Dealer Fraud

The bait and switch is the type of scam that’s been used in just about every industry. This scam involves providing a vehicle for advertisement or promotion which is probably a very base model. This item is probably not very desirable for some reason, but attaching it to a very low price to get you in the door. Once you are in the car dealership, the salesman will point out the frailties or the letdown of that vehicle while shifting to another vehicle that has a higher profit margin and is probably more desirable. The bait and switch scam is one of the oldest games in the book. It could be okay if you find out that the vehicle’s not going to meet your needs, but don’t go in expecting that every vehicle’s going to be priced as aggressively.

In order to qualify for a zero interest auto loan you must have a credit score of at least 680. Remember that you can get your credit report and credit score online from such sites as True Credit and Equifax.

If you credit report show that the score is negative or low than it will probably cost you more money because you will only be able to qualify for a higher interest car loan.

Beware as your car dealer may lie to you about what’s on your credit rating. So it will be a good idea to always 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!

Most of the customers who go to the dealership unprepared often end up so confused and burned out that they gladly sign away anything to just get the deal done with. The dealership is in fact counting on you eventually being in this condition.

According to some researches auto loan markup scam costs consumers as much as an estimated one billion dollars a year.

This scam happens when the car dealer adds points to your auto loan based on what 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!

There are cases, you may not be able to know for sure whether the car has been title washed or not. But following are some tips you can use:

• First of all check the title of the vehicle. If the car is an out-of-state vehicle make sure it does not say “salvaged“. If the title doesn’t say the car is salvaged then:
• Make sure the paint on the outside of the car matches the paint inside the door frame.
• Check to see if that the parts of the car line up with each other. Also make sure that the gaps between the doors and around the hood and trunk are straight and even.
• Take the car to a mechanic. Ask him to 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 consumer protection laws are very tough and prescribe when a vehicle’s title must be branded as salvage or nonrepairable. Other states are less protective. A lot of consumers are uninformed about the law and unscrupulous dealers and individuals take advantage of this lack of information. They often move wrecked vehicles to states having low or no standards in vehicle retitling. They simply wipe out the vehicle’s damage history by moving they to other states.

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 pre-accident value, but would permit states to enact lower percentages. The law will also require warning labels on rebuilt salvage vehicles. Feinstein’s bill goes further. It requires the word “salvage” to be stamped on the title of any vehicle with damage exceeding 65% of its pre-accident value. It also would require owners to disclose any damage exceeding $3,000, unless the damage was entirely cosmetic.

There are numerous cases of this auto fraud, 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.

There is one simple thing you can do if you don’t want to pay for a prep fee. First you may ask the car dealership to credit you the amount of the prep service fees on your contract or you can simply refuse to pay it. If the dealer refuses just don’t sign the deal. 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. Keep in mind that dealer preparation fee is completely legal and a car dealership can add these fees to your final bill. But if you refuse to pay the fee you will be able save yourself some money.

One of the oldest and most common forms of auto fraud is odometer fraud. Typically consumers are willing to pay more for vehicles with lower mileage and this creates an incentive for dealers to rollback the mileage on odometers. There are a number of ways that odometer fraud can be accomplished in: physically repositioning the numbers, changing the mileage reading electronically, replacing the entire odometer, and/or disconnecting the odometer. Often dealers orally misrepresent the mileage and put the odometer reading on the trip meter.

If you want to avoid this car scam, you should closely read the odometer. The average person drives approximately 12,000 miles per year. If the mileage on the vehicle is below the average ask the dealer to explain why. Another good idea will be getting 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 vehicle 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 believe that you have been a victim of odometer fraud, you should contact the DMV and/or consult with a dealer fraud attorney.

Generally there are usually no hidden dealer 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:

• You need to have good credit score (usually 680 or higher) to actually qualify for these special loans. Only about 20% of car buyers do qualify.
• The dealership makes more profit on regular financing rather than on these special financing deals. That’s why the Business Manager of the dealership may try to convince you that you don’t qualify for the low rate. This simply a scam and you shouldn’t fall for it if you know that your credit score is good.
• Car buyers 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.
• Remember, that these special low-financing rates are often applicable to short-term auto loans (2-3 years) and do not apply to the typical five-year loans that most buyers prefer.