Dealer Fraud

You must have a credit score of at least 680 to get a zero interest auto loan and you can get your credit report and credit score from True Credit and Equifax.

Negatives on your credit report that you weren’t aware of will cost you more money because you will only be able to qualify for a higher interest car loan.

The other thing is that car dealers will frequently lie to you about whats on your credit rating. So take your credit rating with you!

A car dealers loan department is not the place to get carried away and start making hasty emotional decisions, and believe me - that is what they are counting on!

If you go in there unprepared you will end up so confused and burned out that you will gladly sign away anything to just get the deal done with - and they are counting on you eventually being in this condition! Its all part of the process.

It has been estimated that this car scam costs consumers as much as one billion dollars a year!

The car dealer will often add points to your auto loan based on what they say is in your credit rating. Those points are then kicked back to the car dealer from the lender.

This is an industry wide practice that can easily add $1000.00 or more to the cost of your vehicle and cost many thousands more over the life of your loan.

Yes, if your car dealer is the middleman for another finance company. The reason is that the points the dealers lose on low or no interest loans they will make up for by raising the price of your car to MSRP and or adding all kinds of lame fee’s, etc. If your zero interest auto loan is offered by the car manufacturer then it won’t cost you any extra points. Obviously that rule only applies to zero interest car loans. Anything else and you’re fair game.

Of course that doesn’t mean the salesperson won’t try and squeeze you for more money somewhere else during the deal!

In some cases, you may not be able to know for sure  —but here are some measures you can take:

• Check the title to see if the car is an out-of-state vehicle. Does it say “salvaged“? If the title doesn’t say the car is salvaged then:
• Check to see if the paint on the outside of the car matches the paint inside the door frame.
• Make sure that the parts of the car line up with each other—and that the gaps between the doors and around the hood and trunk are straight and even.
• Have a mechanic check underneath for evidence of welding of the frame or unibody.
• Look for evidence of flood damage. Check under the mat for mud or dirt. Look for watermarks on the inside of the doors, and for moisture inside the trunk and under the seats.

California, Michigan, and Iowa have tough consumer protection laws prescribing when a vehicle’s title must be branded as salvage or nonrepairable—but other states are less protective. Unscrupulous individuals take advantage of this lack of uniformity and move wrecked vehicles to states having low or no standards in vehicle retitling. In this way, they are able to wipe out the vehicle’s damage history.

Nationally, both Senator Dianne Feinstein (D-Calif.) and Senator Trent Lott (R-Miss.) have sponsored bills supporting a uniform national standard for dealing with wrecked and salvaged vehicles. Lott’s bill would classify as “salvage” a vehicle that sustains damage exceeding 75% of its preaccident value, but would permit states to enact lower percentages. It also would require warning labels on rebuilt salvage vehicles. Feinstein’s bill goes further—requiring the word “salvage” to be stamped on the title of any vehicle with damage exceeding 65% of its preaccident value. It also would require owners to disclose any damage exceeding $3,000, unless the damage was entirely cosmetic.

There are numerous cases, but here are some examples how vehicle title washing affects consumers :

A California college student purchased a car from a major franchised dealer who maintained that the vehicle was “certified” and had passed a “100-point inspection.” The buyer began experiencing problems immediately after purchase. First, the steering rack had to be replaced. Then, she discovered the frame was bent, which made the vehicle unsafe and unstable. The tires wore unevenly. The trunk leaked. The buyer had the car inspected by an independent repair shop and learned that the vehicle had been involved in a serious wreck. When the car was rebuilt, the workmanship was so poor that it rendered the vehicle unstable. The buyer confronted the dealer, who refused to take the car back. She hired an attorney and filed a lawsuit to get out of the deal.

A Chicago-area businesswoman bought a car from what she thought was a reputable dealer, but later learned that the car had been rebuilt after a wreck. A mechanic found the engine was not properly lined up in the chassis and that parts of the car had been welded together where bolts normally are used. During a four-year-long court suit, the woman’s attorneys learned that the wrecked car had been purchased by an out-of-state backyard mechanic who had tried to fix it up and then sold it to a repair shop in another state—where a couple purchased it and later traded it in.

A 73-year-old Northern California woman was awarded $100,000 in punitive damages in a lawsuit accusing a dealer of selling her and her late husband a used car without disclosing that it had been in a crash.

If you don’t want to pay for a perp fee there’s one simple thing you can do. Tell the car dealership to credit you the amount of the prep service fees on your contract. Simply refuse to pay it. If they don’t just get up and walk out. It won’t have cost you anything more than a little bit of you time and if the prep fee is $500 you will have to work many hours just to cover it. Remember, it’s completely legal for a car dealership to add these prep fees to your final bill but if you go into the dealership fore-warned you can save yourself some money.

Odometer fraud is one of the oldest forms of auto fraud. Consumers are clearly willing to pay more for vehicles with lower mileage, thus creating an incentive to rollback the mileage on odometers. Odometer fraud can be accomplished in various ways: physically repositioning the numbers, changing the mileage reading electronically, replacing the entire odometer, and/or disconnecting the odometer. Dealers sometimes orally misrepresent the mileage and put the odometer reading on the trip meter.

To avoid this practice, you should closely read the odometer. The average person drives approximately 12,000 miles per year. Is the mileage on the vehicle way below the average? You may want to ask the dealer to explain why. You should also get a vehicle history report. You can get summary title reports from service providers such as: Carfax (www.carfax.com), AutoCheck (www.autocheck.com), and CarFraud.com (www.carfraud.com). The history reports usually include information on vehicle mileage. A major discrepancy between the mileage reported and the actual mileage could signify fraud (especially if the actual mileage is lower than previously reported).

If you suspect that you have been a victim of this type of fraud, you may wish to contact the DMV and/or consult with an attorney who specializes in auto fraud.

Believe it or not, there are usually no hidden tricks to these super-low financing rates. They truly are great deals offered by the manufacturers to help the dealers move out certain models which may be lagging in sales. There are, however, some things you should be aware of:

• Only about 20% of car buyers actually qualify for these special loans. You need a good credit score (usually 680 or higher).
• The dealership ends up making far less money on these special financing deals than they would on regular financing, so the dealership’s Business Manager may try to convince you that you don’t qualify for the low rate. If you know that your credit score is good, don’t fall for that.
• You usually have a choice between the low financing rate and a rebate. For buyers who need the cash for their down payment, the rebate may be a better way to go.
• These special low-financing rates are sometimes only applicable to short-term auto loans (2-3 years) and do not apply to the typical five-year loans that most buyers prefer.

Most consumers know that people with bad credit are generally charged a higher interest rate for financing. However, a surprisingly large percentage of consumers, including many auto customers, have no idea what their credit report looks like.

This lack of knowledge facilitates fraud. While most dealerships will deal honestly with customers, some dealerships will defraud customers by (falsely) telling them that their credit is terrible – as a way of justifying exorbitant interest rates. The scam makes sense: people are willing to accept interest rates if they think that the rate is based on their credit. Unfortunately, this is not always the case. In the last few years, various class actions have been brought (both nationally and in California) alleging that minorities pay significantly higher financing, even when the numbers are adjusted to statistically account for differences in credit. In short, minorities with equally good credit often pay more.

If you’re thinking of financing a vehicle through a dealership, you should consider taking the following steps:

(1) Obtain a copy of your credit report and be familiar with both your score and your credit history.

(2) Compare financing rates at local banks and credit unions. Many will offer competitive rates much lower than dealerships.

(3) Write down your expenses, go through your budget, and be clear on what you can afford.

(4) Go in knowing what interest rate is fair based on your credit history, the age of the car, and how long you are looking to finance.

(5) If the dealership makes any statements about your credit that you believe are questionable, ask to see your credit report.

(6) Remember that interest rates are negotiable, and that the rate quoted to you by the dealership probably includes a discretionary markup. Feel free to negotiate.