Dealer Fraud

Consider never financing a vehicle through the dealership because when you see the finance manager whatever payments, interest rate, etc. you had may get tossed out and the dealer fraud may begin, like “stuffing” your contract with extras like unnecessary warranties, costly etching, glazing, environmental packages, etc., and the dealer may try adding it to your contract! Of course, these extras are where the dealership makes lots of profit.

Finance managers may ask you or even ask you to ask your employer to lie about your income. If you agree you could possibly end up getting charged with a felony, not the dealer, for knowingly defrauding the lender! New car dealerships have even been accused by former employees of forging car buyers‘ signatures to lenders!

Some car dealers may possibly try and do anything to get your monthly payments as high as possible. Salespeople may too often misquote and inflate monthly payments. For example, they may say a $400 a month car payment for 5 years is a 9% interest rate, when, in fact, it is not and probably is higher than 9%! You would like to think you could trust the car dealers finance manager who computes the interest rate and monthly payments correctly but do not count on it. Moreover, make sure you see everything in writing, including the down payment, the correct amount of money you are borrowing and so forth. However, still the safest thing to do maybe is get an independent third party, like your bank, to correctly calculate your car dealer’s proposal before you sign on the dotted line.

Furthermore, beware of overpriced, costly options. They may significantly inflate your monthly car payments. If a salesperson says a particular option if free, odds are you cannot believe it.

Large volume car dealers claim they save you more money compared to other dealers because they sell more cars than their competitors. They supposedly get cars at a lower cost then pass the savings on to you, the customer. However, the so-called large volume dealers may have larger overhead expenses including higher rent and marketing expenses, higher phone bills, a larger payroll for more employees and so on compared to their smaller volume competitors.

Consequently, the so-called large volume dealer may not be able to sell you a car at a lower cost afterall. Moreover, if a lower cost car is sold to you by a dealer that promotes itself as a large volume dealer you may end up getting charged more once you see the dealer’s finance manager. It is this manager whose job is to get every time they can out of you after you agree on a car’s price and agree to buy a car today!

Off the record, many car dealers admit their advertisements may be essentially nothing more than “come-ons” just to try and get you on the car lot. Your knowledge of how car deals are done and your negotiating skills can make or break any deal no matter where you shop for a new or used car.

The finance manager will come across as the friendliest guy or gal on the car lot but watch out. Some have been accused of double-charging you for things you have already paid for like insurance coverage and other extras. Remember, it is their job to get your monthly payment as high as your credit limit can possibly handle then the finance manager will ask you to sign on the dotted line. Once you sign it is too late to do much about it either even in a court of law! Always be suspicious if you agree on a monthly payment plan then return later to sign-off on the deal and find out your monthly payment cost has significantly increased due to some real or imagined problem with your credit! Always be willing to walk away from a deal.

Car dealers may promise that with very few, if any, dollars can allow you to drive away in a new car even if you have bad credit or no credit. However, when you get on the car lot and “take the bait” the salesperson may tell you it will cost $1000 to drive away in a new car.

The “churn” begins when you may not qualify for a loan amount on the car you want so the car dealer may suggest that you double the amount of income you say you earn when filling out the loan application! This is illegal if you sign off on it but if you do sign the deal it is not the car dealer that may end up getting in trouble with the law, it is you!

Salespeople may not mind selling cars to those who cannot afford them because even if the cars get re-possessed for non-payment it is the car buyer that gets hit with all kinds of “repo-fees” at up to 40% interest! So a $500 car can actually end up costing you thousands!

Car dealers have been known to be able to re-sell and repossess the same car numerous times, thus earning tens of thousands of dollars on just one car!

How to avoid this scam: You should never buy a car that will cost you more than 20% of your total income. Car dealers have been accused of suggesting that you can spend up to 40% to 60% of your total income on a car! What do they care if you cannot really afford the payments?

In addition, always consider getting gap liability insurance especially if you lease a vehicle even though it may cost you an extra $100 to $200 a year for the coverage because if the vehicle gets stolen or totaled in an accident, you still have to pay-off what you owe on the car loan plus whatever the vehicle would have been worth at the end of the lease before it was stolen or totaled.

Beware of car  dealers who say, “You have to sign an arbitration clause!” This means you must agree to arbitrate any future problem you may have with the dealer that warrants legal action. This clause may also be hidden in fine print on the back of the contract you are asked to sign but no one may ever even discuss it with you.

First of all the arbitrator is supposed to be neutral in any disputes with the car dealer but never always count on this! Simply strike any arbitration clause from anything you sign and if the dealer says the clause is mandatory consider not even doing business with that particular dealer and simply walk away!

Beware of dealers who say “A credit check is mandatory” even if you plan on getting financing elsewhere. Never fall for this because what you may not know is the more times your credit is checked out by anyone it potentially lowers your credit score! If you plan to pay cash or arrange for financing elsewhere always tell a dealer upfront that you do not authorize them to run a credit check on you, do not give them your social security number and do not let dealership “make a copy” of your drivers license before you take the test drive. Of course, you will have to show your drivers license but do not let it out of your sight. Also, consider before signing any papers that the credit-check authorization clause be stricken from the document and then make sure it was done before signing it.

Used cars may be wrecked, re-built and re-sold legally to unsuspecting buyers! A clean title and bill of health can even be acquired by the used car seller and the used car buyer may never know the car had been wrecked and/or “totaled” in an accident!

The only way to ever know a car’s true condition is to have a good independent mechanic check it out before you buy.

A flood car is one that has been caught in a flood and underwater then salvaged and cleaned up for re-sale to unsuspecting car buyers and even used car dealers! Consequently, you cannot even trust that the title held by the used car dealer is legitimate, even though, by law, the title of a flood car is supposed to state that the car has been under water.

In essence, you cannot trust what the used car dealer knows so you must inspect used vehicles thoroughly yourself or have a good mechanic do it. Check under the hood for corrosion and look for water lines indicating how high the water level may have reached during a flood. Also, check under the dashboard, seats and floor mats for signs of dirt and/or sand.

Car buying services may advertise they search nationwide to find you the best price available on a vehicle, then proceed to charge you only a small finder’s fee, but always consider comparing the broker’s price to local dealers in your area.

A broker claims to save you money but the most common complaint against brokers is they may help find the best price but may not get you the best deal, meaning brokers may try and add on a service fee on top of the finder’s fee. Hidden costs can dramatically drive up the cost of your best price, so much so that now you may not be getting your best deal.

More importantly, if using an auto broker make sure the contract comes from the dealership the vehicle is purchased from as well as all car payments should go directly to the same car dealership. Never make payments to or through the car buying service broker. Illegitimate brokers or those all of a sudden having financial problems could possibly take your car payments and run!

Beware of dealers who tack on dubious fees like “protection packages” or “dealer prep” especially if they did not even discuss them with you when negotiating the vehicle price! Too often these fees are for things you may not really need like etching the VIN (vehicle identification number) on the car window, rust proofing and fabric protection. The dealer may only pay $90 for all these services added together but will ask you to pay $1000 or more! Battery and tire protection you do not need because they are already built-in to your existing new car warranty and “dealer prep” is nothing more than them getting the car gased up and cleaned up so you can drive it off the lot. The do-it-yourself VIN etching kit costs just $25. Simply refuse to pay for anything that was not originally discussed when determining the price of the vehicle and get used to saying, “I’m not paying for that” and threaten to walk out if necessary!

Too many new car dealers selling so-called “certified” used cars say that they have no way of making absolutely sure that the used cars they sell have not be involved in major collisions and have been re-built to be re-sold to unsuspecting car buyers, who are not made aware the cars were once wrecked! However, this is hardly believable because if independent car mechanics can easily spot re-built wrecks then so can car dealers!
Only around half of the motor vehicle departments in all 50 states in United States even supply local governments with enough information to determine if a used car has been completely wrecked then re-built for re-sale to the public! This makes the so-called “used car search and information” internet services or independent services being sold to consumers for a fee not very practical and essentially unable to really know if a used car has ever been wrecked or not. Consequently, hundreds of thousands of cars that get “totaled”, or completely wrecked beyond repair, get re-built for re-sale and end up being bought and driven by unsuspecting car buyers!
Too often these cars end up getting involved in collisions again that may kill the driver and passengers because the re-built wrecks were not re-built for safety but were re-built just to “look” good to prospective car buyers! Re-built wrecks may not even have proper functioning airbags and other safety equipment put back into them and few, if any, proper repairs may be made to ensure the re-built wrecks are even safe to drive again!
Your only hope is to have a competent, independent mechanic that does not work for the car dealer inspect the used car you want to buy before you buy it to determine if the car has been wrecked then re-built. Once you buy the car from the dealer it may be too late to get customer satisfaction even if your re-built wreck case ends up in a court of law!