He's got four decades of experience and insights that'll make your stomach
tie-up into knots the next time you begin searching for a new set of wheels.
But auto industry veteran Ray Stafin Sr. is a trusted advisor to Benjamin
Dover, and his company a fair, competitive and reliable resource for auto
buyers across the entire nation. (Yes, they deliver in all 50 states.)
Read on.....
Benjamin Dover question (BFD):
What is the #1 thing someone should do when they realize they're buried in a
car?
Ray Stafin Sr. (RS): It
depends. How deep are they buried? First thing outta the blocks is to try to
sell it to a friends or relatives or co-workers (assuming the car's not a
lemon) to try to get maximum [and fair market] value for your car and reduce
any shortfall that they might be facing. Try to sell the car on a personal
level, because they'll never get as much if they try to trade it in.
The downside to selling to a private party are the usual concerns: Once you
find someone that wants to buy it, then you've gotta figure out if they can
qualify for financing, or can come up with the cash to close the deal. And of
course women face an extra set of challenges [threats] just from the
selling-to-strangers standpoint. Someone responding to an ad in the paper or a
sign on the car when it was sitting in a parking lot, or driving down the
freeway is always a potential problem, regardless of gender.
BFD: So what if I owe $10,000
on a car note but the car's only worth $7,000-how do I get outta that jam?
RS: You say the car's only
worth $7,000-but is that retail or wholesale price? Who determines where the
$7,000 value comes from? Remember, the more the consumer can sell the car for,
the smaller the bullet they're going to have to bite on the shortfall.
Knowing that we can buy their next car for them at the right price-as well
as pick up any rebates along the way or find a vehicle that offers special
financing opportunities and simply be their advocate and get the best deal
possible (so they don't duplicate the mess they're currently in), we can
"roll" that negative, carry-forward balance into the new deal. But
this time they're going to have a game-plan that makes sense and will either
allow them to "drive their way out" of their current mess without
having to write a big check, or if they've got to write a check, we'll get it
down to the smallest check possible and reduce the bitterness of a pill
they're going to have to swallow sooner-or-later.
BFD: And frankly Ray, if
they do it sooner, it's probably gonna be a lot smaller than if they put it
off to some time into the future?
RS: Absolutely right.
With interest rates as low as they are right now, they're crazy not to take
advantage of them, along with our ability to honestly guide them through the
mess they're in-and help them get their act together and get into the black
once and for all.
BFD: Should someone lease or
buy their next vehicle?
RS: It's a personal decision; you have to look at factors such as mileage,
what are you using the vehicle for, and frankly some vehicles aren't worth
leasing.
BFD: Such as?
RS: Ford's Focus. Why would
you lease a car like that...it's pretty-much considered a
"disposable" car...it's a starter type of car, anyway. You wouldn't
gain any sort of distinct advantage because the residual value [the valuation
of the vehicle at the end of the lease, and this directly affects how high or
low your payments are going to be] will be so low that the significance of any
savings would be wiped out.
BFD: What are some
vehicles that right now [Fall '03] have some attractive financial incentives?
RS: There's $5,500 back on
Suburbans and Tahoes...so if I take that $5,500 back and add let's say $4,000
in mark-up, I'm at $9,500 behind MSRP [Manufacturer's Suggested Retail
Price]...and what the consumer's going to get is significantly lower payments.
BFD: But haven't there
been some changes in how the banks arrive at certain numbers in the leasing
game?
RS: Yes, they used to go
from MSRP when they were computing the residual calculation, but now they call
it CRM or Current Retail Mark-up. This CRM number significantly lowers the
"starting point" to compute the residual value-mainly because the
funding banks really miscalculated this over the last few years and they took
some major financial hits as a result.
The net effect of using this CRM? It knocks off (in this case) maybe $1,500
on the value of the Suburban which will then have a direct impact on the
residual value computed-which means lower residual equals higher monthly
payments. Bottom line? Leasing companies and the banks that fund them no
longer go from the "sticker" price or MSRP. Now it's the CRM...
BFD: So in other words,
if the leasing company miscalculates the CRM, they'll find themselves SOL
ASAP?
RS: Cute. But it's also
worth noting that on popular car models they may go with the sticker price...
BFD: Okay....examples of
the Top 3 most popular vehicles you're seeing leased these days?
RS: The Lexus RX-330 is
extremely popular; just about all of the Acura models are good...and of course
BMWs are always hot. SUVs are still (surprisingly) in demand...and minivans
are also holding their own, the (Honda) Odyssey and the (Toyota) Sienna are
popular.
BFD: Over-mileage freaks
alotta people out...actually the fear of going over-mileage is what does it,
but I've long contended that unless someone keeps the car to the last day of
the lease, this isn't a factor. Am I right or wrong?
RS: Other than affecting
the re-sale value, you're right. If you're supposed to drive 75,000 miles and
you've driven 100,000, it's going to affect the value-no matter what. Of
course some models (like the Mercedes) can have higher mileage without
adversely affecting the re-sale value...but as long as you've got the
maintenance records and have done your job to properly maintain the vehicle,
you can reduce the impact of high mileage.
BFD: So it makes more
sense to trade in a vehicle before the end of the lease rather than take the
hit and pay the excess mileage charge?
RS: Absolutely! You'll
pay a lot less on a trade-in than you will by paying the excess mileage...look
at the numbers: If it's 18¢ a mile and you're 30,000 miles over, that's
alotta money.
BFD: Yeah...like $5,400
worth of excess miles...
RS: So Stafin's Rule of
Thumb? You'll get more money for your excess mileage trade-in than you will
end up paying in excess mileage charges.
BFD: Let's talk hail
damaged or just plain old, got-in-an-accident/got-a-check-in-hand vehicles.
What's the best way for consumers to handle a car in this situation?
RS: Consumers are much
better off taking their insurance check and trading in the vehicle.
BFD: Why?
RS: Because we know that
we can get their car repaired for a lot less than they can...so why not take
the opportunity that's being presented to you and turn it around, flip it into
a positive and get a new (or newer, anyway) vehicle?
BFD: What's the #1
warning you want to pass along to anyone "biting" on one of those
ads heard on the radio? You know! Get more car for less money...guaranteed!
These sound-too-good-to-be-true ads hook alotta people...and frankly scare a
lot more that have heard all of the car leasing horror stories.
RS: These ads are
come-ons!!! They're designed to get you in the door and once they've gotten
you in, it's "let the games begin." It can be brutal. All they want
to do is get you in the front door and get you so far into the new vehicle
acquisition process-both emotionally and financially. Consumers have got to
remember one of your favorite lines: If it's too good to be true, then it
always is!
BFD: What's their
favorite game they like to play?
RS: You know the game.
The one particular vehicle we had-well that's gone. "But the next model
up is loaded up..." and then hang on because here we go folks.
BFD: What about the
games some salesmen play by letting someone "buy" the vehicle, only
to get a phone call a day or two later to be told that "your financing
was turned down...but we can get you in this other vehicle for only $20 more a
month!" Is this legal? How do they get away with this? Is this common?
RS: Yes...it's known in
the car game as a "spot delivery." It's a common technique to
"keep control of your customer" and it's a coupla factors at work.
The salesman/finance department pulls a credit bureau report on the person
and tries to determine on the spot if they can get them financed and in the
mean time, they put the customer in the vehicle-stopping the customer from any
further shopping by taking their trade (current vehicle) away from them, so
now they can't go try to work another deal some place else. This is a common
practice, because they want control of the customer, and this is the easiest
way to do it-by putting them in a new car.
BFD: And not only are
they removing the risk of their customer continuing to shop for a deal, but
they're also getting them totally emotionally invested-not just financially-in
the new set of wheels, aren't they?
RS: Sure...now the
customer's becoming familiar with the car, they're getting used to it and
showing it off to their friends and family and neighbors. You take the car
home and the neighbors see it, and then you get a phone call telling you that
the financing's been declined, but that an alternate lender can do it by
bumping your payments $20 a month, the decision's gonna be easy. The customer
can't go home with their old car now...so they take the $20 per month
hit-that's commonplace. The car salesman wins.
BFD: Is it illegal?
RS: To a degree. Is it
morally correct? No. Is it illegal? It depends. Spot delivery means the
customer has signed a contract-and most of the car salesman get the consumer
to sign what's called a "Borrowed Car Agreement." That way they're
not legally-obligated by a contract when they "can't get them
approved."
BFD: So what does the
consumer actually sign? Don't they think they're signing a contract?
RS: What they actually
sign is a Purchase Order-stating that they agree to the price-and they don't
put them on a contract because they don't have them approved yet. So they put
them on the Purchase Order agreeing to the purchase price and have them
simultaneously sign the Borrowed Car Agreement so in case they can't get an
approval (for the financing) they can get the car back...or they can demand
that they pay that (new) amount, and you can go get your own financing-type
deal.
BFD: So what recourse
does a consumer have, if any?
RS: None! They agreed to
it when they signed the paperwork I just described, they've agreed to
everything.
BFD: So what should a
consumers do to protect themselves from every being put into that position?
RS: Don't take the new
car. And don't give up your current car (future trade-in). ALWAYS wait until
you get your financing approved before you take delivery. And always take a
copy of the contract with you.
BFD: Do they have to
give you a copy of the contract if you demand this before you leave?
RS: Yes. If you sign it
and they sign it, they have to give you a copy of the contract...that's a done
deal. (The only time it's not a done deal is if the dealer comes to
you-instead of you going to the dealership. But if you go to the dealership
and sign the paperwork and they give you a copy, it's a done deal...and if
they can't get it approved, that's their problem-they're on the hook.)
BFD: What happens if you
take delivery of the car after signing the Borrowed Car Agreement and then the
car salesman calls you a couple of days later and tells you that they can't
get you financed at the previously "agreed" to payment...so I tell
the salesman to stuff it? What if they tell me they've already gotten rid of
my trade-in? Do I believe them? What recourse do I have?
RS: That's happened in
the past...and usually what ends up happening is that the dealer ends up
having to bite the bullet for the trade. More than likely they don't get rid
of the car until the deal's cemented and done. They don't load it up on a
trailer and get rid of it-there's too many horror-stories about dealers having
to write a check to make up the differences.
BFD: What other tips do
you have for people going car shopping this weekend?
RS: Wash your car! It's
amazing to me that people will take their dirty car and go shopping-and their
cars are trashed out and dirty. This can make a difference of $500 to $1,000
on the trade-in allowance the customer ends up getting.
Ray's Rule? Spend $20
at the car wash and clean up your future trade-in; Armour-All the interior and
the tires and shine up those wheels-get it all spiffed up and looking good and
throw all of those old McDonald's wrapper in the back seat away...it's just
common-sense.
BFD: What else can I do
to increase the trade-in value of my vehicle?
RS: Go spend $150.
BFD: Huh?
RS: If you've got rounded
(worn) tires, go spend $150 on four new tires at Discount Tire. Spending $150
now will save them knocking off $500-or more-on your trade-in. Remember, when
a dealer takes in your trade, they're going to quote it as "average"
or "rough"...that's how they make their money, by selling used cars.
BFD: So anytime you give
'em a chance to beat you down on your trade, they're gonna take it?
RS: Sure...and you don't see
their "bid" (on the trade-in value being allowed) anyway. When you
walk in it's the start of 3-hours of wearing-you-down, passing you off from
this guy to this guy-and now "...I'll let you talk to my manager."
It's all of that crap that you have to go through and frankly, that's why
we're in business because we won't play those games and consumers come to us
to avoid having to be beaten up in the traditional car sales game.
BFD: Can you help
everyone if they wanna buy or lease a car?
RS: Sure...we help
professionals-or anyone else out there that wants to avoid spending hours and
hours getting beaten down by car salesmen. And women do not get treated well
at dealerships.
BFD: They're still
treating women like a buncha dumb bimbos?
RS: Yes...many still
call them "honey" and "sweetheart" and "babe"
and all that stuff and it's stupid because women make at least 60% of the
buying decisions anyway. You know: "Hey, I gotta check with the wife
first" is an extremely common phrase we hear...and it's beyond me why
they continue to treat female buyers with such disrespect. It's ridiculous
since 90% of these women are the ones paying the bills for the family anyway.
Final thoughts from Ben:
Don't believe everything you hear on the radio, folks. Those
ads are designed to get you in the door and then re-trade your deal at
the finish line. As hard as it might be to believe, sometimes
people will say whatever it takes to get you hooked--so don't bite on a price
or a payment they quote you, because it'll change and you'll be stuck.
If you're stuck in a vehicle right now, get
qualified help fast: Here's
the link...e-mail 'em direct from this page and tell 'em you're a Dover
Disciple in need of assistance.
Make the right choice the first time with a
company you can trust...as well as do business with for the rest of your car
buying [or leasing] days: Manufacturers
Auto Leasing
