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Wednesday, February 24, 2010

An Honest Dealer Or Two

SEARCH BLOG: AUTOMOBILES

Sometimes automotive dealerships deserve a bad reputation. Sometimes it is due to their attitude... we're so big we don't need you...; sometimes it is due to their practices... sure these are extra fees, but that's how we operate.

Recently, my mother-in-law wanted to purchase her lease car. She has less than 13,000 miles on it after 3 years and the buyout price was below the market price... it was clearly marked on the lease contract. She went to the dealer and came back with a worksheet that was nearly $2,000 more than the lease contract buyout price. Of course, part of that was taxes, title, and license fees... but then there was about $1,000 in miscellaneous [no particular reason except profit-padding] dealer fees that were just tacked on.

I decided to go back to the dealership and talk with the leasing manager. He mumbled and stumbled and then said he could discount some of the fees and maybe "pull out some equity from the lease" [no such thing], but he never backed off the worksheet numbers for the tacked on fees.

What isn't apparent is that the way this particular contract was structured, the purchase price was $500 more than the "residual" value and that is what the dealer receives for handling the transaction [in addition to the tax, title, and registration, but not including "delivery" or "document" fees. The other fees are "padding" not part of the original contract.

Because my mother-in-law had a month to decide, we went to a dealer from which she used to purchase her vehicles and explained that we were not happy with the present dealership [we indicated she changed dealerships after moving to a different part of the city, but we did not talk about the questionable fees] and wanted them to handle the buyout. Although this was not a normal transaction for her old dealership and the manager expressed some reluctance because of customary "boundaries" that held dealers within a certain distance of the leasing dealer would not handle each other's deals, the sales manager agreed to do it as a favor to this old customer.

After he worked up the transaction, the bottom line was about $1,000 less ... imagine that... than the other dealer was demanding. We then told him who the other dealer was, but did not mention the reasons for not buying through them.

I'll not divulge the name of the dealer who was practicing what I consider to be a "rip-off," but those of you who live in the Orlando area and are interested in Ford products, might want to consider Don Reid Ford. You can ask for the sales manager, David Rodriguez. You won't be unhappy. Thank also to Glen Sdao at Blackwell Ford in Plymouth, Michigan for his advice concerning normal business practices on these lease buyouts.

2012 IS GETTING CLOSER

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CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006 Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)