Dealer Fraud

The Market Adjustment Fee

The car dealer tells you that your car is a really popular vehicle, and to sell it to you they have to add “Market Adjustment Fees” of several thousand dollars. This amount is normally 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, particularly trade-in buyers, have been ripped off 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 dollars for their car, but they don’t notice that they are charged a much higher Market Adjustment Fee.

The Extended Warranty Scam

The Extended Warranty scam is rather old but it is still in use. Basically, when you take a loan on your car, the dealer will say that you have to purchase an extended warranty because the bank requires it for the loan. Avoiding this car dealer scam is very simple actually. Tell the dealer to write down that the extended warranty is required for the loan and they’ll most probably find some excuse to remove the extended warranty. If they refuse to do so, then please do not buy from that dealership.

The Dealer Preparation Fee

The dealer charges you a preparation fee for preparing your car. Most MSRP stickers display that preparation costs have already been covered by the manufacturer. In fact, some fraudulent car dealers permanently print it on the buyer’s order to make it seem mandatory, but one way you can get it removed is by telling the dealer to add a credit (of the same amount as the dealer preparation fees) on the next line. If they refuse to do so, you should simply walk out of the dealership.

This is a very common car dealer scam designed to rip off people with bad credit. It is also referred to as the Spot Delivery scam.

While you are at the car dealership you may be told that you have excellent credit and got a good APR on the loan. Then they hand you the keys to your new car, tell you the sale is subject to loan approval and so you drive happily off.

A few weeks later you get an unexpected phone call from the car dealership letting you know that the loan fell through because you didn’t qualify for the interest rate that you thought was guaranteed. So they ask you to come back to the auto dealership to work it out. If you fall for this car scam be prepared to pay a much higher interest rate.

The dealership knows exactly what interest rate you qualify for and how large a loan you can get. They knew you had bad credit long before you drove off. They knew that even though you could get a loan the APR would be high. The result: you would either purchase a less expensive car or decide not to get a car at all. You want the car badly… if the price is right. The salesman is well aware of this. He or she also knows your credit score and wants to make the sale any way they can.

If you believe that you’ve been a victim of a Yo-Yo financing scam you should immediately report the car dealership to your state’s Attorney General Office. You should also contact the Better Business Bureau in order to report a dishonest dealership. You can also try to find better financing with a better interest rate as fast as you can.

The credit score scam

This scam is designed in the following way. The finance manager gives you some misleading information about your credit score telling you that it is lower than it really is so that they can get you for higher interest rates.

This scam is comparatively easy to avoid. Just get your own copy of your credit report and bring it with you.
It is not easy to lie to you about your credit score in case you have your own copy of it. If your paper and theirs doesn’t contain the same thing, go somewhere else because that dealership is lying to you.

The Dealer Prep Scam

Basically the dealer will tell that you have to an extra $500 to cover the labor costs of the dealership’s 5-point inspection.

You are paying for the amount of time it took for the dealership to make sure that the car wouldn’t explode on you in the first week of owning it. This check up is for the dealership to remove plastic from the seats, vacuum the car out, make sure that all of the fuses and fluids are ready to go, etc.

When factories deliver new cars to the dealerships the cost of delivery and prep is already covered, so basically you are paying the dealership for work that they haven’t really done.

You can avoid this car dealer scam by plainly 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, then you can decide if the car is worth the money or not. If you believe that it is worth, buy the car; if not, go to another dealer that will remove the dealer prep costs.

The series of bumps in the price and the attempts of grinding you to spend more money is known as the Bump and Grind scam. Here is how this car dealer scam happens and how you can avoid it.

The Bump and Grind scam happens during the car buying negotiation process. It’s a common sales technique used to gradually raise the price of the vehicle. If the salesperson tried to raise the price by $2000.00 right off the bat then you would freak and run out the door.

So the technique of gradually raising the price by just a little here and a little there is much more subtle and quite effective.

When you make an offer on a car, the sales person will certainly tell you some bogus line like: “Hmmm, my boss will kick me out of his office if I take this offer to him, so let’s bump it by $200.00 and then he will at least listen to me?”

So that’s the first “bump” and on it will go. The sooner you succumb to the “Bump”, the more bumps in the price you can expect. Then the dealer will supposedly present your offer to the sales manager and supposedly argue on your behalf.

Just remember that such scenes are just simple auto scams designed for making you believe that you’ll make a great deal in case the sales manager agrees to the price offered by the sales person. Finally after about quarter of an hour the salesperson will come back and say something lame like: “That sales manager is such a hard head! If you could just agree to add another $250.00 to your offer then I’m almost sure he will agree to your price”.

You can avoid the bump and grind scam by telling the salesperson that you’re aware of it and are not amused by their games and that they are just wasting their time and yours and if they continue with the bump and grind car dealer scam that you will just leave.

Most people hate going car shopping because they have heard so much about the innumerable car dealer scams. In this blog you may learn about some seemingly innocent, but rather witty dealer scams.

Today Only Price Car Dealer Scam

This car dealer scam works till you are at the car dealer, but have not bought a new car yet. The dealer will give you a great price and will tell you that the price is only good until the end of the day. This car dealer scam will make you think it is a great deal and end up buying the car without checking what other car dealers have to offer for fear of missing out on the great price they offered.

Throw It In Car Dealer Scam

For sweetening the deal and softening you up on price the dealer will offer to give you extras like floor mats, window etching, fabric protection and other accessories. This largely practiced scam will slow down the price issue negotiations and take your attention away from the price and make you feel that you got something of value.

The Puppy Dog Car Dealer Scam

The dealer will allow you to take the car overnight. The idea is to get you to experience ownership for a much longer period of time than a test drive.  Then you can see the car in your garage or driveway, your neighbors can see it, your friends see it, and you start to form an attachment to the car and end up buying.

Best Price Matching Car Dealer Scam

If the car dealer doesn’t manage to sell you a car while you are there, they will tell you just before you leave to visit other dealers that they will match or beat any price that you will get anywhere.  By this time, you are most likely sick and tired of looking around and dealing with car salesmen and various scams that you will take their offer.

When buying a new car, people most frequently turn to car dealers as to the most knowledgeable and trustworthy people to buy a car from. However this is not always the case. Some car dealers are simply dishonest and use really mean scams for tricking you. So one should be extremely cautious to avoid becoming a dealer fraud victim. Today we will discuss the The Payoff  Your Loan Scam and try to reveal the related  dealer tricks.

This is when the dealer offers to pay off the balance of your current car loan no matter how much money you still owe. It is a common sales strategy. When the average buyer hears this, they think that by purchasing a new car with a new dealership, they will automatically owe no more money on their current car. That couldn’t be further from the truth. What really happens is that the car dealership does help you get out of your current contract, however they are normally forgetting to tell you how high your fees are going to be for breaking the lease agreement with your old dealership. So now you will have to pay fees that are in the thousands to compensate for it. You will also not be able to refinance for a new car until those fees are paid. Of course the dealership can add the cost on to your contract with them at a substantially higher rate. The sole reason why the dealership agrees to this deal is because they want to get more money off of your current car. They aren’t really doing anything for you at all. The dealership will also give you far less than the car is worth on the trade in. This car scam works because they will up your monthly fees, and then sell your trade in for more money than it’s worth. The dealership will then extend your monthly payments in order to conceal extra year of payments.

To avoid this car dealer scam, you have to ride out your current lease until the end. If you are really determined to get a new car, then you should try selling your current car on your own. Possibly make a deal so that the buyer pays much down and takes over the lease payments. Make sure you get legal documents so you don’t end up with bad credit from someone who decides not to pay. Also make sure the buyer carries enough car insurance.

The Bump and Grind car dealer scam is a common dealer trick, used to increase the price of the vehicle and occurs during the negotiation process.

Car dealers know that if they try to raise the price of the vehicle for $2000.00 right off, the consumer will probably go away from the deal. So what they basically do is just raising the price by just a little here and a little there. This technique proves to be quite effective.

When the car buyer makes an offer on a car, the sales person will most likely tell some bogus line like: “Gee, I know my boss will kick me out of his office if I take this offer to him, so how about if we raise it (bump it) by $150.00 (or whatever) and then he will at least listen to me?”

This is only the first “bump” and what consumers don’t know is that later there will be more bumps in the price.

Then the dealer leaves you for about fifteen minutes to supposedly present your offer to the sales manager. The salesmen will pretend to argue on your behalf. When the dealer comes back and he/she will say something lame like: “Gee, that sales manager is such a hard head! If you could just agree to add another $200.00 (or whatever) to your offer then I’m almost positive he will agree to your price”.

You can avoid the bump and grind car dealer scam if you are well informed and let the dealer know that you are aware of it. If you feel that the dealer is trying to scam you tell him that you will leave if they continue to do so.

Car buyers who have poor credit are not left with a lot of options when they are shopping for a car. In fact, their only choice for finding a lender for their new car purchase is through a car dealer loan.

Car dealer loans are not as bad as a lot of people think, but they certainly hide a lot of surprises. This is why car buyers need to be very careful when planning to use a Car Credit Loan.

First of all make sure that the interest rate is fixed and is clearly stated in the final contract. Also check that it is written in a way that it wouldn’t allow the car dealership to change it at a later date. It is a common practice for car dealers to improve your car loan application, have you sign the documents, and hand you over the car. However, later they may call and inform you that you do not qualify for the loan because you have poor credit. The dealer will tell you that you must pay higher interest rates in order to keep the car. If you are in a situation like this find a loan from another lender or report the scam.

Another very popular car dealer scam is to make you look for a cosigner for your loan. The dealer will convince you that this is the absolutely only way that you can get financing since you have a terrible credit history. However, later you will find that your name isn’t including in the loan documents and that the loan is in the name of the cosigner, even though you are paying it. This is illegal. If your car dealer offers such a thing simply refuse to sign the deal.

The “spot delivery” is a dealer trick used to get you to take delivery of a vehicle immediately after you agree on a car deal. However you should know that even though you pay down payment and drove away from the dealership with a new vehicle doesn’t mean you’ll get to keep it. Dealers know that most car buyers are in a hurry to sign the paperwork and to leave in their new vehicle.

The scam happens when you allow the dealership to handle the financing. You first sign some paperwork which the finance manager should try to get approved with the bank. If he can’t get the deal put together with the bank whose paperwork you signed, he then has to go to another bank. The finance manager will probably call you to let you know you have to sign new documents. Moreover, at the dealership the buyer will be informed that he/she has to return the vehicle or sign a deal at a very high interest rate per year.

Often, the people with low credit or low income become victims of spot delivery schemes. The best way to avoid this car dealer scam is to be informed and not let the dealer rip you off. If you believe that your car dealer tried to scam you contact an experienced dealer fraud attorney.

The car fabric protection car dealer scam is, in fact, very simple and easy to avoid. Car dealers make great profits by selling their consumers many fees and “options“. Most of these things can be bought on an aftermarket basis and some of them are a total scam.
The car fabric protection car dealer scam happens when the car dealer charge you for hundreds of dollars for stain protection for your seats and carpet. Actually you can’t be really sure the fabric protection was done as it is invisible. Even if the fabric protection is done you need to know that all the car dealer did was to spray the fabric with a couple cans of Scotch Guard. You can buy Scotch Guard at most stores for only a couple dollars per can.
Remember, that the car fabric protection car dealer scam is one of the car dealer scams you may be confronted with when buying a new car.