Dealer Fraud

Irrespective of where you go to find your automobile, be sure to stand fast and continue within your means. Do not allow anybody talk you into purchasing an automobile that you either can’t afford or are not really in love with. At the same time there are tons of other cars you could fall in love with. Be prepared to walk away from the vehicle if the deal doesn’t conform to the criteria you laid out earlier. Your power to negotiate a good deal will increase by leaps and bounds.

Maybe most importantly, acquire the vehicle identification number (VIN) which is generally found on the driver’s side dash and is visible through the windshield. When you have the VIN, you are able to discover a lot of data about your potential car.

Log on to www.carfax.com and enter in the VIN. Once you do this, you’ll have a complete account on the history of the car including all previous owners, whether or not it has been in an accident with damage, and much more information. Armed with this knowledge can make a difference in whether or not you purchase that particular car.

The salesperson can tell you it was a “program” car which can mean an assortment of different things; it could be a dealer car, a rental car, or an executive car among other things. The salesperson can promise that this specific car was a car used by executives from the rental car company to use and that when it arrived at a certain amount of miles, it was offered up for sale. However,  the carfax report can proove that salesperson lied to you.

The moral of the story is to do your research. If you’re not certain about a car purchase, walk away. Trust your gut instinct, this is the biggest mistake most people make. Look very cautiously at what you are going to purchase and make certain that what the seller is presenting the car as is completey accurate.

There are many types of auto insurance scams - some involving car insurance companies and others involving individuals trying to scam the system.

1. Being lowballed. This is where you do your research and hunt around for the best car insurance deal you can find. One company comes in way cheaper than the rest so you decide to go with them. Then 2 months later, once you’ve signed up and paid your money, you get a letter saying that there was a ‘company rate error’ and your premium is actually a couple of hundred dollars higher than the price you were quoted.

2. Buying from a Phony Agent. Just because an agent has a storefront doesn’t automatically mean that they are a real agent representing a real insurance company. A proof-of-insurance card can be forged just as easily as letterhead, business cards and signage can. One clue that things may not be as they seem is if the agent issues their own insurance. They can’t legitimately do that because they are ‘agents’ which means that they represent an insurance company and aren’t an auto insurance company in their own right.

3. Going through a middleman who represents a Phony Company. While the agent may seem legitimate, you need to do your homework on the company they claim to represent.

4. Alliance between an auto insurance company and repairer that benefits them but not the insurer. For example, a car insurance company may recommend a repairer that inflates the worth of the car and then charges a high amount to repair the car. In this instance, the car should probably be written off as totalled but the repairer doesn’t do this because it will lose business and the insurance company will lose on deductibles.

5. Car insurance quote in exchange for personal information. If you receive a phone call from an insurance agent offering a free quote on car insurance in return for you providing personal information, don’t be fooled. Providing information in this instance leaves you vulnerable to having your identity stolen. The only information required for a car insurance quote should be information about the car.

If you’re looking for balloon auto financing, chances are you either have dealt with a dealership recently or soon will. Make sure you’re not getting taken advantage of by reading up on the top dealership scams.
“Your credit disqualifies you for the best rates.” Dealers will almost always try to make your credit appear worse than it really is. They do this so they can bamboozle you into higher interest rates on financing. This is part of the reason why you would be better off securing third-party financing, such as balloon auto financing.
Lumping all transactions into one. Dealers love nothing more than to negotiate all three components of a car-buying transaction (financing, trade-in value, and the new vehicle price) at once. Lumping everything into one allows them to dangle one low number in front of you while disguising the fact that they are simultaneously inflating (or deflating, in the case of trade-in value) the other numbers. Negotiate each of these transactions separately or get balloon auto financing from a more trustworthy third party.
The MSRP myth. You will always only see the MSRP of the car on the vehicle window. This number is basically meaningless because it is nothing more than an inflated suggestion. What you should be concerned about is the invoice price, or what the dealer paid for the car. Find out this number and work your way up.
The 0% financing illusion. You will sometimes have the option of 0% financing or a cash rebate. Always choose the cash rebate. The hidden costs of 0% financing are significant because the dealer has to compensate for the profit lost in the financing deal. Often, 0% financing means you have to pay sticker price for the car, which is not worth it. You’re better off with independent balloon auto financing.
“I’m losing money on this deal.” You will hear this line when the dealer doesn’t want to go any lower on the price of the car, and you should never believe it. If they try to substantiate this claim at all, the figures they show you to “prove” they are losing money on the deal are not accurate. Dealers get their profit from all kinds of sources, including manufacturer holdbacks or cash incentives…neither of which they will tell you about.

Often salespeople will use a code to represent numbers. They do this so they can hide their numbers they are using from someone who does not know this code. For example, A=1, B=2, etc., and J=0. The salesperson will often even show you this when calculating things for you. So if you see “CJJJ” next to your trade-in you are getting $3,000 for it. If you know the code you have the advantage not them.

Dealerships will do everything possible to give you the impression that you must buy your vehicle today or you will lose it. They know their best chance to close the deal is when you are at the dealership that day.

Dealerships will also often say they have a buyer for your trade-in. It is great to think that the dealer already has a buyer for your trade-in, and as a result of this they will pay more for your vehicle. It is just another method to get you to trade-in immediately and purchase a vehicle today.

One way salespeople will get a vehicle into your monthly budget is to “stretch the term.” You tell the salesperson you can afford $200 a month. Basically, they will extend the length of the contract as long as possible to fit it in your $200-a-month budget.

The less you say in front of the salesperson the better. This is true because they will use anything you mention in their favor and against you in order to get you to purchase a vehicle as soon as possible and spend as much as possible.

When looking over your trade-in a salesperson might say, “We would give you more for your vehicle, but it needs X and that will cost $250, and Y will costs $200.” They will find anything that might be wrong in order to decrease the trade-in value of your vehicle.

Another dealer trick used to manipulate you is by saying, “Well, Mr. Smith maybe this vehicle is too expensive for you. Let’s look at a cheaper vehicle.” They do this to bring out your ego so you want to prove that you can afford the better vehicle and that you can afford to purchase it today.

Yet another method salespeople use is to say, “Mrs. Smith, I have another client interested in this vehicle as well, and this is the last one.” This is done to have you make a decision quickly because there are no other vehicles available. As you know there is another vehicle like that one somewhere in the world for you to purchase.

One other line a salesperson might use is, “You see the manufacturer already discounted the price right here on the window sticker so I do not have any room to move.” This is not true and therefore it is essential for you to haggle, otherwise you will pay too much for the vehicle and then pay interest on that higher price.

Deposit scam takes place when the finance manager insists on a deposit before you have signed the purchase contract.

You will be told that the finance manager has to bring in a copy of the contract offer to his boss and he needs a deposit from you just to ensure that the boss will sign off on it.

It’s just a dealer trick to make sure that you are “serious” about getting the car.

Avoid this car fraud by refusing to give a deposit before the contract is finished a signed by both parties.

Dealers run this scam so that they can keep you there. Tell them that the fact that you made an offer on the car shows that you are serious.

Dealerships depend on a buyer’s ignorance so that they can mark up your prices. Holdback is money paid to the dealer for about 2-3% of MSRP.

It is money that is given to the dealer from the factory when the car is sold. This is profit for the dealer for buying the car.

This scam occures when dealers will tell you that it costs them money so that they can charge you for it later. Basically, they can get the money twice.

Avoid this delaer trick by letting the dealer know that you know better and will not pay it.

This dealer fraud happens when the dealer tells you that they will beat anyone else’s prices or give you $500.

They simply ask you to get the price from another dealer and they’ll beat it. The hard part is that other dealers will not just hand over their information for you to take to someone else.

This deal is almost impossible to get because most dealers sell different makes and models anyway.

Avoid this scam by not buying into it in the first place.

Purchasing a new car from the dealership leaves you open to dealership scams, but what about when you need to refinance your car loan?

Many of the scams are the same as you will encounter when buying a car. Here are the best tips for avoiding any of the refinance scams that dealerships force you through.

• Get your own credit score and bring it with you to the dealership
• Don’t pay a cash deposit for your financing loan because if the deal goes bad, you can’t get your deposit back
• Don’t apply for a car loan until you have been employed for at least 6 months if you are a recent college graduate
• Apply for your loan online so you can avoid getting ripped off
• Learn to fix your credit before you apply for a loan. Get your credit score to at least 680 first.
  Pay off your credit card debts before you look for a new car
• If you have recently moved wait 6 months before applying for a loan. You addresses are always verified. If you move a lot, they will not trust that they can keep track of your whereabouts should you make late payments etc.
• Having been approved for a loan in the past helps
• Don’t get a co-signer for your loan because often times you will find that the deal is solely in the other person’s name.

This is one of the  scams most commonly used  by dealers. They will try to convince the buyer that they can provide the lowest possible price for the car thereby prompting the buyer to start negotiations with the dealer.

The salesman will probably tell you that you can get the car that you want for a lesser amount but when you are about to enter negotiations, it turns out that you were not promised a lower price after all. In the end, it is just an empty promise.

The dance begins on the car lot where the salesman or pack of salesman jumps you as soon as you get out of your car.  Anyway, when they approach you it usually starts like this. Hi, I’m Johnny ShowroomShark, are you looking for a car or truck today?” You answer, they begin to lead you around and show you what they want to show you. One way to take control immediately and put them off balance is to say “I just want to look around by myself” and take control. This is a big issue with car dealer management; they ALWAYS want to be in control.

Next, assuming you find something you like they will now have you come inside to see what kind of price they can get you, if you balk they may say well just come in and let me get you one of my cards then. What will happen in that case is that you will then be introduced to a closer who will do everything possible to get you to sit down and talk about making a deal.

If you are interested in negotiating on a car, here are some other things to watch out for. One dealer trick is to ask for your driver’s license so they can make a copy. Don’t give it to them; they will use this as leverage when you are getting ready to leave. Beginning the negotiation process watch out for trick closing questions, the most popular of these is a variation of “If I could would you?”. It goes like this, “If I can get $1,000 off the price will you buy today?” or “If I can get your payments under $300 per month can I earn your business today?” All of these are psychological closing questions designed to get you to commit to a certain figure. One way to counter this is to come back at him with questions such as, “If I am willing to buy today will you sell me the car for $1,000 under invoice?” If you have educated yourself on cost, rebates, dealer holdback, etc., you can lay all this on him too. Most salespeople will be completely overwhelmed and dumbfounded that you actually know the cost of the car better than they do!

Another car dealer trick is to hit you with astronomical payments and down payments. For example, they may give you on a $20,000 car a down payment of $5,000 and then $450 per month when it should be maybe $2,000 down and $350 per month. One method you should watch out for is called the “4 square”. It works like this; the salesperson will have a piece of paper divided into four equal parts. In the top left will be the retail price of the vehicle, in the upper right may be the down payment, the lower left for your trade, and the bottom right the monthly payment figure. This system has been used for years to make profit in the car business. Again, the best way to counter this is to take control yourself and don’t play their game. If you want the car you tell them what you will do and if they don’t meet your demand get up and leave.