Dealer Fraud

The fake dealer scam is one of the numerous scams you may become victim of when purchasing a vehicle. Here is how this scam is designed. You are conducting an online search for a used car and come across a car for sale at a very good price, you contact the seller and they tell you the car is a fair distance away but they will pay for the cost to ship it to you, they ask you to pay via a wire service they use many times and you never see the money dealer or the cars for sale again.

The scam is clever here as the money wire website they have you use looks just like one you would expect to see, sometimes they look better than the real money wire websites they use the popular brand names on their site to make it look official and make a minor change to the web address which normally goes unnoticed. The money is wired and immediately picked up never to be seen again. The car photos and details are normally copied from local dealers’ websites and the car scam artist poses as one of the dealers.

To avoid this scam first of all you should be well informed and attentive. The first warning signal of this scam is the dealers’ offer to ship the car for free, not only they sell the car cheaper than its normal price but also they are willing to foot the bill for shipping. Never trust someone else’s recommendation and never use a money wire service for online payments as they are just not secure enough.

Every car buyer can become a victim of dealer fraud, especially if you go to a dealership without being aware of common dealer tricks and pressure techniques. Thus you can end up paying hundreds or even thousands more on your car deal.

Following are the most common car buying scams that come directly from a car dealer.

1. Remember that all car dealers are master negotiators and are trained on sales tricks and strategies. Often the sales staff of dealerships is offered formal or informal courses in persuasion. So it is very easy for the salesperson to talk you into a purchase.

2. “The deal won’t be here tomorrow!” This is one of the most common persuasion tactic used by car dealer. In fact, the salesman is afraid to let you leave the dealership, as he knows that if you have time to think the deal over you are not likely to come back. The truth is you will still be able to buy the car tomorrow, so take some time to make a decision.

3. The Back End scam happens when the dealer loads up profits. A sales agent may offer you a good deal on a car and then sell you a lot of over-priced extras. Avoid this scam by refusing all extras on a used car.

4. Car dealer will probably try to pressuring you to “close the deal now”. Salesman knows that the quicker you buy the sooner they can move on to the next customer. Don’t rush into the deal. If you feel pressured into deciding, simply walk away.

5. If you are uncomfortable or not very knowledgeable about cars it is a good idea to bring a friend or a spouse with you. Someone who knows more about car buying can save you hundreds or even thousands on your purchase.

6. Remember that the first offer of the Salesman will be very high. This is why you should start your negotiations low, so you can meet in the middle at an acceptable price.

You can avoid car buying scams if you understand the main sales tactics and tricks used by dealers.

One of the common scams of the car dealer is to tell you that the dealership has found a lower rate for you. All you have to do is go to the dealership and re-sign your loan papers. However, this is not the truth. Most victims of this car fraud are people who don’t know their credit score and don’t have any information about the current interest rates they qualify. Thus, the best way for you to avoid this scam is to get a copy of your credit report online.

You should never consider buying a car when you are in desperate need for one. Your car dealer will probably feel that you need a car very much and will try to take advantage. Never wait until an old car is dead before searching for a new one. Give yourself a little more time to shop around for a new car and you will be able get the best deal possible.

Sometimes the dealership will contact you to inform that your financing fell through and that you have to respond by paying more money on your loan. This is just another scam pulled by dealerships. Don’t believe it. It’s another reason for you to get a copy of your credit score.

This car scam usually involves the trade in that you owe money on. This scam happens when the dealer intentionally holds your trade in as a hostage. The money you put down as a down payment is locked up in the dealership. Your car loan is considered to be delinquent, because the dealership has promised but in fact haven’t pay off your loan.

The best way to avoid this scam is to get all your car loans pre-approved even if you have bad credit. Thus you become your own finance manager and are empowered to take care of your own finances. You are also allowing yourself to focus on what is really important, the price of the vehicle you are purchasing. There are several other dealer tricks that you will be able to avoid if you get your loan pre-approved.

In case you don’t want to pay for the preparation fee, simply tell the car dealership to credit you the amount of the preparation fee service on your contract. If the car dealer refuses to do so, just walk away from the deal. Remember, that it is legal for a car dealer to charge you for preparation fee, however if you step into the dealership armed with information it will be very hard for dealer to scam you and you will be able to save your money. There are more and more scams and fraud going on today and the best way to protect yourself from dishonest dealers and car fraud is to educate yourself and be well informed.

If you think you are a victim of the preparation fee scam, you won’t be able to report it to the authorities. However, you should report the car dealership to your state’s Better Business Bureau.

Following are some other scams you should be aware of when shopping for a new car.

1. One of the scams the dealer may use to make more profit is the VIN# Scam. This scam happens when the dealer tries to charge you for having the VIN# etched on the window, because it is required by the finance company. This is not true.

2. Another dealer fraud is the forced warranty scam when the auto dealership will insist that you purchase a $2000, 2 or 3 year warranty in order to qualify for the car loan. The dealer is simply trying to scam you and the truth is you don’t need the warranty.

3. Be wary when the dealer says the phrase “subject to loan approval“. In fact, all car loan proposals will have this phrase in it, but there are only a few unscrupulous dealerships out there that will try and con more money out of you by quoting this phrase as the reason why. You don’t have to worry if you have good credit. Car dealers usually use this scam on consumers that may have bad credit. The best way to avoid this scam is getting your car loan from a bank or other financial institution.

4. The ‘dealer mark-up’ is another fake fee added by car dealers on purpose to increase their profits from the sales. This fee is usually seen on an orange sticker attached to the manufacturer’s suggested retail price.

The above mentioned scams are just several of numerous scams used by car dealers to trick you. When you are shopping for a new car, try to find a trustworthy car dealership to avoid being scammed.

This popular scam occurs when the dealership sells you a previously wrecked car. Of course, some car dealers may not know that the car is a wreck however some know and simply try to cheat you. When you buy this type of vehicle it will have a sticker on it that says “as is” and the car dealer will ask you to sign papers that will state the condition of the car and that you agree to buy it “As Is”. This is a real problem for a consumer as no warranty is included with your purchase. In case something happens you are assuming all risks for the car and the dealer has no responsibility.

The best way to avoid this scam is to get a vehicle history report for the car you intend to buy. Try to get as much information about the car as you can. Another good option to check the condition of the car is to take it to a qualified mechanic and have it inspected.

This scam happens when the dealer adds unnecessary fees to make as much profit as possible. This fee can be seen on the orange sticker marked on the manufacturer’s suggested retail price (MSRP). There is no real reason for requiring more money for the additional dealer markup. What the dealership does is including all kinds of extra fees in the additional dealer markup.

Avoid this scam
The best way to avoid the markup scam is to simply ask the dealer to get rid of it whenever you see an extra dealer mark up fee. If they refuse than just walk away and shop somewhere else. Remember that if you do pay the extra dealer markup, you are overpaying for no real reason.

Insurance scam happens when the dealer tells you that if you purchase your insurance from them or a company that they work with you will avoid paying higher interest rates. Remember that this is not mandatory. This scam also applies to the car dealer telling you that you must pay life insurance or extended warranties due to “bad credit.” Avoid this scam by simply walking away from the deal.

Turnover scam is just another way to really wear the person down. This dealer fraud occurs when the dealership sends over many different salespeople continuing to ask the customer to invest time and get you to hurry up and buy. This dealer tactic is also called harassment. Avoid this fraud by threatening to leave if they don’t stop it.

This is one of the dealer scams used by dealerships simply to keep the consumer there. This dealer fraud happens when the finance manager insists that the customer makes a deposit before he/she have signed the final purchase contract.

The customer will typically be told that the finance manager has to bring in a copy of the contract offer to his boss and he needs a deposit from you just to ensure that the boss will sign off on it. The dealer will tell you that it’s used just to make sure that you are “serious” about getting the car.

You can avoid this scam by refusing to give a deposit before the contract is finished and signed by both parties.