Dealer Fraud

Step1

Avoid car trade-in scams wherever the dealer states he will pay off your current lease or loan, no matter how much you owe. Remember that a lease or a loan is a financial contract, and there is no trick to eliminating one when buying a new car. While this supposed “deal” will only end with you making even higher payments on your new car, it is better to wait until your car is paid for, or your lease has expired.

Step 2

Look out for car dealers who expediently forget to pay off your trade-in after the deal is complete. Many new car buyers are shaken as soon as they receive notices for a collection agency a few months down the road as the dealer never handled the transaction as promised. Yet again, there is methods to avoid this trade-in scam by ensuring that you get all pay-off documentation in writing, or simply wait until you vehicle is paid off before you trade it in for a new car.

Step 3

Have your trade-in examined by an independent mechanic in order to avoid car dealers who report “all sorts of problems” with the vehicle. By offering independent and recent documentation, you can successfully rebut a dealership mechanic who claims your brake pads are almost gone, or that your engine may need a complete overhaul before it can be resold.

Step 4

Acquire a copy your current credit report to avoid trade-in scams where the dealer tells you that you are ineligible for lower interest rates due to questionable credit scores. This type of scam is rather ordinary, but it is easily discouraged once you produce a real credit report. Keep in mind, a car salesman should not know more about your credit score and financial history than you do.

Scam 4: The pay off loan or lease scam

The car dealer’s newspaper advertisement is constantly saying that they will pay off your entire remaining loan or lease. This is true literally, but there is no hint about the consequences of breaking the loan or lease contract. Actually the penalty for breaking the contract for your current car costs thousands of dollars. Of course, the car dealer pays you off the remaining loan or lease, but the penalty of thousands of dollars is subject to you. The ads are just trying to mislead you into buying their car so that they can profit more.

Never believe in these misleading ads, stay in your present loan contract and never break the contract.

Scam 5: The forced warranty scam

This car scam is easy to detect. Just after you have made an agreement with the car dealer and before you sign the contract, the sales manager will tell you that you cannot get the loan unless you buy the “required” warranty. They would say that the warranty is a necessity for the loan because the bank won’t allow it if you don’t have it.

Yet again, the easiest way to avoid this forced warranty scam is not to finance your car from car dealers.

Scam 6: The forget trade in scam

This is always found after several months of car purchase. The car dealer informs you that they would pay off your remaining loan for your old car that has been traded in, but they never do. You are in charge for your loan responsibility, not the dealer. The bank does not know the agreement between you and the dealer and they hold you responsible for the late payments.

The best way to pass up this scam is to pay off your existing liabilities on your old car before you buy a new car. This way you can get the title from the bank after you eliminate the debt, sell your old car and then buy a new car without falling for the scam.

Scam 1: The straw purchase scam

Here a straw purchase means someone purchases an automobile for other people who, due to poor credit, cannot purchase it themselves.

In order to make you buy the car without any hesitation, the car dealer may assure you that you can get a car loan even if your credit record is not very good. Moreover, they will tell you that you can build your credit by using this car loan, and the only way to do this is to find a co-signer for your contract. And next you will find out that the co-signer is not the primary borrower of this loan but the only borrower-your name is not even on the contract.

It is difficult to detect the straw purchase scam. You can avoid it in advance. Remember, never sign contracts separately, as this is a good chance for the dealers to perform the straw purchase scam on you.

Scam 2: The check bounce scam

This scam occurs in case you are using a credit union or an online car finance site. For getting the commission to sell you the car dealer’s financing, the car dealer will refuse your bank draft first and then lie to you using the reason that the online lender always bounces check. So you have to agree with their offer of financing your car purchase, even though that car dealer financing comes with a higher ARP.

Scam 3: The spot delivery scam

A spot delivery scam occurs a few weeks after the car purchase when the car dealer calls you and says that your credit score is too low to have the low ARP you signed on the contract. But in fact there is no problem with your credit score. This is just a spot delivery scam.

The best way to avoid this kind of scam is to use your own financing instead of using the financing that the car dealer offers you. Never give the car dealer any chance to trick you.

After the Toyata recall on January 21 car dealers have been ordered to stop selling the vehicles and the manufacturing plants have stopped production. The models, which include the popular Camry and Corolla, make up 57 percent of the automaker’s sales.

For now, the manufacturer says not to do anything unless you’re experiencing problems. Toyota said that the acceleration incidences are rare, happening when the pedal becomes worn, for instance. If you are experiencing any sticking or anything else that worries you, the company says to call your local car dealer.

Here are other tips from Toyota if you happen to be driving and the accelerator sticks:

• If you need to stop immediately, you can control the vehicle by stepping on the brake pedal with both feet using firm and steady pressure. Do not pump the brake pedal since it will deplete the vacuum utilized for the power brake assist.

• Shift the transmission gear selector to the Neutral position ((N) position) and use the brakes to make a controlled stop at the side of the road and turn off the engine.

• If unable to put the vehicle in Neutral position, turn the engine off. This will not cause loss of braking or steering control, but the power assist to these systems will be lost. If the vehicle is equipped with an Engine Start/Stop button, steadily and firmly push the button for at least three seconds to turn off the engine. Do not tap the Engine Start/Stop button.

• Turn the ignition key to the ACC position to turn off the engine if the vehicle is equipped with a conventional key-ignition. Do not remove the key from the ignition as this will lock the steering wheel.

It’s known than usually salespeople advert prices of a car excluding the on-road costs. You should better always ask for the specific on-road costs to be included, otherwise the salesperson will most likely give you the excluding on-road costs price. No doubt, you have to be protected because your contract may be drawn up on this proviso. The thing is that the moment you sign the contract, the ‘quoted’ price of the car, will then be understated by many thousands of dollars.
To make sure not to be involved in this, you better shop around for car prices online. There, you’ll get a wide array of information on car trends, models, and car price range. Being informed with relevant information, you are at a much better bargaining position with the car dealer. You know what your used car is worth in the market, and you know how far a leeway you can go without losing too much at the bargaining table.

If you have bad credit and want to buy a new car you haven’t got a lot of financing options. For that reason you are likely to look for a car dealer that can provide the money required for the new car.
Loans offered by car dealers are not that bad, however it is more likely to have unfavorable terms. Another important problem is that  some car dealers will try to cheat you. Here is presented the top three car scams that you should remember and avoid.
-Previously Wrecked Car Sold As Is
This is a popular scam so you should be alert. Some car dealers do not know that the car is a wreck however some know and try to cheat. The real problem with buying a wrecked car is that you will be asked to signs papers that will state the car condition and that you agree to buy it “As Is”. In this case you have no warranty. If something happens to the car the dealer will step back and there is practically nothing you can do.
The best thing to do to avoid this scam is to always run a Carfax report that will show everything about the car. Also get a mechanic to inspect the car.
-The Excusive Fee Scam
Definitely one of the top car dealers’ scams. The ridiculous thing about this scam is that it is so simple and still a lot of car buyers easily fall into the trap.
Another tricky thing about this scam is that in fact it is not illegal. What the seller does is obviously he adds a number under the car price total and ask you to pay it. You will be informed that this fee covers their expenses if someone did a check on the car, for cleaning it or removing the plastic from the car seats. Neverthelsess, usually the extra charge is rather high for such services and you should never agree to pay it.
-The Bouncing Check Scam
This scam applies to car buyers who tried to get the money for the purchase and will not ask the dealer for financing. The dealer will say that the check bounced and offer you financing. No doubt, he will assure you that their deal is great and you can get the car immediately and so on. Do not be cheated by these sweet talks. If you have been financed by any credit institution you have surely check if they are respectable union and if their checks are accepted.
You might probably be offered a loan by a financing institution at higher annual interest rate. More over you might be called by some dealers later to say that actually you do not qualify for the credit and will try to increase the rates even more.

Recently a Los Angeles car dealer has sold a car to an older adult without any information given to the sales person. The car dealer did not ask older adult neither about monthly income nor even social security. The purchase contract included a high dollar amount car payment and low monthly income from the older adult. When the family members found this out they tried to exchange car for lower payment. However, they were denied. The bank was not able to do anything either. Auto Sale took advantage of the older adult. The car dealer did not handle the sale correctly.

At this point the sales person will return and escort the customer to their newly purchased car. With all the paperwork signed, the car Dealer doesn’t want the customer to linger (they might take the time to read what they just signed). This is the emotional “high” of the transaction for the customer. They think they have just “beat the house” on their hard-won deal and they are ready to strut out of the dealership and drive off into the sunset. The Dealer wants to encourage that. There is a psychological aspect to putting the car over the curb and the Dealer knows that if the customer figures out what happened to them and refuses to take delivery, the odds are that they will have to “unwind” the deal sooner or later (i.e., “back out the deal”, cancel it, rescind it). That’s the last thing the Dealer wants to do. In fact in California there’s a “no cooling off” period so the sooner the Dealer gets you to drive off with car, the better.

The Dealer’s staff has just worked for 3 or 4 hours to package the deal and get it signed, sealed, and delivered. They made no small amount of money in the process. To unwind the deal would mean having to start all over again with some other customer and lose the profit that they just “earned”. That’s a nightmare for any car dealer. They’d rather work the next deal on the next customer than have to work this deal all over again.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]

The car dealer is required by the purchase contract to return to you all consideration (i.e., everything) given for the purchase, included your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

There may be times when your car dealer may tell you that it already sold your trade-in, and you can be offered the value of the trade -in as listed on the purchase contract. On the other hand the language of the purchase contract does not appear to give the car dealer this option. The return of the trade-in, thus, is being required. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either (1) the value of the trade-in as listed on the purchase contract, (2) the fair market value, or (3) what the car dealer received when it sold your trade-in.

Customers who have online auto quotes aren’t immune to loan scams. The car dealer may tell you that he needs to get your credit report because this is required by the Patriot Act. You might even notice the form you are filling out is titled “Application for credit.”

However what most customers don’t know is that the Patriot Act does not require a credit report or your Social Security number and the dealer uses this to get you into applying for dealer financing. Remember that your name and driver’s license number is all that the dealer needs.