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.

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.

Car dealer tricks are various and may be used by the car dealer in various situations. The aim of car dealer scams is to get more money out of you and sell cars that wouldn’t be sold so easily in case no tricks were used.

High Balling

An excessive price will be offered for your trade in. Some customers are attracted by this thinking that they are getting one over on the dealer. Rest assured, however, that you’ll pay for it in the end, when the dealer charges too much for your new car.

Loss Leader  Advertising

A car dealer will identify one/two cars of a particular model. These will be the “worst” cars. The dealer will then launch a large advertising campaign based on these cars with the price e.g. $200 below cost.

When the customers rush in from all around the city, they are promptly “switch sold” to another car. All the salesperson has to do is to point out why the car is undesirable, and then get the customer to pay more for a better car.

The Lap Dog Trick

When a customer leaves a dealership and says to the car dealer they will look around for other prices, the dealer tells him/her to come back once the “best price” has been obtained. The dealer will then either match the price, or try to increase it slightly by taking advantage of the fact that the customer is sick and tired shopping and is itching to buy the car. This car dealer trick is very common and works well for most dealers. It relies mainly on getting the customer to feel obliged.

Bouncing the trade in

The dealer will contact you before the new car is delivered and say there’s an issue with the trade in. They will ask you to bring it back for an inspection and claim to have found it’s really only worth $500 less than what they have offered for it. If you fall for it, the salesperson earns another $500.

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.

Most car dealership scams are very well hidden and in order not to be tricked you must really understand the car selling game from the inside in.

You should start protecting yourself against car dealer fraud even before you enter the dealership. First of all you should do some research to get information about the car you are interested in. Try to narrow down your choices and then find out the average cost that car sells for. Often car dealers try to talk you into the car deal that benefits him the most. It will be much easier for the dealer to do so if you don’t have this information.

One of the most common dealer tricks is to start negotiations high. In this case start your negotiations with a low bid, even lower than you need to pay. Show the dealer that you are familiar with cars available and you have an understanding of the cost. This way you will be able to purchase the car in an acceptable mid-range.

One more trick to be aware of is getting you to pay more by purchasing different add-ons and extras. The car dealer may offer you a great deal on a vehicle of your choice. However, later the dealer may add to the deal a lot of overpriced extras. These extras include dealer warranties, special insurance plans and paint sealants and can mean thousands in profits for the dealer.

Remember that dealer fraud is something you can protect yourself against. By simply understanding the way car dealers make profit and the tricks they use you can save yourself hundreds if not thousands of dollars.

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.

Buying a new or used car is not always that easy. You should be aware of scam dealers who are trying to get that deal from you no matter how much it costs. If you are not careful enough you may end up with a piece of junk. It is one of the most common dealer tricks to convince you to buy the car today, especially if he is trying to force you into buying a lemon or a car previously involved in an accident. He may trick you by telling that you better sign papers right away as they hold the car just for you. These types of remarks are some of the oldest car dealer tricks used.

The scam dealer will probably add a lot of fee’s in order to get you to pay more. He will tell you that it is mandatory. However this is just another scam to get a higher down payment or add more to your loan agreement. Remember, that there are dealerships out there that use scam tactics as a means to sell vehicles but.

The dance begins on the car lot where the salesman or pack of salesman jumps you as soon as you get out of your car.  Anyway, when they approach you it usually starts like this. Hi, I’m Johnny ShowroomShark, are you looking for a car or truck today?” You answer, they begin to lead you around and show you what they want to show you. One way to take control immediately and put them off balance is to say “I just want to look around by myself” and take control. This is a big issue with car dealer management; they ALWAYS want to be in control.

Next, assuming you find something you like they will now have you come inside to see what kind of price they can get you, if you balk they may say well just come in and let me get you one of my cards then. What will happen in that case is that you will then be introduced to a closer who will do everything possible to get you to sit down and talk about making a deal.

If you are interested in negotiating on a car, here are some other things to watch out for. One dealer trick is to ask for your driver’s license so they can make a copy. Don’t give it to them; they will use this as leverage when you are getting ready to leave. Beginning the negotiation process watch out for trick closing questions, the most popular of these is a variation of “If I could would you?”. It goes like this, “If I can get $1,000 off the price will you buy today?” or “If I can get your payments under $300 per month can I earn your business today?” All of these are psychological closing questions designed to get you to commit to a certain figure. One way to counter this is to come back at him with questions such as, “If I am willing to buy today will you sell me the car for $1,000 under invoice?” If you have educated yourself on cost, rebates, dealer holdback, etc., you can lay all this on him too. Most salespeople will be completely overwhelmed and dumbfounded that you actually know the cost of the car better than they do!

Another car dealer trick is to hit you with astronomical payments and down payments. For example, they may give you on a $20,000 car a down payment of $5,000 and then $450 per month when it should be maybe $2,000 down and $350 per month. One method you should watch out for is called the “4 square”. It works like this; the salesperson will have a piece of paper divided into four equal parts. In the top left will be the retail price of the vehicle, in the upper right may be the down payment, the lower left for your trade, and the bottom right the monthly payment figure. This system has been used for years to make profit in the car business. Again, the best way to counter this is to take control yourself and don’t play their game. If you want the car you tell them what you will do and if they don’t meet your demand get up and leave.

There are a lot of great dealerships scattered abound the countryside, but you have to be on the look out for the ones that are trying to scam your pocketbook.

What you should be on the lookout for are the dealers that make their money from the manufacturer, when they buy the vehicle-and not when they sell it. Often, a large car dealership can purchase vehicles on fairly standard pre-determined prices. They can then offer rebates, incentives, and discounts the dealer can pass on to the consumer.

An independent dealer may not have the luxury of being able to pass on the ’sweet’ deals to is or her client. And, you can bet the sales pressure to get you in a car seat will be a lot less polished.

HERE ARE SOME CAR DEALER TRICKS USED TO GET YOUR SIGNATURE ON THE CONTRACT

1. Burn up the Buyer’s Time
The average consumer only has about three hours a week of free time to look for a car. The job of the car salesperson is to make you do less comparative shopping. That will induce you to buy when on their car lot.

2. Feed on the Buyer’s Emotions
Don’t allow yourself to get sucked in! Leave the emotions associated with car buying at home. A car salesperson can be like a shark. They smell “blood” when they know you’re hot to buy a car.

3. Place the Buyer in a Comfort Zone
Don’t forget, he or she might have the smile of a saint, but they’re out to make a sale! You’re the only person that can watch out for you.

4. Pile Options on the Buyer
Be aware of vehicle options you didn’t ask for, or don’t need. This is a smooth way of jacking up the price and making you think you’re getting a bargain.

5. Play-down the trade-in Value
Make sure you know the market value of your trade-in, and then make sure the price of the vehicle you have in mind isn’t jacked up to compensate for the amount your car is worth. Otherwise, it’s just like giving your trade-in away for free.

While you shouldn’t think this will be the experience every time you buy a car, it just makes common sense to keep your eyes pealed for anyone who might be out to take advantage of you.