Dealer Fraud

In most of cases when you want to buy a car you go to new or used car dealers, and still you are not protected from different dealer scams. However, there are several other alternatives to buy a car. And one of those is buying repo car. In other words repo cars are privately owned vehicles that have been seized either by the bank, financial institutions or the government.

Reasons these cars have been repossessed is, most probably, because the owner failed to pay for the car mortgage or the car has been used as a lien for another loan, probably a house mortgage. In this case the vehicle becomes the property of a bank, financial institution, or the government.

Most car buyers wonder why repo cars are so cheap. In fact these vehicles occupy so much real property which equates to money lost. This is why instead of storing these useless vehicles banks or other institutions decide to sell it off converting them into liquid assets. You should take into consideration that these vehicles are not so much of a use to their new owners so they will be sold to the highest bidder, through auction. The car can cost as little as $100, depending on the seller.

When you think of buying a repo car there are several factors to take into consideration. One of them is to know that different people have different standards and priorities when it comes to buying a car. Of course, buying a repo car gives you an opportunity to own a car at a very affordable price. You can even buy a car with as much as 90% savings, and the car may be good as brand new.

Generally, it is easy to find repo car sellers/auctions, as they are websites that publish a list of repo cars on sale. It is important for the buyer to understand the terms and condition of purchasing a repo car be it through auction or non-auction purchase.

The decision whether or not buy a repo car is up to you but come to think of it, there is nothing wrong with buying repo cars. They are legal, same as other pre-owned cars, and most of all cheap.

Many stolen cars are not only stripped for parts, but resold to trustful buyers. In case you knowingly buy a stolen car, you can be arrested. If you buy a stolen car unknowingly, you could lose both you car and money. Try to evade becoming the car thief’s victim by following the following tips:

Beware of loose dashboards.
Check the switch for chisel or pull marks.
Be on the sight for any deal that seems “too good to be true”.
Question the dealer whether the registration was recently issued on an older car.
Be wary of new license plates on an old car, or new plate bolts on an older plate.
Be wary of a seller with no fixed address, place of employment, or phone number.
Compare the engine identification numbers with all other VIN numbers to make sure they match.
Make sure the vehicle identification number (VIN) plate on the car’s dash is present, secure, and has no loose rivets.
Make sure that the private individual’s name, who you buy the car from, matches the title and registration of the car.
Be cautious of a fresh paint job on a newer vehicle, which can indicate an attempt to change the car’s identity.
Make sure the VIN plate has not been repainted and the numbers stamped in the plate are original factory numbers.
Check the stickers of the license plate registration and the inspection to be sure they are current and issued by the same state.

The VIN on the dash must match the VIN on the registration, title, and federal safety inspection sticker on the driver’s door.
Verify the information about the seller’s past financing and insurance on the car with the bank, finance company, or agent.
Check with a new car dealer that handles the same model, or contact a law enforcement agency, in case you are doubtful about plate authenticity.
Make sure the VIN plate rivets are original. All 1970 and newer cars released in North America have stainless steel “rosette-shaped” rivets with six petals and a hole in the middle. They are difficult to scratch with a knife.

“Contract Packing” – Adding unwanted options and accessories.

Some dealerships “pack” a contract with add-ons like warranties, service contracts, options and accessories that you did not ask for. Common add-ons are “protection packages” and rust-proofing.

What you should do:

•    Before signing the contract, look at it carefully for any items you did not authorize.
•    If an item was included for “free”, check to see that it is in the contract and that you were not charged for it.
•    If you find any items that you simply don’t want, tell the salesman that you will not pay for it.

Financing Fraud – Lying about credit scores

Another common dealer scam used by fraudulent dealers is to trick you into believing that you have bad credit. They may tell you that your credit score is too low and you do not qualify for a low interest rate. They do this to convince you that the high-interest financing offered by them is a good deal.

What you should do:

•    Get a copy of your credit report with your credit score.

•    Shop around for financing. Credit unions and other financial institutions often offer rather low interest rates.

These are 2 of the most common dealer scams and tips for avoiding them. However, if you believe you are already a  dealer fraud victim, don’t waste your precious time and contact an experienced dealer fraud attorney.

Trade-in Scam

Many customers who trade in their old cars become victims of car dealers who are not truthful about the value of the trade-in. Customers who are unaware of what they can get for their car if they were to sell it today are likely to accept statements like these and may walk away with very little money received for their trade-in.

What you should do:

•    If you are not sure of your car’s condition and/or its market value, you may want to take it to a few dealerships. Tell them that you are thinking of trading in your vehicle and see what they offer you for it. This amount may be a more truthful estimate of your car’s market value.

•    If you want to trade in your old car, make sure you know its current market value. You can go to the bookstore or library to find a book that lists values of most cars.

Co-signer Scam

When customers don’t qualify on their own for financing, car dealers often suggest that they get a friend to co-sign. Often, however, a salesperson tells the co-signer that he/she is only signing as a reference to help the primary buyer. This is not true. If you are asked to co-sign for someone, you should know that the co-signer is equally responsible for paying the debt and can be sued if the primary buyer doesn’t make payments.

What you should do:

• In most cases, it is not a good idea to be a co-signer for any type of loan.

• Only co-sign if you are ready to make the payments for the car.

Each year thousands of people unwittingly buy cars that have been severely damaged in accidents. It’s not too difficult for dishonest rebuilders to patch such vehicles up quickly and turn a profit by selling them to unsuspecting buyers.

To avoid becoming a victim of such auto scams, keep reading our blog.

1. Understand what happens to “totaled” vehicles. If a car or truck is damaged so badly that the cost of repairs exceeds its value, insurance companies typically declare the vehicle to be a total loss and pay out a claim to the owner. Then many insurers sell these totaled vehicles at salvage auctions. Sometimes the cars get purchased for their parts or scrap materials; in other instances, they get snatched up by rebuilders or by car dealers who hire rebuilders.

2. Check the vehicle’s title. Does it reveal the car or truck’s storied past with the words “salvage title” or another similar expression, such as “parts only,” “unrebuildable” or “scrap”? If so, that’s a sign of a past accident. If not, don’t assume that the car is completely OK. Those words appear on the titles that insurance companies hand over at salvage auctions, but it’s not hard for those in the barely regulated rebuilding industry to have that disclosure removed. One way to do this is to bring the car to a different state and re-register it.

3. Ask the seller point blank. The simplest way to find out whether the car has been in an accident is to ask. Unfortunately, though, the seller may not be up front with you. Nevertheless, make it a habit to ask this question clearly and directly.

4. Go to a mechanic. Whenever you buy a used car, it’s important to have the vehicle carefully inspected by a mechanic — ideally a mechanic with a background in collision repair. Even if you are worried about the cost, get the inspection anyway. It’s worth it!

It has been shown that one out of three used cars has something to hide. That could be outstanding credit, odometer rollback, etc.. That is why car dealer fraud cases are amongst the most common issues.

Vehicle cloning is a used car fraud that has become rather widespread today. To avoid being a victim of such a  auto scam, follow our tips given below.

1. Registration papers: The registration papers give you some initial information about the vehicle. Make sure the license plate on the car matches the number on the registration papers. Make sure the owner’s name matches the seller’s – and ask for a picture ID.

2. Maintenance records: Other papers that you should inspect very carefully are the maintenance records, which are not only a good way to see if the car was stolen (thieves never have the maintenance records), but also give you a hint of how well the car has been taken care of.

3. Vehicle identification number: Check the VIN which should match the number on the title and registration. The VIN is located on the driver’s side above the dashboard, inside the driver door and under the hood. Look for any signs that may indicate tempering with these numbers. If the windshield contains any slight damages, there is a strong possibility that the VIN has been replaced. If so, the car is probably stolen.

4. Insurance: Ask to see the insurance papers and check that everything matches. If the vehicle is uninsured, it might be stolen or have other problems. If the dealer cannot provide insurance papers, this is probably not a car to buy. If they do provide the papers, call the insurance agent for verification.

Getting a good deal will depend on how well you negotiate. Here are a few insights into negotiating with car dealers and avoiding various car scams designed by them.

Never agree to the first proposal. When you’re looking to buy a car, the first offer is always made by the dealer. The car might have a sticker price, and this is used as a starting point for negotiation. The dealer might factor in other things in the computation, such as registration, accessories, taxes, and the like. The first reaction you should have, as a buyer, is that of shock and outrage.  If this first offer is too expensive for you, simply say “I want something that is sensible, and within budget”. This would prompt the dealer to try to shave off a few dollars, or even offer discounts to meet your needs.

Ask the wife (or the husband). When going through final negotiations, a car dealer’s agent will usually get his manager or supervisor to approve the price, if it’s negotiated down from the SRP. You can also use a similar tactic by turning to someone else to make a final decision. You can tell a dealer, for example, that you are interested in the offer, but that your wife will not allow you to buy the car at such a high price. This will also prompt the dealer to further lower the offer, given the need to please not only one decision maker, but two.

Don’t offer to split the difference. When you have an offer, and the dealer has an asking price, don’t offer to meet halfway. This would only mean you agree with the higher price asked, and that the dealer would have won the negotiation. Instead, wait for the dealer to offer to meet halfway. Then you can make a counter-offer and meet halfway from your preferred price point to his halfway-offer. You end up with a lower price.

Think and rethink. Dealers often take advantage of your presence, knowing that they must make a sale while you are there. Otherwise, once you leave, your interest in purchasing a car will likely be reduced. So the dealer might describe the offer as limited to today only, or that you will get certain freebies and discounts if you buy now. But big decisions like a car purchase should be well thought out, and are best made after a good night’s sleep. Seeing you back at the auto showroom the next day, the dealer will most likely give you an even lower offer than the first time.

Negotiating with car dealers can be tricky, as you may become a victim of car dealer’s fraudulent practices. If you know how to get around the smooth talk, then you can end up getting a good deal yourself.

Used car fraud becomes more and more prevalent. Vehicle cloning is one of those wide-spread scams. Here is how it works. Thieves steal a car, usually a high-end “desirable” car or SUV. Then they take the vehicle identification number or VIN from a similar car and slap it on the stolen car. Because each VIN is unique like a fingerprint, the stolen vehicle becomes a clone of a legitimate vehicle. Add some fake papers, and the thieves are ready to sell you a vehicle that looks perfectly legal.

When the police come knocking on your door, you have no legal recourse – you have to hand over the stolen property. Statistics show that such stories are happening to more and more people ever year.
But you can avoid being a victim of such an auto scam. Here are some tips to protect you from ending up the proud owner of a stolen car.

1. Low sale price: If the car seller is asking a extremely low price for the vehicle, inquire why. Smart buyers typically research car prices online before purchasing. To check current car values simply search for a similar vehicle on a popular car classified website. If the price asked for the vehicle is significantly lower, be suspicious as the car could be stolen. The thief may be asking the lowest possible price to rid them of the vehicle quickly.

2. Phone number: Always ask for the car seller’s landline before your first meeting. While cell phones are rather convenient and increasingly common, it will be rather difficult to trace if the need arises. If the seller refuses or states that they only have a cell phone approach with caution. Be extra watchful in your dealings with this person since it will be very difficult to find them if they suddenly disappear.

3. Registration address: Ask to view the car in the daytime at the address listed in the registration papers. If the seller refuses and instead asks to meet in a public place, make sure there is a valid reason. Even if the seller gives a good reason there is still a higher probability that the vehicle is stolen. If you still feel the seller is legitimate and the car is not stolen be aware that he/she could be hiding something serious about the car.

4. Inspection: Why view the car in the daytime? So that you can inspect the whole car very carefully. Look for any signs that people tampered with locks. Replacement locks are a giveaway. Check hidden places in the vehicle to see if the paint color has been changed, which might also disguise a stolen car.

Take these steps and protect yourself from used car fraud.

Below you may read 4 of car dealer advertising scams that are used for tricking naive buyers.

1) Push, Pull, or Drag Sale

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

Foolish people get tricked.  Some even drive off with a new or used car.  They are given $3,000 for their 1983 Chevette and feel like they have just ripped somebody off.  The truth is that they have probably got ripped off.

Most car dealers have nearly $2000 to $2500 worth of markup built into the price of their lower end vehicles and 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.”  By doing this, they can give you some money for your Chevette and make thousands.

2) Buy a Car, get a “Free_______”

Whatever the item is (a big screen, camcorder, computer), it isn’t free.  The price is simply built into the cost of the vehicle.  As a rule a car deal that would bring $3000 profit may “only” bring $2200 after they give you the $800 gift certificate to Circuit City or Best Buy.

3) We’ll pay off your trade irrespective of how much you owe when we make a deal!”

The key phrase in this sentence is “When we make a deal…” Paying off the trade is part of making the deal.  If they cannot pay off the trade as the consumer owes too much, they won’t make a deal.

4) Buy One, Get One Free

Buy a car , and get a second one for no additional cost.  WOW! Just make sure you get a good driver to bring the flood damaged 1989 Nissan Sentra home with you after you overpay for your other vehicle.

In order to avoid becoming a dealer fraud victim, one should have certain knowledge about the most common dealer scams. In this blog we will discuss the situations when a car dealership cancels the purchase contract and the options and rights you have in those cases.

• If the dealership cancels the contract within 10 days, you get your down payment or trade-in back.
  

The purchase contract requires that the car dealer return to you everything given for the purchase. This includes your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

Sometimes a car dealer may tell you that it has already sold your trade-in, and will offer you the value of the trade-in as listed on the purchase contract. The conditions of the purchase contract do not appear to give the car dealer this option. It requires the return of the trade-in. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either

(1) the value of the trade-in as listed on the purchase contract,

(2) the fair market value,

(3) what the car dealer received when it sold your trade-in.

• The car dealer cannot charge you for using the car you purchased from them.

For instance, it cannot charge you for the miles put on the car during the 10-day period. However, you are responsible for any kind of damage to the car during the time it is in your possession.

• The car dealer cannot cancel the contract after the 10-day period has expired.

If a car dealer tries to do this, you should clearly state the car dealer is no longer entitled to cancel the purchase contract, and ask the car dealer to send you a letter explaining why they think they can still cancel the purchase contract.