cdgQpa1pUUE  , or copy and paste it in your browser. You can watch a blind man “drive” the Google Prius around town. You just get in this car and tell it where you want to go. It “sees” and reacts to everything a human can, only faster and smarter. It “sees” other cars, stop signs, curves in the road, children in the street, etc. You can get in the car, tell it to take you to Publix, and catch up on your reading on the way.

Pitfalls to Avoid When Having Your Car Serviced

Before I get into the pitfalls, it is important for you to understand how important it is to have your car serviced according to the manufacturer’s recommendations. The pitfalls and consequences of not doing so can be equal to or greater than those you might experience at the hands of an incompetent or unethical service department.

I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.

Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work.  Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.

When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.

You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.

You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.

Don’t be shy about asking for a loaner car when you have to take your car back a 2^nd or 3^rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.

As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right. 

BUYERS ARE LIARS! (part 2)

I wrote this column about four years ago and this morning I received another comment on my blog. Here it is:

Hi Earl, good article. As a car sales professional, I have heard this saying and whilst I always approach every prospect with the right attitude: The number of lies I have been told I have lost count. Things like: a/ Customers telling you another dealer will give them an extra $4000 for their trade in: when you know the dealer deals with the same wholesaler b/ Customer tells me that another dealer will throw in a polished alloy bullbar: Two problems: that product was not available for that vehicle yet: yet they still insisted (and the store it was going to come from: TJM: didn’t even make tow bars for that model: and lo and behold: the other dealer hadn’t even met this guy. c/ Customer comes to me, we build a great rapport, then goes shopping elsewhere and buys: phones me to ask if i will match a deal that is so far below cost it couldn’t be anything other than a figment of their imagination: and after calling the dealer, finds out it is just that: and the real buyer was not the person who came to me. This other clown comes and parades the car and restates what deal they got: yet can't produce the invoice. That said, I love the car business and these people are part and parcel of it. I quickly work them out and eliminate them now ;)

This comment is just another example of why car salesmen develop this negative attitude toward their customers.  It’s reminiscent of what soldiers do when they go to war…they demonize the enemy to justify in their minds that their job which is to wound, kill or capture them. During WWII, the Japanese were the “Yellow Peril” and we called them Japs. The Japanese referred to us as Yankee Devils. The same held true with the Germans, Koreans, and today with the Muslims. Just like soldiers, car salesmen are often only “following orders” and they demonize their customers when they’re ordered to do things that their conscience wouldn’t permit them to do to a “good person”.

I don’t claim to be a psychologist (and I don’t even play one on TV), but I have read articles explaining how humans will stereotype other people in a fashion that falsely justifies their negative behavior toward those same people. We also see this with racism. If you make yourself believe that car buyers are out to take advantage of you, “buyers are liars”, you can’t feel guilty about tricking them into paying a dealer fee. If you trick a “roach” or a “slug” into coming in to buy a car on credit when they probably can’t, why should you feel guilty? After all, roaches and slugs don’t have feelings.

I’m always amazed by the way car dealers who use deceptive advertising and unethical sales tactics rationalize their behavior by actually blaming you, their customer. The following is a direct quote from an anonymous car dealer’s email I received this morning in response to one of my recent columns in this newspaper:  “I don't think you would make any of these comments if you sold fords in a non-metro market. How do you expect dealers to change when consumers think they should pay less than dealer cost for a car and then walk into any other form of retail store and pay what they are asking?? Your ideas are noble but there are other dealers who have tried 'your' methods who are no longer in business.” This dealer is saying that his customers are so ruthless and cunning that they won’t buy a car unless they can buy it below his cost and his only solution is to trick them into thinking that they are buying it below his cost, like tacking on a “dealer fee” to the price they quoted the customer.  He also goes on to say that my “ideas are noble” but I can’t possibly be successful and I will go broke trying. I truly appreciate his concern and I want to assure him, if he is reading this article that my business is doing very nicely.

This attitude is actually a prevailing part of the culture in many car dealerships. Many dealers, dealer managers, and sales people don’t trust their customers (how paradoxical!). They don’t even like their customers. A very common expression among car dealers and their sales staff is “Buyers are liars”. This means that a prospective customer will not tell you the truth about the condition of his trade-in, he will lie to you about the price he got from your competitor, and he is likely to remove those new tires that were on his trade-in when the dealer appraised it when he comes in to pick up his new car.

There are also a lot of dealerships where used car buyers and people with bad credit are held in especially low esteem. They have nicknames for people with bad credit like “slugs” and “roaches”. Apparently dehumanizing these unfortunate members of our society with derogatory labels makes it easier to treat them so shabbily. People with bad credit are targeted with direct mail and newspaper ads making absurd promises that convince prospective customers that they can finance a car no matter how bad their credit. In some dealerships applicants are coached on how to falsify credit application and pay records. In some cases the applicant may not even know he is signing a false credit application which is federal offence.  In most cases the credit is refused and the applicants are not even given the courtesy of a return phone call to tell them this.

What these kinds of dealerships don’t understand is that you must trust a person first before you can expect her to trust you. You have to treat a person with respect before you can expect that person to respect you. Somebody has got to go first. My experience over the past 40+ years as a car dealer is that 99.9% of my customers are good people who I can believe and trust. Those are pretty good odds and I just assume that every customer I am dealing with is part of that 99.9%.  Once in a great while I get burned, but the loss from that one in a thousand that takes advantage is far out-weighted by the other 999 who respond positively to my trusting them and treating them with respect.