Dealer Fraud

It is a good idea 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. If you want to know 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 any add-on fees and options. In case you do at least seek to try and reduce the cost of these items and services. One of these fees is 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 car’s windshield, but you can get this done much cheaper somewhere else.

Also 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.

Another form of common auto fraud is when dealers sell you cars that have been used, rental and fleet. According to the report of the U.S. Department Of Transportation (DOT) up to 50% of used, rental and fleet cars may be sold with illegally rolled-back odometers. Even in case when the odometer reading is correct, these cars may not have been well maintained and may likely have been operated under severe conditions by rental and lease drivers.