Dealer Fraud

Credit score scam is the most abused scam. This is where the car dealership tells you that your credit score is lower then what it actually is in order to charge you a higher finance rate on your car loan. No one is immune to this scam because the dealership doesn’t care if you have good or bad credit when they attempt to con you. To get a solution out of this the only best way to deal with this greediness is to bring a copy of your credit score with you when you go looking to buy a new car.

Another favorite scam is the forced warranty scam where you will be insisted by the auto dealership that in order to qualify for the car loan you will need to purchase a $2000 2 or 3 year warranty.

The dealer markup fee is another phony fee that is made up just to pad the car dealership’s profit margin. This is an unnecessary fee that the dealer charges for no reason other than greed. This fee can be seen on the orange sticker marked on the manufacturer’s suggested retail price (MSRP).

These are just a few of the many scams that can surface from time to time when you are attempting to buy a new car. Although these practices to go on there are many trustworthy car dealerships that can and will sale you a car for the right amount of money allowing you to purchase the car without getting ripped off and still allow the dealership the opportunity to make the compensation they deserve for their efforts. The trick is to find that dealership.

When you purchase a new automobile it is somehow hard enough without having to deal with the sales pressure from a car salesman. It’s no big secret that almost every car dealership can be talked down on the initial price they want for a car. The important point is to know what scams to look out for in order to maximize your hard earned dollar. A few sales tactics are detailed in this article that you may want to be on the lookout for the next time you purchase a new automobile.

The first money wasting scam deals with checking the vehicle’s VIN# on the window. In some cases you will be made to pay for the added features by the dealership. Please don’t fall for this trick. No lender will require you to pay for any extra options that you don’t require. To be honest the only thing they care about is whether or not your payments are on time.

Be on the look out for the phrase “subject to loan approval”. Almost every car loan will have this phrase in it and trust me when I say that some dealerships will try and exploit you out of more money using this phrase as the reason why. This scam is usually offered to consumers that may have bad credit so if your credit score is good you shouldn’t have to worry about being taken advantage of by the dealership. The bad news is for those that are taken advantage of it usually means upwards of $1000 more in finance fees and an additional $50 a month added to your car payment. One way to avoid this scam is to finance the car through your own bank or credit union.

•Buyers of any used vehicle have the responsibility of detecting scams before they end up being scammed.

• Stock to the age-old saying, “If it sounds too good to be true, it probably is.” In the case of a used car, if the price seems too good for what you are getting, you could be facing scammed.

• You better check that the name on the driver license of the seller is consistent and corresponds with that of the title of the car. In case you are purchasing a car on the internet, the seller should provide clear scanned images of both documents. If the names do not match, do NOT buy the car!

• The inspection of the car should be done by the trusted mechanic. A good car mechanic is like a house inspector. He can site problems with the product that people in general would normally not detect.

• Pay attention to vehicle history reports. There are services all over the web that you can run a vehicle history report. These reports will identify any vehicles that have been salvaged, been in major accidents, rolled-back odometers, etc. Title transfers are also very important. If you see there have been more than 1 or 2 title transfers in the past couple years, avoid this car.

• A car from a reputable car dealer is a must. Detecting a reputable car dealer can be troublesome, but they do exist. Experienced Dealers who have certified used car programs are a good bet. They are a lot better bet than purchasing from a swindler seller whom you will not be able to contact when the deal goes bad.

• You better avoid buying a car on the internet. It is better to test drive the car in person before you make the decision to buy instead of reading up on the seller’s good points about the car. If you DO make the decision to buy a car online, try to pick it up on person and request that the seller allow you to nullify the deal if you are dissatisfied with the car’s condition when you see it in actuality.

States have agents assigned to thwart curbstoning, but there are not enough agents to do this job because they have other duties to attend to. Because of this, there are very few sanctions against curbstoners. Criminal convictions are minimal. States can reprimand licensed dealers who engaged in curbstoning, but even this is not enough.

eBay auction website has also employed methods to combat curbstoning. eBay will suspend any account holder and cooperate with law enforcement. What happens many times, however, is that once an account is suspended, the crooked sellers simply open up a new user id and re-engage in crooked sales.

If you are in the marketing for a used car, and the seller does not have a title in their name, beware. A buyer purchasing a used car from an unlicensed seller runs a high risk that:

1. The vehicle may be stolen.

2. You may not get a clear title, unless a remedy or court order is sought and ruled in your favor.

3. The vehicle may have a rolled-back odometer.

4. The vehicle may be salvaged, reconditioned, or flood damaged.

5. The vehicle may have a lien that has not been properly released.

6. The vehicle may have been sold for EXPORT ONLY.

There are ads claiming that no matter what condition you trade is in, they’ll give you $1500, $2000, or even $3000 for it in trade.

Foolish people flock in.  Some even drive off with a new or used car.  They were paid $3,000 for their 1983 Chevette and they feel like they just ripped somebody off.  The truth is that they probably just got ripped off.

Most car dealers have around $2000 to $2500 worth of markup built into the price of their lower end vehicles and more (sometimes much more) built into their higher priced ones.  When they put on their Push, Pull, or Drag sale, all they do is mark up their vehicles an additional amount equal to their “minimum trade allowance.”  They can give you a ton for your Chevette and still make thousands by doing this.

This is great one for traffic.  Many dealers claim that if they can’t beat a deal, they’ll give you $10,000. They might as well say they’ll give you $10,000,000, because it isn’t going to happen either way.

When it comes to new vehicles, the market is impossibly competitive.  95% of new car dealers will match the price than any other dealer gives on an exact same vehicle.  But not all of them guarantee the claim with money, simply because they don’t want to insult the intelligence of the consumer.  The bad part is, not all consumers are intelligent enough to recognize that unless another dealer is willing to lose more than $10,000 on a vehicle, they’ll NEVER pay the money.

Auto dealers sometimes pretend to be private sellers when selling their cars and this practice is called curbstoning. Most dealers engaged in this practice are used car dealers. This is a good way to sell cars of substandard quality to unsuspecting buyers. If there is a street or parking lot near your residence where there are several cars up for sale then there is a possibility that these cars are placed in public view by “curbstoners.” Car dealers could not sell many of these cars on their lots as curbstoned vehicles may be lemons or junk cars.

Often this technique is used by car dealers as a way to go around state laws regarding the sale of cars. States have enacted legislation that puts a cap on how many cars a private individual may buy and sell a limited number of cars in a given period of time without if he is not a licensed auto dealer. Curbstoners do not have requirements like licensed car dealers, who have to meet with state legislation in order to stay in business.

Though there are no laws that require a dealer to check a car over before selling it, the buyer’s guide states that the car is supposed to have a post on the window stating if the car has a warranty or is sold “As Is.”

The car dealer is supposed to offer a consumer to sign a copy of the Buyer’s Guide and give the car buyer a copy of it. If the car buyer have signed the Buyer’s Guide and have a copy of it the buyer will probably have no recourse, because the dealer can say it was posted on the car and no fraud occurred.

The customer may have a dealer fraud case if he/she hasn’t signed the Buyer’s Guide. Consult with an attorney if you believe you are a victim of dealer fraud.

VIN (Vehicle Identification Number) cloning has become one of the most fast growing national problems. How does VIN cloning occur? VIN cloning occurs when the VIN of a stolen vehicle is replaced with the VIN of a similar vehicle.

Car thieves usually get the VINs from the Internet, car lots or parked cars. Later they forge tags and stickers with the “clean” VIN and place them on stolen cars. After this they sell vehicles to individuals or car dealers.

As the states don’t share this type of information with one another the thieves manage to easily get away. They get a VIN in one state and after placing it on several cars sell the stolen car in a different state. So a VIN may be cloned and used on several similar stolen cars.

How to avoid this scam: You can avoid this scam if before buying a vehicle you obtain a vehicle history record from CarFax or any other site. If the vehicle was registered in more than one state then this could be it. Keep in mind that the most popular cloning targets are SUVs.

Sometimes we come across ads by dealerships promising Zero Down, Zero Percent Financing and No Payments for six months on new car purchases and car dealers spend millions of dollars on this each year. At first this sounds like a good deal. However, you should know that this is simply a scam.  Approximately 10% of those that apply for zero percent interest car loans actually get approved. The reason is the law credit score. Eventually, when you get approved for the zero interest auto loan it turns out to be a very short term loan (24 to 36 months). Your monthly payments in this case will be really high. Car dealers offer a zero percent interest auto loan for select models only. So it turns out that most of the consumers won’t qualify for zero percent interest car loans, as they can’t afford the short term car loan with high monthly payments and the dealer won’t probably offer this option for the car you consider.