Dealer Fraud

Buying a new car is like buying anything else on the market, only a little more stressful.  Stressful because car dealers are trained not to take “no” for an answer, and many word games and phrases come into play to help them to get you to close the deal.

So you can be easily led to think that you are getting a good deal, when in fact you could be getting a bad deal.  This is their job; they improve their craft all day from 9:00 to 5:00.

The new car sale price trick isn’t usually included in the list of the ‘official’ car dealer scams, but it’s worth discussing.

Surely you’ve noticed how retail stores will offer a 50% off deal on a piece of merchandise, but in truth the price of the item has been increased in the first place.  This same marketing strategy applies to selling cars. If a company marks up the price by 55%, and sells it for 50% off of that price, you are actually paying 5% more for the item than it originally costs.

This is a very common way for car dealerships to work.

They may offer a $4000 cash back deal on your trade-in while the other fees and interest rates will be higher than normal. But they’re hoping that this $4000 cash back offer will temporarily blind you long enough for you to sign the papers.  So while a car dealership may make the numbers sound great, they will try to get you with the other fees.  Let them “try” whatever they want; your job is to not be fooled by their tricks and eventually not to become a car dealer fraud victim.

Many of the car dealer scams one encounters when buying a new car are nearly the same. Here are some great tips for avoiding car refinance scams.

•    Order your own credit score and take it with you to the dealership.

•    Never make a cash deposit for your financing loan because if the deal goes bad, you can’t get your deposit back.

•    Don’t apply for a car loan until you have been employed for at least 6 months if you are a recent college graduate.

•    Apply for your loan online to avoid getting ripped off.

•    Learn to fix your credit before applying for a loan. Get your credit score to at least 680 first.

•    Pay off your credit card debts before looking for a new car.

•    Wait 6 months before applying for a loan if you have recently moved. You addresses are always verified. If you move a lot, they might not trust that they can keep track of your whereabouts should you make late payments etc.

•    Don’t get a co-signer for your loan as often times you will find that the deal is solely in the other person’s name.

A salvage vehicle is any motor vehicle which has been wrecked, destroyed or damaged to the extent that it is declared a total loss by the insurance company or, in the event an insurance company is not involved in the settlement of the claim, sustains damage in an amount exceeding 75% of its actual retail cash value. There are some steps you may take to protect yourself from buying salvaged vehicles that have extensive water damage.

Many people may not realize they have bought a flooded car until they take it to an insurance company. They then find out that their agent cannot even issue them an insurance rate quote because of the salvage title on the vehicle. Since used cars are usually sold “as is” there is very little recourse the buyer has at this point other than to try and get the vehicle road-worthy and go through a long inspection process with the state motor vehicle bureau that is required for a vehicle with a salvage title.

One of the easiest ways to protect you from buying such a car is to obtain a vehicle history report from a firm like CARFAX which tracks flooded vehicles and other types of damage. You may also do some detective work yourself on the vehicle if you have any doubts. Look inside the engine compartment and look for any water mark signs that might indicate high water levels. Next, look under carpeting to see if there is mold or any presence of water staining. Finally, inspect the electrical system thoroughly. This is where most water problems show up first.

So to protect yourself from purchasing a flooded vehicle you should be a diligent consumer. If case you have already been defrauded by car dealers, try to find an experienced dealer fraud attorney for help and advice.

Buying a used car is always the best option for customers who can’t afford a new car. Used car dealerships are the most convenient places for finding used cars at a discounted and moderate price. The pre-owned cars are usually sold through independent dealers, franchises, rental car companies, auctions, private sales and leasing companies.

Buying used cars is most popular in California. The comparatively low price and the opportunity to save a rather big amount of money attacks a lot of car buyers. However, buying a used car may sometimes be complicated. Used cars may have hidden mechanical problems, in some cases they may have been previously wrecked and rebuilt.

Very often car dealers sell you these cars without disclosing the problems and the history of the vehicle. These are typical cases of car fraud. That’s why you should always get a vehicle history report of the vehicle you consider buying. Vehicle history reports are very easy to get. They protect you against purchasing used cars with costly hidden problems. The reports contain any information about accidents or major repairs, any lemon law buybacks, odometer fraud and other relevant data on the vehicle.

In some cases buying a used car makes more sense than buying a new car, especially for those consumers who are trying to save money or invest it on something else. This allows you to get a new car and trade in the old one.

Generally customers need some knowledge to avoid becoming a dealer fraud victim. They need to know how to act and what to ask dealers when entering the car dealership. Here are some tips that will be rather helpful when dealing with car dealers to prevent odometer fraud.

1.    Inspect the vehicle carefully to make sure that its actual condition matches the mileage that is indicated in the odometer.

2.    If you think the vehicle you are going to buy has been repainted, search for the parts that have been replaced. Paint is sometimes used to cover the older parts, thus giving the vehicle a newer look.

3.    Look in the left door frame, as well as inside left front window, under the hood, in the glove compartment or in the trunk for maintenance and oil change/lube stickers that might contain accurate mileage information.

4.    If you consider buying a vehicle advertised or represented as part of a fleet than you should be twice careful. Be wary of these vehicles especially if the odometer shows low mileage.

5.    The numbers on the odometer gauge should be aligned properly. Misaligned or crooked numbers might be a sign of odometer tampering.

6.    Ask the car dealer to provide you with a written statement of the actual mileage disclosed on the odometer at the time of purchase. If they refuse to provide that document, you may already have a claim under the Truth in Mileage Act.

The Market Adjustment Fee

The car dealer tells you that your car is a really popular vehicle, and to sell it to you they have to add “Market Adjustment Fees” of several thousand dollars. This amount is normally indicated on an orange sticker next to manufacturer’s MSRP sticker. A car may be popular, but if it is in stock, it is not worth paying extra for it. Many buyers, particularly trade-in buyers, have been ripped off before. They focus only on what they get for their old car, and so they don’t see the big picture. They may get an extra few thousand dollars for their car, but they don’t notice that they are charged a much higher Market Adjustment Fee.

The Extended Warranty Scam

The Extended Warranty scam is rather old but it is still in use. Basically, when you take a loan on your car, the dealer will say that you have to purchase an extended warranty because the bank requires it for the loan. Avoiding this car dealer scam is very simple actually. Tell the dealer to write down that the extended warranty is required for the loan and they’ll most probably find some excuse to remove the extended warranty. If they refuse to do so, then please do not buy from that dealership.

The Dealer Preparation Fee

The dealer charges you a preparation fee for preparing your car. Most MSRP stickers display that preparation costs have already been covered by the manufacturer. In fact, some fraudulent car dealers permanently print it on the buyer’s order to make it seem mandatory, but one way you can get it removed is by telling the dealer to add a credit (of the same amount as the dealer preparation fees) on the next line. If they refuse to do so, you should simply walk out of the dealership.

Purchasing a pre-owned vehicle may be a difficult task, especially if you do not know which used cars to avoid. There are certain steps that consumers should know to avoid becoming a car dealer fraud victim.

Step 1

Check Consumer Reports before purchasing any vehicle. Consumer Reports contains valuable information on the reliability of new and used cars. They contain evaluations from both the car experts and everyday drivers. Search by the vehicles’ year, make and model. Read each evaluation carefully and check the used car’s overall rating.

Step 2

Go to a private party or dealership and test drive the vehicle. If you are not sure what to look for, have someone come with you who has a good idea of the vehicles components. Check the basic functions of the car to make sure they are in working order. If you do not have anyone to take with you for a test drive, bring the vehicle to a reputable mechanic.

Step 3

Request a vehicle history report. This step is crucial to ensuring that you are not driving a lemon! A vehicle history report will provide you with details on any accident, fire and flood damage that the vehicle may have incurred in the past. It will also tell you whether or not the vehicle has a salvage title.

Step 4

Walk away from any private party or dealership that will not allow their vehicle be viewed by a mechanic or does not provide you with an accurate details of a vehicles history.

Below is a brief summary of negotiation strategies and tips for ensuring you get the best car for your money and avoid becoming a victim of dealer fraud.

Take Your Chances

Negotiating with a car dealer is far easier than most people believe. Contrary to popular opinion, if you disagree with the dealer on the price, you will not be thrown out of the dealership. The salesman is almost never authorized to agree on a final purchase price anyway, so you should not hesitate sending him to a manager to ask for a lower price.

Come Prepared

Conduct some research to find the fairest price for your target car. While you may not get that exact value, it will most likely be significantly less than the amount that the dealership will be advertising. You may also use ‘how to negotiate’ guides for dealing with sales representatives. This will help you reduce not only the car-buying stress, but also the overall price you have to pay for it.

Do Your Homework

The most important aspect of a car search is to make sure you do your homework. Compare the value of your target car offered by various dealerships and make sure that it doesn’t have any major mechanical problems that the dealer isn’t mentioning. If the car you wish to buy is properly researched and inspected, you will not only have significantly fewer problems with the car after the purchase, but a greater chance to avoid car dealer scams.

Odometer fraud is the practice of rolling back odometers to make it appear that vehicles have lower mileage than they actually do. Odometer tampering is not only illegal, but expensive. Because the buyer thinks the car has fewer miles, he/she pays more for the car - and more in insurance and repairs.

Things You’ll Need:

•    Compare the current mileage on the odometer with mileage shown on the vehicle’s maintenance or inspection records.

•    Check the tires. The car’s original tires should last for some 60,000 miles, so new tires on a car with low mileage should alert you to take a closer look.

•    Look for things that indicate the mileage of the car. Oil change reminder stickers, service receipts and warranty cards will usually have the mileage noted.

•    Have a reputable mechanic inspect the car. The mechanic should look for signs of wear on the engine, suspension and steering, as well as problems with the emissions system. These areas will show signs of high mileage.

•    Be especially alert when buying certain models. Popular models for odometer rollback include sport utility vehicles, Chevy Luminas, Ford Tauruses and Chrysler minivans.

•    Ask the DMV for the car’s title history and its previous owner’s name. You need to provide the DMV with the VIN (vehicle identification number). Reconsider buying this particular car if the title shows it was sold several times in a short period.

•    Be wary of retired, low-mileage fleet vehicles. Dishonest buyers will clean the car up, put on a new brake pedal cover, roll back the odometer and resell it for a tidy profit.

Car dealer scams vary and being aware of them becomes more and more important. Awareness may save you a lot of trouble and money. So make sure that you have done your homework accurately enough and are ready to enter the car dealership without the potential threat of becoming a car dealer fraud victim. Below are some useful questions to ask a used car dealer:

• If the car is certified, can you show me the mechanic’s pre-certification inspection?

Every certified car has to go through a car inspection before it can be certified. Ask to see that paperwork to find out what was fixed. It’s a good piece of paper that will support your future problems.

• Who was the vehicle purchased from?

If it was a trade-in to that dealership, ask the dealer to show you the maintenance records. Tell them they can black out the owner’s name and address. If it was bought at auction, make sure it is gone over with a fine-tooth comb by a mechanic who specializes in inspecting used cars.

• Who certified a used car that is called certified?

The only certification that really means anything is a manufacturer certified pre-owned car. All others are insurance backed programs.

• How long of a test drive may I take?

See if the dealer will allow you to take the car overnight for an extended test drive. Put it in writing that you won’t put more than 100 miles on the odometer, prove you have insurance, and you’ll bring it back with a full tank (if you leave with a full tank).

Ask these questions to the car dealer and hopefully you will not need a dealer fraud attorney’s help in the future.