Dealer Fraud

You might have heard that repossessed used cars are sold at huge discounts compared to their market price. While this is not too far from being true, this knowledge won’t be much helpful if you do not know where to locate these sales and how to really get the best deal and make sure you do not fall a victim to various car dealer scams.

Generally, repossessed used car sources include repossessions by banks as well as police impounds and third party agents who are engaged with repossessing and storing these vehicles. Then these companies will organize auctions and sales to sell the vehicles as soon as they can in order to minimize cost. Hence, you need to know how to find these sales first.

The repossessed used cars business is a very profitable market for car dealer tricks that’s why many of these sales are not made known to the public. They are mostly attended by second hand car dealers who will obtain the cars at cheap prices and later re-sell them at a price that people pay in the open market for used vehicle. In order to maximize the profit margin, some car dealers will service some of the vehicle before selling them.

The easiest and fastest way to locate these sales and auctions is from the internet. There are online databases which are dedicated to providing updated and accurate information relating to repossessed used cars sales. By using them, you can locate the sales nearest to you. Sometimes, you might even be able to see the models available. The database includes listing of cars, trucks, SUVs and so on.

As with buying any second hand vehicle, before you buy repossessed used cars, it is always prudent to check the condition of the vehicle. Apart from getting help from a qualified mechanic, you can also request for vehicle history report and find out if it has been through any accidents. Make sure you read the fine prints before signing the deal to have a clear idea of any hidden costs, lapsed warranty or additional information that may not be clearly spelled out. Use the online services to get the latest information and read forums to get advice from people who have done so before.

To avoid becoming a dealer fraud victim and a dealer fraud attorney’s potential client read our blog and watch for these car dealer tricks.

Profiting from Rebates

Rebates attract a lot of customers, but the discounts can hide several car dealer scams that are employed to suck a few bucks from a buyer. First, don’t let a salesman tell you that you are getting a good deal because of a rebate; rebates come from the manufacturer and usually apply regardless of the price you negotiate with the individual dealer. Negotiate as if there are no rebates.

Second, make sure that the rebates are deducted from the purchase price. If you allow the dealer to mail you a check after the sale, you end up paying taxes and interest on the rebate. And never let an incentive like a low APR or a rebate rush you into a purchase you aren’t ready to make. If there’s an incentive on a vehicle today, odds are there will be incentives on it again. Salesmen will often tell you that you have to buy a certain trim, engine, or option package in order to qualify for the incentives. This is not always true.

Eavesdropping

While it’s a good idea to bring a friend or family member shopping with you—someone else to watch the deal, question the terms — this opens additional avenues for nefarious dealers to use the buyer’s impressions  against them. When the salesman leaves the buyers alone, people drop their guard and feel comfortable discussing the aspects of the deal they wouldn’t mention in front of the salesman. With just a couple slight pokes at their phones, salespeople can leave the intercom open with the sales manager’s office, where they will go not to seek approval on your terms, but to eavesdrop on your conversation, harvesting information to use against the customer. There are even stories of salespeople hiding tiny monitors in their offices. So when the salesman leaves to talk to the sales manager, it’s your turn to leave and get a cup of coffee.

When searching for the right type of auto credit it is easy to fall prey to all types of car dealer scams that promise interest rates which are too good to be true. The truth is that if you come across a lender that offers you auto credit that you can find nowhere else the chances are that this is probably a lender that is offering a low interest rate but will balance out the equation by charging you for extra stuff. This is why it’s imperative that you find out exactly what you are getting into before you sign up for the auto credit.

Many people search for auto credit online which is an easy and effective way to find auto credit which is cheap. However many people seem to go for the first offer they find online without wondering if they can actually get a better offer if they went all out and applied at a few online lenders for quotes. The first interest rate which is offered to you for auto credit will most likely be too expensive. You need to carry out detailed research when it comes to interest rates and this will require that you first make a list of five of the best lenders you come across online. You can proceed to fill out the free quote application form online clearly mentioning your credit rating and your salary. Some forms are just a few pages long while others might be longer. The more details you provide the lender the more customized will be the quote you receive.

Another good aspect of applying for quotes at multiple lenders is that it sparks of competition as each lender tries to offer you the best quote. However there is still room for some bargaining but it gives you an opportunity to spot the cheapest quote and then go forth to find out the details regarding that auto credit. Some lenders will gladly get back to you within 24 hours others might take up to four working days. It’s good to wait for around a week for all the lenders to respond to you before you go ahead and compare all the quotes. Also pay close attention to the fee structure and any other costs which might be hidden. You should be able to find good cheap auto credit if you follow the steps mentioned above.

Auto financing scams are often contrived by car dealerships, salesmen, finance office staff and other lenders. To avoid car financing scams, buyers must prepare thoroughly for the process of getting car financing. Look through the following auto financing scams to avoid becoming a victim of car dealer fraud.

Window etching trick

Window etching is a very common car dealer trick. The dealer will offer to etch the VIN number of your car onto the window of the car for a price. Basically, the price ranges from $300 to $1,000. Some buyers think that they did a good job by being able to talk down the price to a few hundred dollars, but unfortunately for them, a few hundred dollars is still a good amount of money. The best way to avoid this kind of scam is to buy an etching kit that you can do on your own. This is available in most auto shops and costs around $20. See how much they profit from you!

Warranty extension

Although this type of car financing scam is old already, it is still being used and there are a lot of buyers who fall for this trick. How is this scam designed? When you make a loan for the car, the dealer will tell you that you are required to purchase an extended warranty because it is one of the conditions of the bank. There is a simple way of avoiding this scam. Ask the dealer to specify in writing that the extended warranty is required for the loan to be approved. The dealer will most likely find a way to have it excluded. If he persists in including the extended warranty, refuse to do business with this guy and go to other dealerships.

Always keep these car dealer scams in mind if you are going to buy a car. If you or a friend of yours were treated fairly by a dealer in the past, consider using the same dealership again.

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.

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.

Many of the car dealer scams one encounters when buying a new car are nearly the same. Here are some great tips for avoiding car refinance scams.

•    Order your own credit score and take it with you to the dealership.

•    Never make a cash deposit for your financing loan because if the deal goes bad, you can’t get your deposit back.

•    Don’t apply for a car loan until you have been employed for at least 6 months if you are a recent college graduate.

•    Apply for your loan online to avoid getting ripped off.

•    Learn to fix your credit before applying for a loan. Get your credit score to at least 680 first.

•    Pay off your credit card debts before looking for a new car.

•    Wait 6 months before applying for a loan if you have recently moved. You addresses are always verified. If you move a lot, they might not trust that they can keep track of your whereabouts should you make late payments etc.

•    Don’t get a co-signer for your loan as often times you will find that the deal is solely in the other person’s name.

Below is a brief summary of negotiation strategies and tips for ensuring you get the best car for your money and avoid becoming a victim of dealer fraud.

Take Your Chances

Negotiating with a car dealer is far easier than most people believe. Contrary to popular opinion, if you disagree with the dealer on the price, you will not be thrown out of the dealership. The salesman is almost never authorized to agree on a final purchase price anyway, so you should not hesitate sending him to a manager to ask for a lower price.

Come Prepared

Conduct some research to find the fairest price for your target car. While you may not get that exact value, it will most likely be significantly less than the amount that the dealership will be advertising. You may also use ‘how to negotiate’ guides for dealing with sales representatives. This will help you reduce not only the car-buying stress, but also the overall price you have to pay for it.

Do Your Homework

The most important aspect of a car search is to make sure you do your homework. Compare the value of your target car offered by various dealerships and make sure that it doesn’t have any major mechanical problems that the dealer isn’t mentioning. If the car you wish to buy is properly researched and inspected, you will not only have significantly fewer problems with the car after the purchase, but a greater chance to avoid car dealer scams.

Car dealer scams vary and being aware of them becomes more and more important. Awareness may save you a lot of trouble and money. So make sure that you have done your homework accurately enough and are ready to enter the car dealership without the potential threat of becoming a car dealer fraud victim. Below are some useful questions to ask a used car dealer:

• If the car is certified, can you show me the mechanic’s pre-certification inspection?

Every certified car has to go through a car inspection before it can be certified. Ask to see that paperwork to find out what was fixed. It’s a good piece of paper that will support your future problems.

• Who was the vehicle purchased from?

If it was a trade-in to that dealership, ask the dealer to show you the maintenance records. Tell them they can black out the owner’s name and address. If it was bought at auction, make sure it is gone over with a fine-tooth comb by a mechanic who specializes in inspecting used cars.

• Who certified a used car that is called certified?

The only certification that really means anything is a manufacturer certified pre-owned car. All others are insurance backed programs.

• How long of a test drive may I take?

See if the dealer will allow you to take the car overnight for an extended test drive. Put it in writing that you won’t put more than 100 miles on the odometer, prove you have insurance, and you’ll bring it back with a full tank (if you leave with a full tank).

Ask these questions to the car dealer and hopefully you will not need a dealer fraud attorney’s help in the future.

Some unscrupulous dealers sell poorly rebuilt salvaged cars, which are dangerously unsafe and overpriced. Typically, these cars are involved in major accidents or floods. They look fine because of cosmetic repairs; however, they may have defective brakes, steering problems, faulty and inadequate welds, and poorly aligned structures. Make the following inspections to see if a vehicle has been wrecked:

• Check to see that the paint on the outside of the door matches the paint inside the doorframe.

Respraying a vehicle is just one method of camouflaging body damages because the vehicle will appear brand new or in a good condition. Usually, only the outside of the car will be sprayed so it will be easy to tell the color differences.

• Make sure that the parts of the car line up with each other.

Not all mechanics are neat workers and sometimes even the best mechanics fail to put the body parts of a badly damaged vehicle back in line.

• Ensure that the gaps between the doors and around the hood and trunk are straight and even.

This is important, as if these parts are not straight or if they are uneven the car may leak in water when it rains.

• Have a mechanic check underneath for any evidence of welding of the frame or underbody.

Maybe you won’t know what to look for, but if you take a reputable mechanic who has years of experience in his field, he’ll be able to point out shabby workmanship.

• Check the title to see where the car was registered.

Severely damaged cars often move from one parish to another. Persons with damaged cars feel more secure to sell their vehicle in a parish where no one knows neither them nor the vehicle.

• Look for evidence of flood damage.

Check the mat under the trunk for mud or dirt. Look for watermarks on the inside of the vehicle’s doors and for moisture inside the trunk and under the seats.

• Check the validity of the year of the vehicle quoted by the dealer or seller.

Some sellers will misrepresent the year the car was made in order to get a higher price.

Follow these tips to be protected from various car dealer scams and particularly to avoid becoming an owner of a salvaged vehicle.