Dealer Fraud

Buying a new or used car is not always that easy. You should be aware of scam dealers who are trying to get that deal from you no matter how much it costs. If you are not careful enough you may end up with a piece of junk. It is one of the most common dealer tricks to convince you to buy the car today, especially if he is trying to force you into buying a lemon or a car previously involved in an accident. He may trick you by telling that you better sign papers right away as they hold the car just for you. These types of remarks are some of the oldest car dealer tricks used.

The scam dealer will probably add a lot of fee’s in order to get you to pay more. He will tell you that it is mandatory. However this is just another scam to get a higher down payment or add more to your loan agreement. Remember, that there are dealerships out there that use scam tactics as a means to sell vehicles but.

According to some statistics 2.5 million cars are wrecked annually. One million of these vehicles end up back on the road again. Reading this article you can find several very useful tips on how to buy a used car and avoid most common dealer frauds.
Always use Vehicle History Reports to negotiate a lower price, check salvaged, wrecked and odometer fraud cars. Print out questions for you to ask the dealer. If you are buying a used car, make sure to get an AutoCheck Vehicle History Report on the Vehicle Identification Number (VIN). Also have a mechanic inspect the car on a lift. Your mechanic can put the car on a lift and instantly spot hidden frame damage, corrosion, previous crash damage, and fluid leaks. However you should know that your mechanic can’t tell you if your car title has been branded as a flooded vehicle, salvaged, rebuilt, stolen, junked, or passed through a salvage auction.

Car-leasing is considered to be  more attractive than buying. However, you should be aware that leasing regulation does not require as much disclosure as buying a vehicle. This has given rise to many car leasing scams that makes customer  believe they are into a good deal when, in fact, that’s not true. Here are some of the most common scams and how to avoid them.

1. Artificially low interest rates
Some dealers use to quote a lower interest rate. However, in reality it’s much higher. Dealers do this by either purposefully quoting the money factor as the interest rate or calculating the loan without amortizing some closing fees, like the security deposit, into the loan lease. To avoid this scam look out for any fees not factored into the calculation. If you are not satisfied, do not enter into the lease agreement.

2. Terminate your lease early for a low penalty
In fact, this is an all-time leasing scam. The dealer will tell you that if you want to terminate your lease you only pay an early termination fee of $300. What he is quoting is only the small administrative penalty of early termination, there is a much stiffer penalty called early termination fee and this runs into thousands of dollars.
Do not confuse the early termination administrative penalty with the termination fee. Read the small print carefully and know exactly how much you will get charged should you terminate your lease before its scheduled end.

3. Pay for an extended warranty you don’t need
This is another dealer trick used to profit at your expense. The dealer slides an extended-warranty into the deal or he tricks you into buying a 36-month warranty on a 24-month lease.
You do not have to pay extra money for a warranty already built into your payments or for one that goes well beyond your lease term.

Car dealer fraud has become very common recently. Here are some ways to avoid becoming a victim of car dealer fraud, look out for the following auto financing scams.

Yoyo scam

First, the dealer will let you take the car home as soon as possible  promising to take care of the financing. However, a few days later the dealer will contact you and tell you that there was a problem with your financing plan. He will tell you to set up a new financing plan through him that, for sure, will be at a higher cost.
Be aware of this dealer trick and be prepared to avoid it when you detect it. If you have a bad credit score report, don’t finance your vehicle by the dealer and make arrangements for your own financing. You should never drive the car back to your home immediately. Wait for at least a day  to make sure that the processing of your financing plan has already been completed and to make sure that the dealer cannot use this scam on you.

Preparation fees

The dealer will often add an additional preparation fee to your bill  just to conduct a test drive, replace fuses, or take the car’s plastic cover off. And this will increase your vehicle price by at least $500! Some dealers automatically add it to the buyer’s order to make it look as mandatory. The best way to avoid this scam is to ask the dealer to classify it as credit on the following line or simply walk away from the dealership.

Window etching trick

Window etching is a very common scam. The dealer will offer to etch the VIN number of your car onto the window of the car for a price. The price of this service basically ranges from  $300 to  $1,000. Some buyers think that they did a good job by being able to talk down the price to a few hundred dollars, but unfortunately for them, a few hundred dollars is still a good amount of money. The best way to avoid this kind of scam is for you to buy an etching kit that you can do on your own. This is available in most auto shops and costs around $20.

Warranty extension

Although this type of scam is very old, it is still being used and there are many who fall for this dealer trick. What happens in this kind of scam is that when you make a loan for the car, the dealer will tell you that you are required to purchase an extended warranty because it is one of the conditions of the bank. There is a simple way of avoiding this scam. Ask the dealer to specify clearly in writing that the extended warranty is required for the loan to be approved.

Market adjustment

The dealer will convince you that the vehicle you want is very popular. In order to sell you the vehicle, they will do some “market adjustments” amounting to a few thousand dollars. This is usually indicated by a tag near the MSRP tag set by the manufacturer. Even if the car you want is very popular and is very much in demand, if it is in stock you should not be tempted because getting a “popular” car is not worth it if you have to pay a few thousand dollars more.

These are some of the most common auto financing scams used by some car dealers. Always keep these in mind if you are going to buy a car.