Dealer Fraud

Step1:Be friends with a mechanic
No one but a good mechanic can inform you about the exact problems of the particular car brand or model you are eager to buy. You might think that you definitely know the type of a vehicle you want to buy, but a friendly advice of an experienced mechanic can help you to find out the best manufacturer.
Step 2: Organize for financing through your bank
Usually banks suggest a considerably lower rate than what a used car dealership will offer. If you have a previous lending and good standing history with your bank you can receive up to 90 percent financing. By protecting an auto loan through your bank for the amount you can afford before purchasing a car, you’ll find yourself in a far more control when negotiating the final price.
Step3: Ask for a copy of the warranty, read it attentively
As a rule it is not in the dealer’s best interests to provide “dealer warranties”. These documents promise comprehensive coverage and prompt service for the vehicle you buy. The phrase “wear and tear items not included” is a common one in dealer warranties, and one you will hear over and over again if your car begins to have problems. Be attentive and demand the warranty to protect yourself from Lemon fraud.
Step 4: Take it for a long rotate
Leave some of your documents with the dealer and take the car out for a while. Drive the car in city streets with heavy traffic, straight and curvy roads. Test the brake pedal, steering, air conditioning and gauges. Take your mechanic and let him take a look under the hood.
Step 5: Don’t be in a hurry
Above all avoid impulse buying. It is only the salesman’s benefit. It is to your good to do as much research as possible to insure you purchase a safe and reliable vehicle. You should be ready to spend some days doing plenty of research before making a used car purchase.

Car title fraud, the act of deliberately misrepresenting the title history of a vehicle, occurs more often than it should.

Whenever a vehicle is severely damaged in an accident or by a natural disaster, or stripped of its parts, it is given a new title that includes the type of damage the vehicle sustained. Then it is often sold at an insurance auction.

If you purchase your car at an insurance auction and the following happens, you have become a victim of car title fraud:

The car is often purchased at a “too good to be true” price because of the car’s damaged history. Known as “title washing,” the purchaser re-registers the car in a state that does not recognize the branded title as salvaged. The purchaser of the damaged car which has now a clean title then sells the damaged car to an unsuspecting buyer and makes a profit. The unfortunate result is a car that is more prone to problems and being a danger on the road because of its damaged past and the new driver could be out of a lot of money when the car breaks down shortly after purchase.

The federal government is currently in the process of stepping in and mandating what is considered a salvaged car so that there isn’t a discrepancy between states. Until then, if your car was manufactured after 1981, you can perform a car title history check by inspecting the vehicle identification number. Familiarize yourself with car title fraud by doing some research on various websites pertaining to the subject.

Car title fraud is not only financially dangerous for the victim, but by driving an incompetent car, you are putting other drivers on the road at risk. If you plan on buying a used car, be sure to do all of the extensive research you are capable of doing to avoid falling victim to car title fraud.

The purchase of a new car can be a very tiring experience, especially when you are shopping at a car dealer who wants to trick you to buy a car that is not in your price range, or wants to sell you accessories that you don’t necessarily need. Another common practice for a car dealer can be convincing you to lease even though it really is not the best choice for you. In fact, there is a huge list of car dealer scams and tricks. However, it is still possible to purchase a vehicle and stay clear of all these car fraud. Here are a few tips to use when you shop for a new car.

Remember that there are many dishonest car dealers in the industry who will do anything to increase the purchase price of the car you intend to buy, thus making more profit. So, the best way to avoid dealer fraud is to be prepared with information about buying a new car and this will help you avoid Car Buying Scams.

It is very important to choose the best time for shopping for a new car. First of all try to shop during the week, rather than on the weekend. It will allow the dealer to spend more time on negotiating, because there will probably be a few customers at the dealership lined up waiting to buy a car.

Another good time can be the end of each month and the end of the year. During this time most of car dealers are trying to meet sales quotas and move inventory, so they will be willing to negotiating a good purchase price.

Always keep in mind that the dealer may tell you that he can’t negotiate on the prices. This is probably not true and is another car scam used by the car dealer. If you see that the car dealer is not willing to negotiate, just walk away and try to shop somewhere else.

Rewritten Contract/Backdating

A customer often won’t qualify for financing under the terms of the first purchase contract and may be required to increase a down payment, APR, etc. to qualify for a loan. Then the dealership has the customer sign a second contract with the new terms but backdates it with the date of the first contract, sticking the customer with financing charges for a period during which the contract wasn’t yet in effect. In addition to misrepresenting when the customer takes the obligation of the new contract, a backdated contract often violates the single document rule because another form, usually called “Acknowledgment of the Rewritten Contract,” has the actual date when the contract was signed. In addition, many customers aren’t informed that they may opt to cancel the contract and return the new vehicle and have the ,  and trade-in vehicle refunded, rather than signing a second contract with less favorable financing terms.

Forgery

Car dealers may forge the customers’ signatures on subsequent contracts that change the terms of the original signed contract in case the customer refuses to sign the new one. Among other commonly forged documents are: credit applications (with fraudulent representations about income, etc.), as well as buyer’s disclosure forms and guides in order to prevent buyers from reading their buyers’ rights and/or information that may cause them to reconsider their purchase decisions).

Sticker Price

The car code states that a dealership cannot sell a new vehicle for more than sticker price (also known as the manufacturer’s suggested retail price, or MSRP) unless there is a dealer addendum sticker disclosing itemized costs above MSRP physically affixed to the car. Inflating the cash price of a vehicle – as in the case of a negative equity deal often results in selling a vehicle for higher than the MSRP, while also affecting the amount charged for taxes, licensing & registration and finance charges.

Are you afraid to buy a used car because you don’t want to become victim of dealer fraud? It is, in fact, possible to buy a used car and avoid all kinds of dealer tricks and scams. One of the most important thing to do when you buy a used car is to inspect it before you purchase. Here are some tips on how to inspect a used car:

• The first thing you should do when you buy a used car is to walk around it and check the body, tires, registration and then scan the interior.
• Never look at the vehicle in the dark.
• Never look at the car in the rain. Water can sometimes mask prior body damage.
• Try to see the car when it hasn’t been started for awhile so the engine is cool.
• If you buy a used car in an area that has really hot climates then you will need to check for blown head gaskets and cracked heads.
• Check the transmission fluid after the car is warmed up, on level ground and idling.
• Always get a vehicle history report before you buy a used car. This is an excellent get information about the car you intend to buy and can help you verify if it has been declared as a salvage vehicle or was flooded.

This lease fraud happens when the car dealer promises the consumer to pay the remaining lease payments on the existing lease if the consumer signs a new lease contract with them. Remember that the offer may be the reason for a number of potential problems.

Most consumers think that the dealer is taking over responsibility for the entire lease when he makes this offer. That’s not what happens. The truth is, they simply take over the rest of the payments and when completed, will return the car to the company that originally leased it to you.

In case you have any problem with the car (i.e. damages, excessive mileage, etc…) the leasing company won’t send the bill to the dealer; they’ll send it to you. Moreover, if the dealer doesn’t pay the remaining payments, or doesn’t return the car, the leasing company will contact you, not the dealer.

Car leasing is a method when you can have the use of a vehicle by financing it. Leasing, typically, differs from buying and the consumer never actually owns the vehicle, but uses it over a set period of time. The length of car leasing contracts can be 12 months, and can last up to 24 months or 36 months.

The person who leases the vehicle is making monthly payments to the owner or the dealership. Car leasing may often be cheaper than car loan repayments. However, the person who leases the vehicle should remember that at the end of the lease the customer will not have over a set period of time. Be aware because there are some car dealers will try to scam you by telling that you will own the vehicle at the end of the lease term. However, at the end of the lease you will be required to pay additional sum.

There are a number of advantages that leasing gives. One of them is that car leasing payments usually work out less per month than car loan repayments. At the end of the lease contract the leaser returns the vehicle to the owner and do not have to worry about the value of the vehicle or the hassle of having to advertise and negotiate a sale. When leasing you don’t need to pay down payments like when you purchase the vehicle. You will also afford vehicles that would ordinarily be out of their price range.

Leasing may be beneficial for both the consumer the dealership, however, there are a lot of dealer tricks and car leasing fraud that will make you pay more and make your leasing contract complicated. So, if you have decided to lease a vehicle then carefully read your lease agreement before signing.

The Forced Warranty Scam is when the finance manager tells you that you are not eligible for the loan by the bank unless you pay an extra $2000 for a 2-3 year extended warranty. It”s hard to believe they even try this. Why would the bank trust you to pay a $22,000 loan for the car, but they will not trust you to pay for a $20,000 loan? That’s just insane.

You can avoid this scam by forcing them to put it in writing that you “have” to pay the extended warranty in order to get the loan. Just let them know you”d like to check with the contract your local State’s Attorney’s office for validity and they”ll drop the extended warranty in a heartbeat.

The Dealer Preparation Scam is a legal and very much common practice. I still refer to it as a scam because it is just another way to get more money from you for nothing. The dealer will tell you that you have to pay an extra $500 to cover the labor costs of the dealership’s 5-point inspection.

This alleged check up that you are paying so much money for, is for the dealership to remove plastic from the seats, vacuum the car, maybe, and make sure all of the fuses and fluids are ready to go. When new cars are delivered to the dealerships the cost of delivery and preparation is already covered, so basically you are paying the dealership for work that they haven’t really done.

This scam can be avoided by simply asking the dealership to add an extra $500 credit to the deal to make sure you do not have to pay the money. If they refuse, the choice is yours. If you think it”s fine buy the car, if not; try another dealer that will remove the dealer preparation costs.

Early Termination

Most leases early termination terms can be very unpleasant for the consumer, particularly if the termination is forced, i.e., the car is totaled in an accident or stolen. Insurance pay-outs, in such cases, often fall far short of the balance due on the lease leaving you holding the bag. Many leasing companies will offer “gap insurance” for only a few dollars a month extra which is a wise investment.

There is a very good reason why it is so expensive to get out of a lease. Consider that your monthly payment is made up of two parts: depreciation and interest. The depreciation payment part is calculated by taking the difference between the cap cost and the residual (the total depreciation over the lease) and dividing it by the number of months.

But we all know that a car undervaluates more rapidly in the earlier years with the biggest hit occurring the day you drive the car off the lot. So when you terminate the lease before you have paid all of the depreciation, you will likely be required to pay the difference between what the car is worth and how much you have paid on the depreciation. This difference is often referred to as the “gap”.

Some lease contracts will stack the deck against you with the terms for early termination. For example, some Nissan Motors leases require the sum of all remaining payments be made before they will release you from the lease. Always read the fine print of the lease contract and understand your exact liabilities for early termination before you sign.

Higher Credit Requirements

Since the expensive car you will be driving for the next 2-5 years belongs to someone else (the leasing company), the owners want to be assured that you will make the payments on time and will not trash their car. The credit worthiness standards, therefore, tend to be higher for leases than conventional loans. In other words, if you have a troubled credit history you may have problems getting approved for a lease.

Insurance Cost

Leasing companies conduce to require higher amounts of insurance coverage than you may normally carry. This could impact your insurance cost considerably. Find out the requirements and then get an estimate from the insurance company before signing on the dotted line.

No Ownership

Mileage Limitations

Almost all leases limit the number of miles per year by imposing fees typically 10 to 15 cents per mile over 15,000 miles per year. If you put a lot of miles on a car, these fees can add up quickly.

Sometimes car dealers sell poorly rebuilt, wrecked or salvaged vehicles. Thus, after the purchase car buyers find that the vehicle is unsafe and moreover it is priced too high. The majority of these vehicles were involved in accidents or floods. Most of the vehicles look good on the surface, but they may have steering problems, defective brakes, inadequately welded parts and overall, poor handling.

Most of the state laws require car dealers to inform customers before purchase if the car has, to their knowledge, a “salvage title” or has been involved in an accident. If a car dealer fails to disclose any such information it is considered fraud.

Make sure to inspect the vehicle thoroughly before buying. Especially, look for the following;

• matching of paint on the outside and inside of the door frame.
• parts of the car should line up with each other and the spaces between the hood and trunk and around the doors are straight.
• flood damage is fairly evident in certain vehicles by the presence of mud or dirt under the mat in the trunk, or moisture under the seats or inside the trunk or hood. There may also be watermarks inside the doors.
• if the car has an out of state title, it may have been moved to another state due to its extensive damage.