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April 30, 2008

A tough April for car dealers

Filed under: Car Buying Help, Dealerships — Tags: , , , , , — admin @ 3:27 pm
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Preliminary reports show that auto sales will be down this April as compared to the same month last year.  In fact, some people are predicting that the second quarter 2008 auto sales will be worse than this year’s first quarter sales which were also down significantly.  For the auto industry the pot of gold at the end of this rainbow is that the people who are calling for a poor second quarter 2008 are also predicting that it will represent the bottom and the final two quarters of the year will see sales increase. 

            For the car shopper this is good news.  You should be able to walk into any car dealership and get a great low price, regardless of what you are shopping for.  A smart shopper will receive very little resistance getting the price they want.  On the flip-side, if you enter a car dealership unprepared you will likely get fleeced badly because somebody’s got to make up for all the money car dealers are losing in the second quarter. 

April 28, 2008

It’s not your father’s car dealership

Filed under: Car Buying Help, Dealerships — Tags: , , , , , — admin @ 7:26 pm
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At car dealers around the country there is a huge sift in the business landscape that will dramatically change your car buying experience in the future.  Right now we are seeing car dealerships close at a rate never before seen.  And unlike any other time, many of these closures are being encouraged and assisted-by the auto manufacturers.  Last year 621 big 3 dealers (Ford, GM & Chrysler) closed and virtually every one of these dealers could be considered a Mom & Pop type of dealership.  You know the small single franchise dealer.  I’m talking about a place where the dealer principle worked in the dealership with a small and knowledgeable staff that was committed to keeping you as a customer. 

The Mom & Pop dealer is disappearing and being replaced by the multi-franchise mega-dealer.  This trend has been growing in recent years, but with the present auto sales slump dealers are going out of business at a record pace.  If your reaction to this is happiness because you feel that car dealers are getting what they deserve, that is your right but be careful for what you wish for.  As the little auto retailer is replaced by the mega-dealer the future is not pretty for the consumer.  Customer-care will diminish, I call that the Wal-Mart effect.  When the last of the Mom & Pop dealerships close a visit to a car dealership will include being treated like cattle (or flying today).  And worst of all, with less competition there’s only one way for pricing to go, and that’s up!  That’s why auto manufacturers are encouraging dealers to go out of business.  The little guy is holding the prices down for the consumers.  For car shoppers competition among dealers helps, too bad it will soon be a thing of the past.   

 

April 25, 2008

See, I am NOT Chicken Little!

Filed under: Car Buying Help, Dealerships — Tags: , , , , , , — admin @ 8:44 pm
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I have not been crying wolf with my blog entries warning people of the dangers of title fraud.  Here’s a case of thirty people getting scammed by a car dealer and now they are in big trouble!  In Castle Rock CO., near Denver there are 30 people who have paid for a car, never received their titles and now the dealership is closed and the owner’s nowhere to be found!  To read the whole story click here.  I’ll give you a quick overview; a high-end dealership in Castle Rock is now closed and abandoned leaving 30 customers without titles to the cars they paid for.  The reason the customers do not have titles is because the dealership never purchased the cars they sold to these customers!  So this shady car dealer sold people cars he didn’t own (and fake extended warranties along with not paying off any trade-ins).  This crook of a car dealer conducted transactions he never intended to complete and then disappeared.  Police are looking for the dealer principle, Wayne Weaver, but no one can find him.  My guess is Mr. Weaver was able to get out of town with at least a million dollars of other peoples’ money! 

As I’ve told you in multiple blog entries, this is a scam that’s very easy for a car dealer to commit.  Car dealerships sell new and used cars every day without having the vehicle’s title.  What honest operators do is after the dealership sells a car they obtain the title and transfer ownership to their customer.  But if you are a crook like Mr. Weaver, you begin the transaction and split without paying anyone off.  In 2008 we are going to see this type of fraud reach epidemic proportions as dealers are buried in debt so you MUST protect yourself.      

April 22, 2008

As Car Dealers Slash Costs – Are You Going To Pay More?

Filed under: Car Buying Help, Dealerships — Tags: , , , , , — admin @ 7:27 pm
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I recently read the results of a survey conducted with over 400 car dealers from around the country.  In the survey the dealers were questioned about changes they are making in their businesses to deal with the car sales slump.  I’ll give you the highlights, and then my thoughts.  From the survey it appears car dealers are ordering fewer vehicles than they did this time last year.  They are employing less people while limiting the remaining employees overtime.  Overall, domestic car dealers are forced to make bigger cuts than import dealers.  As a shopper you can expect to see a decrease in customer care from your dealer. 

But that’s not all, back in the go-go ‘90s manufacturers put tremendous pressure on dealers to provide customer care; now all the manufacturers care about are sales.  So that slimy car dealer that sold a ton of cars, but also generated a ton of upset customers won’t need to worry about the manufacturer’s wrath.  You see, in the auto industry in 2008, it’s only about sales.  If a car dealer can move tin, the manufacturer doesn’t care how many complaints they cause… just sell the cars.  The dirty, unhanded car dealer is the one who’s going to get the rewards going forward so… be forewarned!       

 

April 21, 2008

Car Dealer Scam Jeopardizes a Man’s Entire Life

Filed under: Car Buying Help, Dealerships — Tags: , , , , , — admin @ 9:33 pm
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There are countless scams a car dealer can pull on you and while we are dealing with the toughest economic conditions we’ve faced in decades, you can not be too careful.  I’ve mentioned in previous blog entries the dangers associated with title fraud along with the hazards of having a dealer not pay off your trade-in.  Title scams and dealers who hold onto customers money with the intent of getting interest free loans or to use as a parachute for bankruptcy are on the rise and will become more common as long as our economy stagnates.   

            But, desperate times often create a desperate situation and that’s exactly what happened in Waynesboro, Virginia.  Rodney Price, owner of RSD Motors has been charged on over 40 counts that include failing to issue titles to vehicles, improper registration, disposing of mortgaged properties, obtaining money under false pretenses and embezzlement.  Mr. Price faces both misdemeanors and felony charges and seemed to take enormous liberty with other people’s money and property.  Unfortunately this is far from the first time I have heard of car dealers committing these crimes and it will not be the last. 

            While Mr. Price was committing these frauds he showed NO concern for anyone.  The damages to innocent people who had the misfortune of coming into contact with Mr. Price could have been much worse.  For example, it appears that a Mr. Dale Early made arrangements with Rodney Price to sell his 2004 GMC Sonoma on consignment (a practice I strongly discourage) at his dealership.  The truck was sold, but Rodney Price decided to stick it to Dale Early.  Instead of registering the truck in the new owner’s name, Rodney allowed the new owner to drive the 2004 GMC Sonoma on Mr. Early’s insurance and plates for 2 months. 

My guess is by letting the new owner of the 2004 GMC Sonoma drive around on Dale Early’s insurance and plates Rodney put a few hundred dollars in his pocket.  But, had the new owner of the Sonoma been driving drunk and killed someone, Dale Early might have found himself in jail, or at the very least he would have spent hundreds of thousands of dollars to avoid jail.  Rodney Price put Dale Early in danger of losing his home, his savings, his good name and just about everything he’s worked his whole life for.        

April 10, 2008

Clueless Senator Drops Ball When Dealing With Car Dealer

Filed under: Dealerships — Tags: , , , , , , — admin @ 6:32 pm
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In Norfolk Virginia there’s a used car dealer who’s TV ads have received so many complaints and have been deemed so disturbing that Senator Jim Webb has been involved in efforts to get the ads taken off the air.  As the Auto Insider I have always tried to educate you about dealer tricks and scams so you can protect yourself.  So I never thought a scenario could develop were I would be upset that a member of the Senate was attempting to intervene against a car dealer… but that’s exactly the case! 

            Here’s the story.  A used car dealer, Charlie Falk decided to run TV commercials with actresses playing military personnel.  It appears the rub is that the actresses are not providing an authentic portrayal of how a female in the military would be dressed.  No, they are not dressed in a sexual or overt manner; just not properly attired.  For instance, one actress has the very top button of her shirt open; another does not have a t-shirt on under a camouflage shirt.  Remember, nothing sexual – just unauthentic.  Now these ads have upset and offended several active military women along with some retired personnel. 

Please understand my disagreement is NOT connected to the women who are offended by Charlie Falk’s ads.  I may not be able to fully comprehend their feelings on this matter because I do not have a military background, but that is not what has me upset.  The only suggestion I would give these offended women is that they should use their power as a consumer block to get their fellow military men and women to boycott Charlie Falk.  There is a huge military population in Norfolk and without their business I’m sure Charlie Falk would take an enormous financial hit. 

My contempt is focused on Senator Webb.  The Senator has decided to use his enormous power and influence to address this issue rather than the countless illegal, unethical and deceiving auto ads used to fleece car buyers all over Virginia and the entire US on a daily basis!  In these TV ads Mr. Falk did not attempt to insult any military people, remember they represent a huge portion of his customer base.  I’ve seen the ads and in my educated opinion Charlie Falk was just sloppy and thoughtless while producing his TV spots. 

Now Senator Webb is a former military man and I bet the military vote is critical for the good Senator to stay in office.  To me, this appears to be little more than a Senator pandering for votes.  It’s a shame that Senator Webb doesn’t put our tax dollars to work ensuring car dealers don’t rip people off, rather than just insult people!  No, I am not condoning insulting people, but I do think that the fact that an enormous number of Americans are financially assaulted by car dealers represents a more pressing issue for the Senator to address. 

To prove my position all you need to do is take a closer look at Charlie Falk.  In October 1994 Mr. Falk agreed to settle a lawsuit by forgiving $10.5 million in defaulted loans and pay $400,000 in damages to former customers.  Mr. Falk runs what’s called a Buy Here – Pay Here used car lot.  In 1994 Mr. Falk owned 11 such BHPH used car lots.  The lawsuit arose over his practice of repossessing vehicles in an untimely manner.  Some people might describe it as selling someone a car, then legally stealing it back!  Given the choice, I’d rather be insulted by Mr. Falk rather than some of the alternatives.  The $400,000 paid to former customers was split between 2,500 to 3,100 people!  That’s a lot of people harmed in my opinion. 

In fact, I wonder how he could possibly be allowed to continue selling cars after settling a case that damaged so many people.  You would think that some figure with the power to protect the people would have taken his license away back in 1994.  Gosh, I bet a Senator could have done that, I wonder why no one did?  I think I know the answer.  Buy Here – Pay Here auto dealerships cater to low income customers.  People often choose to do business with these dealerships because they can not obtain an auto loan from a bank.  The Buy Here – Pay Here dealer holds the note for the car they sell. 

Now in Senator Webb’s defense I need to state that he was not in office in 1994.  Additionally, it is possible he is not familiar with the prior actions of Mr. Falk.  But if he reads this and does a little research he will learn that the present actions of Mr. Falk are pale in comparison to his previous offenses.  I urge Senator Webb to become more aware and active in his attempts to protect the citizens of Virginia from all car dealers like Charlie Falk.  Use this as a springboard for change! 

But, we can not assume that Senator Webb is unfamiliar with the actions of may car dealers.  He’s a very bright man and he knows auto dealerships commit illegal and unethical actions against unsuspecting people on a daily basis.  So, if this is the end of Senator Webb’s actions against Mr. Falk and other dealers like him there’s only one conclusion I can draw – if your business practices prey on the poor, stealing money from them and ruining their financial status  (like Charlie Falk) I won’t comment or act.  But, if you happen to insult military personnel with a poorly researched and produced TV ad I’m ready to take you on! 

Senator, if you buy a newspaper, watch TV or read anything on the internet you can quickly identify hundreds or thousands of car dealers who should receive your attention and wrath, unfortunately in this case Charlie Falk is not one of them!                    

    

April 8, 2008

Selling your car yourself, watch out for this scam

Filed under: Selling Your Car — Tags: , , , — admin @ 4:34 pm
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Most people know that you can get more money for your present car if you sell it yourself, rather than trading it in to a car dealer.  Depending on the value of your car the difference can be thousands of dollars, that’s why so many people decide to sell their car themselves.   Sure it’s a huge hassle, you must advertise your car, deal with shoppers and once you find a buyer you need to make sure the transaction is done legally and completely.  Many people who start this process quickly become frustrated and fed-up with the process.  So, if someone calls with a promise of a quick and profitable sale for a small fee it sounds great… unless it ends up being a scam!   In England there is a scam that is happening at an alarming rate that preys on private car sellers and I would not be surprised if this con found its way ‘across the pond’, if it is not here already!

Victims of this scam are called shortly after advertising their car from a ‘company’ that supposedly has a database of car buyers who are ready, willing and able to purchase the victim’s car right now.  There is a small fee for the seller to gain access to this database; the scam in England was charging US $40.00.  Of course all sorts of promises and guarantees are made.  The person from the ‘company’ promises that you can sell your car for much more that the amount you are seeking, so in reality you will make money using their database.  Sounds great right, all you need to do is pay the company and your car will be sold in a day or two! 

Not so fast, sure they’ll cash your check or hit your credit card for at least the $40, but don’t count on any buyers coming from them.  In England this company has scammed a huge number of people who have received absolutely nothing for their money.  I do not know of this scam happening here yet, but I’m sure it is only a matter of time because it has been very successful overseas.  So if you are selling your car yourself and someone approaches you with any type of paid assistance be careful, be very careful!       

 

April 7, 2008

Don’t buy a car now

Filed under: Car Buying Help — Tags: , , , , , — admin @ 9:32 pm
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From every indication auto makers will be increasing their incentives in the coming months.  This is especially true for the European auto makers as long as the Euro stays strong.  With slumping sales we have seen incentives rise.  In fact, manufacturers like Ford who not that long ago swore to their dealers that the, “days of 0% financing for 60 months is a thing of the past,” have not only brought it back, but expanded it!  This month, for the first time ever Mazda is offering 0% financing for 60 months on the Mazda 6.  Additionally, Ford has expanded the 0% financing for many Fords, Lincolns and Mercurys. 

As we have moved through the calendar year incentive spending has increased.  When you compare February and March of this year auto makers increased their incentives by 13.6%.  Right now large trucks are leading the way with incentives, averaging $4,368 per vehicle.  SUVs are second with an average incentive of $4,094.  Domestics have been increasing their incentives each month and Japanese companies have tried to buck the trend by dropping their incentives by $73 in March.

When you read these tea leaves everything is pointing to a tremendous buying opportunity later this spring and summer.  As we move through the 2nd quarter the need to ‘move tin’ will create such a supply problem that most auto makers will be forced to set incentive records.  As the Auto Insider I am recommending people wait a few months before buying a car, it could and should put thousands of extra dollars in everyone’s pockets – except the car dealers!

 

April 4, 2008

The $99 a month car dealer scam

Filed under: Car Buying Help, Dealerships — Tags: , , , , , , , , , — admin @ 9:29 pm
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A lot of people get confused or excited when they see a car dealer advertise a $99 a month payment.  Sometimes the dollar amount changes, dealers will use a $47 a month payment or some other low number.  I’m going to explain why car ads that use these tricks are usually offering you a bad deal.  In fact, I tell people that if a car dealer advertises in this manner they should avoid doing business with them.  The reason car dealers use this advertising method is because so many people are fixated on what their monthly payment ends up being and they never understand how that number was generated. 

You must understand how a car dealer arrives at your monthly payment to determine whether your $385 monthly payment is a good price or a bad price.  Many people don’t understand that two people can have the same $385 payment for the exact same car and one person got a good deal, the other a bad deal!  So when someone asks me to evaluate their car-buying skills by throwing out a low monthly payment I simply nod in approval just to be polite.  Of course I do not know if they got a good deal or a bad deal and they usually don’t know either! 

So let’s look at all the elements that make up a car buyer’s monthly payment so you can make intelligent decisions.  Your monthly payment is a combination of the following:  an interest payment for your loan, a fraction of your actual loan (if your loan is 48 months you pay 1/48 of the loan each month) along with any other fees or taxes you might have rolled into the deal.  These are the separate elements that make up your monthly payment.  So you must have negotiated a good purchase price for your car or your monthly payments will never be a good deal.  This is true whether you are buying or leasing your next car.  No figure has a bigger impact on your car deal than the car’s purchase price – common sense when you think about it. 

Now you must take the vehicle’s purchase price and subtract any down payment or trade-in allowance. So if you are buying a $25,000 car and you put $5,000 down or give the dealer a trade-in worth $5,000 your financing figure becomes $20,000.   Now we take that $20,000 and add any additional fees you might have rolled into the deal to create the final amount of money you will be financing.

When you go to financing you need to determine how much interest you are paying on the money you are financing, in our example let’s use $20,000.  The length of your loan determines the number of monthly payments you will make.  A common rule of thumb is the longer the loan and the large amount of money you finance, the higher your finance rate will be.  So do not be afraid to ask if your financing gets better if you shorten your loan term. 

For instance, let’s say two people are financing the exact same car for the exact same amount of money, $20,000.  One person got a rate of 7.9% financing for 60 months.  This person will have a monthly car payment of $404.57.  The other person got a rate of 4.9% for 48 months.  This second person’s monthly payment will be $459.68.  Now remember, they both are financing the exact same amount of money, so who has a better deal?  Many people instinctively would say the lower monthly payment is a better deal, I disagree.  You see, the first person is paying $404.57 per month for 60 months for a total of $24,274.20.  The second person is paying $459.68 for 48 months for a total of $22,064.64.  The person with the higher monthly payment ends up paying $2,209.56 less for the exact same car! 

Now that you understand the process you can see that anyone could buy a new Rolls Royce and have a $99 a month car payment.  To accomplish this all you need to do is put about $125,000 down!  Car dealers advertise $99 a month payments because they know that any potential customer who walks in the door off that ad is fixated on their monthly payment.  This allows the dealer to jack up the financing rate, spread the payments out (some dealers now push 72 month loans).  By hiking your rate several points and stretching the payments out an extra year or two the car dealer and the bank will make additional thousands of dollars on every customer! Don’t let this happen to you!  Buy smart, don’t be fooled into judging a car deal by the monthly payment, it’s the easiest way to get scammed by a car dealer!      

April 1, 2008

Auto financing in today’s world

Filed under: Car Buying Help — Tags: , , , , , — admin @ 5:31 pm
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If you are shopping for a car you need to know that one of the biggest problems car dealers are facing today is the difficulty they have getting customers financed.  I do not recall a time in recently memory when I’ve heard so many dealers complain about how difficult it is to get customers who are ready, willing and able to buy, bought by a bank.  So as a car shopper I strongly recommend that you know your credit status and be fully prepared before you ever walk into the dealership. 

Being prepared will improve every aspect for you.  If prior to entering a car dealer have your credit score, financing and down payment information ready the dealer will be thrilled to work with you. From the dealer’s point of view this streamlines the process because the dealer will know you are a serious buyer that they can put in a car.  With that bit of knowledge coupled with a depressed car selling environment no dealer would risk losing a real buyer who has their financing in order so you’ll get a great price.  Be prepared and enjoy the benefits.    

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