Dealer Fraud

The well-informed buyer is the wisest, while customers who haven’t done any research frequently get confused by the seemingly endless stream of complex information that comes with buying a car. Car dealers often work around a method which bounces profit potential from one transaction to another. If a customer is set on getting a good deal on their trade-in, a car dealer may then choose to concentrate on inflating monthly payments or the down-payment.

Car dealers are also not legally obliged to offer you the lowest interest rate you qualify for. Once a rep has run your details on the credit check they’ll know your income, housing status and if or when you were late paying your rent or mortgage. Some new and used car dealerships obtain this information when the customer is taking a test drive, and the car dealer is already adding up just what price they think you’ll pay.

And if you sign up for a higher rate than the car dealership pays back for the car, you’ve just gifted them some more. Often this difference lies in fractions of percents on your rate. Find out which rate you qualify for first.

Royce says a confused or inattentive buyer can also lead to “slamming.” In this case, a car dealer may take charge and hurry them through every step: the test drive, into the office, the write-up, a quick negotiation, sign the papers and drive home. And then, a few days later, enter the infamous “buyer’s remorse.” Royce says that, unfortunately, this is more common than you might think.

But you, the smart buyer, have negotiated all these obstacles and just when you think you’re winning in negotiations, you’re introduced to a secondary sales rep that you are told is the car dealership manager. Surprise, he’s just another sales buddy brought in when closure on the deal appeared to be slipping. Often the sales team will split commission in this scenario. And they both know that additional options are a car dealer’s bread-and-butter, though the practice of “back-ending” a deal, or adding additional charges to option lists without the customer’s knowledge, is illegal in many states.

Here are all important questions to ask before you purchase an extended auto warranty.

1. Are you a Member of the BBB and in good standing?
2. Do you offer financing?
3. Can I choose the repair facility?
4. Do you pay the repair facility directly?
5. Where can I take my car for repairs? Your dealership, or any ASE Certified repair facility you choose.
6. Depending on the age and mileage of a used car, do you offer bumper to bumper coverage for vehicles out of manufacturer’s warranty?
7. Do you include Wear & Tear?
8. Is overheating covered?
9. Do you offer a per visit deductible?
10. Do you offer a Zero Deductible option?
11. Do you offer Road Hazard protection?
12. Do you offer Car Rental reimbursement with your extended auto warranty?
13. Is the agreement transferable / renewable?
14. Are High Mileage plans available for up to 102,000 miles?
15. Are claims handled by the same company that sells car warranties?

Buying extended car warranties for your new or used car can be confusing and expensive.

Yet they are so needed because if you don’t have an extended warranty after your factory warranty ends, then you are on your own and with the high cost of repairs, an extended auto warranty can pay for itself even the first time you use it.

But if you choose to buy an extended auto warranty from your car dealer, which is what most car buyers do, then you can expect an extremely high pressure and unpleasant experience in the finance department.

The reason is because extended car warranties are one of the most profitable things that a car dealer offers.

The sale of them is handled in the car dealer’s finance department and the pressure to buy their extended auto warranty can be intense.

So what should you do? There is no doubt that car warranties are needed and even though car dealers will try to make you feel like an idiot for turning down their expensive warranty - there is an alternative.

Make sure you ask for the drive away price, which is the final cost to you including all fees, taxes and options. However, there are other ways to get the best deals on a new car. For example, call the car manufacturer directly and ask about cash back programs because local dealers may be unaware of them. Or if you are in college or are a recent graduate within the past few years, you may qualify for a manufacturers rebate up to $500. In addition, ask the manufacturer for a factory-to-consumer direct incentive. Tell the automaker the type of car you want and they may offer you a cash rebate or low financing. However, check around concerning financing because you may be able to find a lower interest rate from another source entirely, like from a credit union. Or better yet, ask your local car dealer about a customer loyalty rebate which can be worth a few hundred dollars if you already own or lease a car from a particular dealer you are seeking to buy a new car from. Also, if you plan on having future repairs or general services performed at the dealership, let the dealer know this upfront. It may warrant a few hundred dollar rebate since dealers make much of their profits on parts and repair services.

In addition, dealership salespeople may have a secret code you may want to break! The code tries to hide the real value of the car you are trading in and/or the profit the dealer is making on your particular car deal. The code is not standardized throughout the industry, so you may have to put your thinking cap on. Here is how it may work. Look for handwritten notes at the top of the paperwork you are asked to fill out. If you see alphabet letters scribbled on your trade-in appraisal, like for example, FJJJ, this may mean the dealer thinks your car is worth $6000. The F stands for the 6th letter in the alphabet and the Js stand for zeros, which equals $6000. The idea here is if you see notations like this, you may safely assume the dealer thinks your trade-in is worth something different from what is being offered to you. Be subtle, but this is your cue to try and get more for your trade-in. Always get your trade-in appraisal in writing. This keeps the dealer from offering you much less for it when your new car arrives if the new car you want is not on the lot when you make your final deal with the dealer.

Furthermore, consider ordering your new car direct from the factory instead going to a dealership car lot. This way you can possibly avoid costly options that too many dealership cars come loaded with. A dealership may likely accept a small profit from a factory order because it is a quick and easy sale, plus the dealer then does not have to pay the automaker for storing the new car on the dealers lot!

However, the flip side to this is if the dealer thinks you may opt to order from the factory, he may be willing to significantly cut the price of the cars on the lot more so than usual. Also, any rebates and incentives you get deducted from the price of a new car, always make sure they do not expire before you take delivery!

Try to never pay more than $500 over what a new domestic car may cost a dealer and not over $1500 for an import. Negotiate up from the dead cost, which is what the dealer pays the car manufacturer after factoring in any rebates and incentives the dealer may get from the manufacturer. To discover the dead cost, you will have to determine the dealer invoice, price incentives, and holdbacks which are the dealers manufacturer rebates for selling cars.

Try and never pay for, or at least seek to try and reduce the cost of add-on fees and options like a dealer advertising fund fee which is what the dealer pays to participate in his automotive groups advertising association. Also look for the fee called the wholesale financial reserve. This is the fee the dealer pays the manufacturer each month until the car is sold off the lot. Another fee is for window etching. This is when the car dealer etches the vehicle identification number (VIN) on the cars windshield, but this can be done much cheaper by most any reputable garage mechanic.

Maybe even consider looking for a quota car which is the car a dealer needs to sell to make its quota for monthly sales in order to get a bonus offered by the manufacturer. In this case a dealer may sell a quota car at a loss or for no profit! It may be best to ask about a quota car around the middle to end of the month when sales quotas are more of a concern for the dealer. Dealership sales managers may be the only ones to ask concerning quota cars because sales people may not even be aware of quota levels at the dealership.

Up to 50% of used, rental and fleet cars may be sold with illegally rolled-back odometers according to the U.S. Department Of Transportation (DOT). Of course, even if the odometer is correct, these cars may not have been well maintained and may likely have been operated under severe conditions by rental and lease drivers.

I know that it is not an uncommon practice for people to sell their car on consignment at a local car dealership. In theory this is a win/win situation. The car dealer makes a commission for providing a sales team along with a location for the sale to occur on, and the seller gets a chance to receive a better price for their car.

Well, what happens when the car dealer is facing tough economic times? The seller, you, often gets stiffed. I am hearing stories more and more about innocent people who put their car on a dealer’s lot to be sold on consignment and when the car is sold the owner never gets paid. In my opinion, it is a bad idea to consider selling your car on a dealer’s lot on consignment. Simply put, the chance of losing your money or having to go to court to get your money is not worth the risk!

The vehicle price listed on the window is known as the MSRP, or manufacturer’s suggested retail price. Who cares? Do you really have to know all this? Not really! Just know the invoice price and work the MSRP from the bottom.

Visit some websites to get updated about the actual selling prices of cars. This is important because if you know the actual selling price of the car, you could eliminate any possibility of the dealer cheating on you.

Sticker price is the metric in the sales of some popular cars. One of the popular cars, the Honda Minivan is sold at the sticker price.

The only way to buy a used car cheap is to find out what the used cars value is first.

You won’t know if that used car you’re interested in buying is a good deal unless you know the price range that it should fall in.

If you attempt to buy a car without doing some research first it will result in you wasting your time and spending a lot more money, plus you could end up with a car that turns out to be a total piece of junk.

When you want to buy a used car you will see that some dealers might list an unrealistically high price.

It can just as easily go the other way too because some prices will be unusually low.

Obviously those are the ones you want to be on the lookout for, but the only way to know that the car you’re interested in is a good deal is to look at ads for lots of cars just like it.

So take all these prices into consideration knowing that some prices can throw off the whole average.

If you see the model you like, but its not the color you want, then you still need to pay attention to what the car is selling for. Quickly take notes on the year, model, mileage, equipment and prices.

Prices will vary by location too. Its important to spend some time looking at lots of ads before you buy a used car and from the area you live.

If you want to buy a used car that is rare, then widen your search to include the year before and after the car you’re interested in. Just make a note of that and take that into consideration when you’re figuring the used cars value.

After doing this you will start to get a really good feel for what price range this type of car should fall into. Then when you find a car you like, you’ll know right away whether its a good deal or not and that is the only way to buy a used car cheap!

You’re searching online for a used car and come across a car for sale that is a very good price, you contact the seller and they tell you the car is a fair distance away but they will pay for the cost to ship it to you, they ask you to pay via a wire service they use many times and you never see the money dealer or the cars for sale again.

The scam is clever here because the money wire website they have you use looks just like one you would expect to see, sometimes they look better than the real money wire websites they use the popular brand names on their site to make it look official and make a minor change to the web address which normally goes unnoticed. The money is wired and picked up in minutes never to be seen again. The car pictures and details are normally copied from local dealers websites and the scam artist poses as one of the dealers.

How to Avoid this Scam: The first warning signal is them offering to ship the car for free, not only I the car cheaper than normal but they are willing to foot the bill for shipping which is normally many hundreds for long distances. Never use someone else’s recommendation and never use a money wire service for online payments as they are just not secure enough.