Jul 28 2009
How to Avoid a Forced Warranty Scam and a Dealer Preparation Scam
A Forced Warranty Scam occurs when a finance manager tells you that you are not eligible for a loan from the bank unless you pay an extra amount of money for an extended warranty.
You can avoid a scam such as this by asking the finance manager to put in writing the fact that you “have” to pay for the extended warranty in order to get the loan. Also, you may want to tell the finance manager that you want to check with the State’s Attorney General’s office to verify that such a request is lawful. If you respond in either of these ways, it is likely that the finance manager will drop the extended warranty “requirement” in a heartbeat.
The “Dealer Preparation Scam”, another common practice that our office considers a scam, is yet another way dealers try to make money off of you. Under this scam, a dealer will tell you that you have to pay an extra $500 to cover the labor costs of the dealership’s 5-point inspection.
The dealership’s 5-point inspection covers the dealership’s costs in removing the plastic from the seats, vacuuming the car, and making sure all the fuses and fluids are working properly when you purchase a vehicle. When new cars are delivered to a dealership, the cost of delivery and the preparation of the vehicle for its sale is already included in the purchase price. So, why should you have to pay for these costs twice?
This scam can be avoided by simply asking the dealership to include a $500 credit with the purchase price so you can make sure you do not have to pay any extraneous fees out of your pocket. If the dealership refuses, the choice is yours – if you think it’s fine to buy the car, then go ahead and do so. Otherwise, try working with another dealership and see if they are willing to remove the dealer’s preparation costs and/or provide you with a $500 credit.”
