Dealer Fraud

In case a buyer has a bad credit but wants to buy a car, his financing options are not wide. For that reason buyers turn to car dealers who can provide the money required for the new car. Car dealer scams associated with car dealer loans are the following:

Previously Wrecked Car Sold “As Is”

You will be asked to sign documents that will state the car’s condition and that you agree to buy it “As Is”. In this case you have no warranty. If something happens to the car, there will be practically nothing that you can do.

The best thing to do to avoid this car scam is to order Carfax vehicle history report that will reveal everything about the car. Also get a mechanic to inspect the car that you are going to buy.

The Excusive Fee Scam

This car dealer fraud is amongst the top auto dealer scams. Though it is a simple one, a lot of car buyers easily get tricked. This car dealer scam is in fact not illegal. The car dealer simple adds a number under the car price total and asks you to pay it. The dealer convinces you that this fee covers their expenses for car checking, car cleaning or removing the plastic from the car seats. However, this extra charge is usually quite high for such services and you should refuse to pay it.

The Bouncing Check Scam

This auto scam is designed for those car buyers who managed to get financing for the purchase and thus do not ask the car dealer for financing. The dealer says that the check bounced and offers you financing. He will convince you that their deal is ideal and you can get the car immediately. Do not be cheated by such sweet talks.

The dealer will offer you loan at a higher annual interest rate. Moreover, some car dealers will even call you later to say that actually you do not qualify for the credit and will try to increase the rates even more.

When purchasing a new car you need to be very careful in order not to get scammed. So you should know the most common car tricks dealers use to make profit on you. Read our blog to get the knowledge that is necessary in order not to become a car dealer fraud victim.

Search for car buying advice

Always remember that when you go into a dealership that they are looking to sell you a car and make a hefty profit. You need to learn the art of negotiation so that you can get the best possible price and save yourself a lot of money meantime.

Go into the dealership with your own financing options

You need to go into the dealership with your own financing options because if you leave it up to the dealers,  you will end up paying more money than you should. Remember that most car dealerships have finance companies that make money off of you.

Be careful about those extras that the car dealers add to your purchase. In most cases these are items that you do not need and it is only going to cost you more money in the long run. So avoid unwanted items that the car dealer may try to sell.

Remember that when you are in the market to buy a new car you need to avoid the dealerships trying to scam you. They can tell you a lot of things that are not true to make you buy the car but you should not fall for it because they might tell you anything to make a sale.

Odometer is an instrument indicating distance traveled by a vehicle, but criminals are using various instruments to roll back the milometer to sell the vehicle at a higher price.

Odometer rollback schemes represent a high profitable car dealer fraud. In addition to an old machine with false mileage you also get a car which will most likely need more maintenance and repair, thus almost guaranteeing you a return to the car repair shop. And of course the result is more money to be paid by you. Only a low percentage of odometer fraud is executed by amateurs, usually this crime is associated with intelligent organizations or individuals who develop complicated schemes very difficult to detect and investigate. Not only the end consumers are affected by this car fraud, but also legitimate re-sellers.

Recently car manufacturers make use of digital mileage meters because they are cheaper to produce than a mechanical dashboard and easier to fit into the car as there is no mechanical speedometer cable.

Another reason for developing digital odometers was to alleviate the problem of odometer tampering. Electrical pulses in the car wiring may cause the dashboard data, which is stored internally on an EEPROM (Electrically Erasable Programmable Read Only Memory), to become corrupted due to a car accident or a simple mistake in electronics. Therefore, of course, also a tool exists to “correct” the mileage numbers who were displayed incorrectly.

Unfortunately just as quickly as the technology was developed, scam artists learned how to use it for the wrong reasons. It is similar to computer hacking, with the right software and hardware you can penetrate right into the system making the desired changes. You can purchase these tools anywhere in a car shop or online. Since digital odometers don’t have any visible moving parts they are even harder to detect than traditional mechanical odometers, so the vehicle’s condition and a detailed history report are the best clues a buyer has for determining whether clocking has occurred. Legally this service is displayed as “mileage correction”.

According to statistics used car buyers have a one in three chance of buying a vehicle that’s subject to car dealer fraud. But with some care you can avoid them and find the car of your dreams.

What Scammers Do?

* Selling a car that’s been repaired after an accident. The frame might be bent then re-straightened, or any number of faults could be covered. Obviously, they are not going to tell you that - they simply want to sell the car. Buy it and you could be riding a death trap.

* Selling stolen vehicles. Only two-thirds of cars stolen each year are recovered. Many stolen cars are re-sold. If you’ve bought a car and the police find it, they’ll take it. In theory you can pursue the seller for your money - but what are the odds of finding him?

* Selling a car that’s not paid for yet. If you knew about the debt, the finance company can take the car from you. You can keep it if you didn’t know - but how do you prove it?

How to Avoid the Scam?

* Make sure the seller may produce all the proper documentation, and that the car has a VIN number.

* Remember that a car more than three years old must have MOT certificates. Check it to avoid odometer fraud.

* Always ask to see a seller’s proof of identity. If it’s a private sale, look at their insurance policy.

* Find out about the vehicle’s history before you buy. The AA or the HPI can tell you.

* Have the vehicle checked. You can bring in your own mechanic or trust a motoring organization.

* Never buy from anyone who’s selling a car in a motorway service area - that’s asking for trouble. If possible, go to the seller’s house.

* Watch out for ads where car dealers pretend to be private sellers. In this case they dodge some legal obligations and are probably trying to sell a car they can’t sell otherwise.

Car dealer tricks are various and being aware of them is more than important. If you are not careful enough you can get ripped off in car buying process without even knowing it. Car dealers sell cars every day; you buy one surely not even every month. So car dealers have predominance over you in this particular case. In this article we will try to outline how to watch for car dealer tricks.

Step 1

The first step is to tell the sales person that you are not going to discuss rebates until you have agreed on the price of the car. Rebates are intended to attract car buyers into the showroom, and very often they do. However, rebates are sent directly from the manufacturer, they are not connected with the price you negotiate for your new car. Once you have negotiated the price make sure the rebate is then deducted from the price on the final bill of sale.

Step 2

The second step is to avoid high monthly payments. The sales person will ask what you are willing to pay each month, whatever number you throw out will be the least you will ever pay.  Talk only about the final sales price of the car, then once that is decided you will work out what your payments each month will be.

Step 3

The third step is to avoid fees that are extra money makers for the dealer. Negotiate the final price of the car and then if the dealer tries to throw on extra fees after that is done do not pay them under any circumstances. Tell them that the price you negotiated is the price that you will pay, and tell them to build it into the price or you are walking out.

Step 4

The fourth step for avoiding car dealer fraud is to secure your own financing from someone else besides the dealer. This way you can have a secured rate and if the dealer can’t beat it, then forget their financing and do it on your own.

While most people are aware of common car dealer scams, less experienced buyers may fall prey to their tactics. When selling a new or used car, car dealerships profit in two ways. They profit from the sale of the vehicle, and from the interest paid by the buyer. Hence, the goal of most car dealerships is to trick buyers into paying more money for their car.

Dealership Mark-Ups

Car dealerships have a close relationship with certain finance companies. Thus, the car dealerships will likely encourage buyers to use a specific finance company. If possible, secure your own financing with a bank or credit union. Because car dealerships also profit from the interest paid, the in-house finance company may increase the loan rate by a few points. The difference paid is received by the dealership.

Dealership mark-ups may be avoided by simply comparing auto loan lenders. Do not accept the first loan package offered, and never accept dealership financing without shopping around. Request a no-obligation quote from an auto loan broker. This way, you acquire multiple quotes from honest lenders.

Upside Down Auto loans

In an effort to finance everyone, some car dealerships offer crazy loan packages. This might include zero down loans, extended loan terms, etc. While these options sound appealing, and they may help you afford a nicer car, keep in mind that car’s lose their value quickly. Thus, avoid long finance periods. If possible, attempt to have the car paid off within four years. Also, save money for a down payment.

In case you feel you have already fallen a victim to car dealer fraud, contact an experienced car dealer fraud attorney for further help.

Do your homework accurately before entering the car dealership to avoid the potential threat of becoming a car dealer fraud victim. Here are some useful questions to ask a used car dealer:

1.    What is the dealership’s return policy?

High-pressure dealerships will most likely laugh at this question. However, a consumer friendly car dealership will probably give you time to rethink the purchase and at least provide you equal value. No dealership is going to offer you cash back.

2.    What is your cash price for this used car?

Cash is king, even at used car dealerships.

3.    What new equipment comes as part of the purchase?

See if you can get the dealer to throw in e.g. a set of new tires. If the used car’s mileage is approaching 100,000 a timing belt might be a nice touch.

4.    What service has the car dealership performed on the used car since acquiring it?

This helps you to determine what value you’re getting for your purchase.

5.    Do you take trade-ins?

In case the dealership handles this for you it will make your life a lot easier if.

6.    Is a CarFax report provided before purchase?

A reputable dealership will have no problem with this. Make sure the report’s VIN (vehicle identification number) matches the VIN on the used car you’re looking at.

With the help of these questions, hopefully you will not need a dealer fraud attorney’s help in the future.

To avoid becoming a car dealer fraud victim, one should beware of all kinds of auto financing scams. Below are some of the most common auto financing scams that are utilized by some fraudulent car dealers.

Market adjustment fee

The dealer will try to convince you that the vehicle you want is selling like hot cakes and is very popular. In order to sell you the vehicle, they will do some “market adjustments” amounting to a few thousand dollars. Even if the car you want is very popular and is very much in demand, if it is in stock you should not be tempted because getting a “popular” car is not worth it if you have to pay a few thousand dollars more. You should never pay more than the MSRP (manufacturer’s suggested retail price).

Yoyo scam

You will be allowed by the dealer to take the car home as soon as possible. The dealer will take care of the financing, a few days later he will contact you again and tell you that there was a problem with your financing plan. He will tell you to set up a new financing scheme which, of course, will be at a higher cost.

Be wary of this car dealer trick and avoid it at all costs if you detect it. If you have a bad credit standing, don’t have your financing done by the car dealer and make arrangements for your own financing. Never take the car home immediately. Wait for at least 24 hours to make sure that the processing of your financing scheme has already been completed. By allowing one whole day to pass by, you are assured that the dealer cannot use this scam on you.

Buying a new car is like buying anything else on the market, only a little more stressful.  Stressful because car dealers are trained not to take “no” for an answer, and many word games and phrases come into play to help them to get you to close the deal.

So you can be easily led to think that you are getting a good deal, when in fact you could be getting a bad deal.  This is their job; they improve their craft all day from 9:00 to 5:00.

The new car sale price trick isn’t usually included in the list of the ‘official’ car dealer scams, but it’s worth discussing.

Surely you’ve noticed how retail stores will offer a 50% off deal on a piece of merchandise, but in truth the price of the item has been increased in the first place.  This same marketing strategy applies to selling cars. If a company marks up the price by 55%, and sells it for 50% off of that price, you are actually paying 5% more for the item than it originally costs.

This is a very common way for car dealerships to work.

They may offer a $4000 cash back deal on your trade-in while the other fees and interest rates will be higher than normal. But they’re hoping that this $4000 cash back offer will temporarily blind you long enough for you to sign the papers.  So while a car dealership may make the numbers sound great, they will try to get you with the other fees.  Let them “try” whatever they want; your job is to not be fooled by their tricks and eventually not to become a car dealer fraud victim.

Purchasing a pre-owned vehicle may be a difficult task, especially if you do not know which used cars to avoid. There are certain steps that consumers should know to avoid becoming a car dealer fraud victim.

Step 1

Check Consumer Reports before purchasing any vehicle. Consumer Reports contains valuable information on the reliability of new and used cars. They contain evaluations from both the car experts and everyday drivers. Search by the vehicles’ year, make and model. Read each evaluation carefully and check the used car’s overall rating.

Step 2

Go to a private party or dealership and test drive the vehicle. If you are not sure what to look for, have someone come with you who has a good idea of the vehicles components. Check the basic functions of the car to make sure they are in working order. If you do not have anyone to take with you for a test drive, bring the vehicle to a reputable mechanic.

Step 3

Request a vehicle history report. This step is crucial to ensuring that you are not driving a lemon! A vehicle history report will provide you with details on any accident, fire and flood damage that the vehicle may have incurred in the past. It will also tell you whether or not the vehicle has a salvage title.

Step 4

Walk away from any private party or dealership that will not allow their vehicle be viewed by a mechanic or does not provide you with an accurate details of a vehicles history.