Jan 08 2009
Auto Financing Scams
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.
