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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”.
Posted by Earl Stewart at 12:29 PM 1 comment: 


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.

Posted by Earl Stewart at 2:33 PM No comments: 

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 . 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.
Posted by Earl Stewart at 1:05 PM No comments: 

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.

Posted by Earl Stewart at 11:56 AM No comments: