Dealer Fraud

Most car dealership scams are very well hidden, so that if the car buyer do not really understand the car selling game from the inside, he/she will probably fall for them. In this article you can find only a few of the common dealer tactics used to scam you.

You should starts protecting yourself against auto dealer fraud before you even enter the dealership. First of all research the cars you are interested in, try to narrow down your choices and find out the average cost of the model you intend to buy. If you are not well informed the car dealer will most likely try to talk you into the car deal that is more profitable for him.

Remember, that you should be confident. Negotiate and show the dealer that you are prepared and familiar with the cars available and you have an understanding of the cost. Very often car dealers will start their negotiations at a very high price. Offer a low bid (lower than you need to pay). This way you will be able to meet at an acceptable mid-range at the end of the negotiations.

One more dealer trick is getting a consumer to pay more by different added on extras. This includes dealer warranties, special insurance plans and paint sealants, etc. When you purchased add-ons you car dealer makes hundred or even thousand dollars of profits.

Remember, that you can protect yourself against car dealership scams if you understand the basics on how dealerships make their profit and the tricks they use.

In car auctions there is a large fleet of former rent-a-cars from major rent-a-car companies and very often dealerships will get their used vehicles from auctions. These vehicles are driven by numerous different people, who have different habits. Sometimes, people who rent the cars tend to abuse these vehicles and treat them in ways they would not treat their own car.

This is why rental cars are of lesser value than other vehicles of the same brand and the same age that were owned by an individual. The law in a few states requires car dealers to disclose in writing the fact that a vehicle was a rental. However, in the states where there is no such law, car dealers typically hide this information, or even misrepresent the vehicle’s history in an effort to make the sale.

In some car dealerships these vehicles are labeled as “Program Vehicles”, which gives the customers the impression that the vehicle history is of some higher quality. The fact that the vehicle has a previous rental history is material, because consumers will probably not buy it if they known this fact. The failure of the dealer to disclose this information to the buyer is auto dealer fraud.

There is nothing worse for a consumer than falling for an auto sales scam. The purchase of the vehicle is one of the most important purchases and if you fall for the scams of a car dealer you can loose a lot of money. However with a little bit of information you can avoid auto sales scams. Following are 5 important tips you can use to avoid auto dealer fraud.

1. Always go into a dealership with a strong understanding of how much you can afford for monthly payments. Remember, that a car dealer wants to sell you a car and make a profit and will often try to get you to spend more.

2. Watch out for predetermined monthly payments. It’s a common tactic for dealerships to plaster a sign on the vehicle windshield advertising a low monthly payment for the car. This makes a customers believe like they are getting a good deal. However, when you add up the total cost you find you are actually overpaying. This is why you should always have the total cost calculated before signing any document.

3. One of the oldest scams is a classic bait and switch. The car dealer will give you a great price break on the car up-front only to load up his profits by adding a lot of unnecessary extras such as extended warranties, gap insurance plans and special paint sealants. Avoid it by declining any extras.

4. “This deal is only good for today.” This is a common dealer trick and is designed to get you to buy today. The truth is car dealer is afraid that if you leave the dealership and think the deal over you will never come back again. Dealership will still be willing to sell you the car and make you a deal tomorrow.

5. You can negotiate any price. Never get to thinking that the terms of the sale are final. It is good for you to know that any price is negotiable at a car dealership.

One of the most important factors to consider when you are shopping for a used car is whether the car you intend to buy is really worth its price. Even though the car may look like it’s in a good condition there is still a possibility for you to become a victim of auto dealer fraud. Following are a few tips to help you estimate the real value of a used car.

1. First of all, do a little research on the car you consider to purchase. Find out how much that car costs if it were brand new. Check if the car is still in production and if its parts are still available. If you find out that the price of the car is too low it may have more problems than you think.

2. One of the most comprehensive used car value listings can be found in Kelly Blue Book.

3. Remember that brand new cars generally lose up to 30% in their value in 3 years. By the time the car is 5 years old, it may have lost up to 65%. So the older the car the cheaper it should become.

4. Another good idea would be to take a qualified mechanic along with you. The mechanic will be able to whether the car really is worth the used dealer’s tag price.

5. Get some information about the used car history. You can obtain a detailed vehicle history report on CarFax and other sites on the internet. The vehicle history should include any accident history and insurance data.

Keep in mind that some used car dealers will offer you defective cars, so try to look for a reputable dealer if you want to avoid all kinds of car scams.

You may be required to do so. In many states, you (or your attorney) must contact the auto dealer and give them an opportunity to correct the problem to your satisfaction, before taking any legal action for possible auto dealer fraud. This contact should be in writing, and should clearly illustrate both the problem (i.e. the dealer’s failure to disclose certain financing charges), and what steps you would like the dealer to take to resolve the problem (i.e. a partial refund of the vehicle purchase price).

This car dealer scam often takes place when the finance manager insists on a deposit before the customer has signed the purchase contract. The car buyer will be told that the finance manager is required to bring in a copy of the contract offer to his boss and he needs a deposit from the customer just to ensure that the boss will sign off on it.

The finance manager will probably tell you that “It’s just to make sure that you are serious about getting the car”. Avoid this car dealer fraud by refusing to give a deposit before the contract is finished a signed by both parties. This is a common trick used by dealers to keep you there. Tell them that the fact that you made an offer on the car shows that you are serious.

This car scam occurs when the customer have already successfully negotiated a car, and the car dealer suddenly gets a phone call with an offer for the car that is lower than the price agreed on with the customer. The car dealer casually lets the customer hear him state that he will call the man on the phone right back if the customer opts out of the deal. The car dealer then tries to talk the customer down from your set upon price to compete with the guy on the phone’s offer. You can avoid this dealer fraud by telling the salesman that you will understand if he chooses to take the better offer.

This scam happens when the dealer tells you that your car is a really popular vehicle, and so to sell you the vehicle they have to add “Market Adjustment Fees” of several thousand dollars. This amount is usually 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, especially trade-in buyers, have been scammed 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 for their car, but they don’t notice that they are charged a much higher Market Adjustment Fee. The dealer sells the car, gets the trade-in, and makes an extra off the buyer. Never pay more than the manufacturer’s MSRP.

Dealerships depend on a buyer’s ignorance so that they can mark up your prices. Holdback is money paid to the dealer for about 2-3% of MSRP. The factory gives this money to the dealer when the car is sold. This is the profit of the dealer for selling the vehicle. Most dealers will tell you that it costs them money so that they can charge you for it later. Basically, they can get the money twice. Avoid this dealer scam by letting the dealer know that you know better and will not pay it.

This car fraud occurs when the dealership advertises that the price of the vehicle is lower than the MSRP. However what most car buyers don’t realize is that the fine print says that the prices include rebates. All this means is that the rebate that you were offered doesn’t exist because it was already calculated in the advertisement. You will be able to avoid this auto fraud by ignoring it or requesting it in writing that states the rebate is in addition to the price of the car.