Dealer Fraud

One of the most common forms of auto fraud is the practice of misrepresenting the true condition of the vehicle. Dealers often tell buyers, “The car is in excellent condition.” Unfortunately, they are not always telling the truth. Do not be fooled just because a vehicle appears cosmetically clean and mechanically sound. If the vehicle you are interested in comes without a warranty or “as is,” you should be extra cautious.

Vehicles that have been wrecked, declared a total loss by an insurance company, or rebuilt have what is called a salvage title. The title of the vehicle (and registration) must disclose that the vehicle is a salvage. It is unlawful to sell a salvaged vehicle without telling the buyer. The price of a salvaged vehicle is generally much less than an equivalent non-salvaged vehicle. Salvaged vehicles may have major safety defects depending on how well it was rebuilt. It is usually not very difficult to find out whether or not a vehicle is a salvage.

Other vehicles may have been wrecked and rebuilt, but were not declared a total loss by an insurance company. These types of vehicles are much harder to identify because they do not carry the salvage title.

To avoid this practice, you should have the vehicle you are interested in inspected by a mechanic and/or an auto body repairperson before you buy it. You should also get a vehicle history report. You can get summary title reports from service providers such as: Carfax (www.carfax.com), AutoCheck (www.autocheck.com), and CarFraud.com (www.carfraud.com). Look for evidence of a salvage history. For example, if an insurance company held title to the vehicle, it could mean that it was wrecked and declared a total loss. In more complicated cases a complete title history may be obtained from the DMV.

If you suspect that you have been a victim of this type of fraud, you may wish to consult with an attorney who specializes in auto fraud.

Now it really gets interesting. Now the salesman starts on you. First they’ll take the payment approach to selling you. That means they’ll avoid the price and keep the sales conversation focused on how much monthly payment you can afford.
It used to be people bought cars based on price, but then we all started living on budgets and car dealers quickly learned that fact. Then they learned that if they could get you to stretch your budget “just a little more”, then they could pump up the price and that meant more profit for them.
Expect the salesman to start with a monthly payment that is two or three times what you told him you could afford. They don’t expect it, but figure the shock will get you used to the idea of having to pay more than you thought you would when you walked onto the lot (never mind reality). They usually figure that as your monthly payment goes up, the loan length goes down, but watch out for the guy who does it both ways.
Part of all of this is “the ether.” “Putting the customer in the ether” means getting the customer excited (or distracted) so they do not realize what is happening to them in the deal. That’s when the real profit can be made.

Tip: The first step to buying a car is making your budget. Know how much monthly payment you can really afford before you ever go car shopping. And then, aim to spend at least 10% less than your budgeted amount. That way you still have some “room” left over. Never go above the number … no matter what. The more you stick to you number, the better off you will be! Don’t buy more of a vehicle than you can afford. If you do, the next time you go shopping you can be sure you’ll hear the salesperson say you’ve got negative equity (whether you really do or not).
And when you make your deal, before you sign the contract, make sure that everything (absolutely everything) has been written down on the contract. Remember: oral promises aren’t worth the paper they are written on.
Also before you sign the contract, make sure there’s nothing in it about “arbitration” or a “jury waiver” either. If you see anything like that, just take that ink pen and scratch it out on every single copy! An honest car dealer is not afraid of a jury made up of ordinary people. So if you see an arbitration clause or jury waiver in the contract, you know what kind of car dealer you are dealing with … don’t sign the contract at all! You don’t have to give up your legal rights just to buy a motor vehicle.