Dealer Fraud

There are several common car trade in price scams, tricks, and bargaining tactics when buying a new or used car from a dealer. Knowledge of these practices will give a car buyer an advantage one can at least be aware of what is happening in the process. Knowing how to avoid them is even more helpful because the result can be a far more attractive price one receives for a traded vehicle.

Negotiating Trade in Price

Right from the very beginning, the trade in price should be negotiated separately from the purchase price of the car one is interested in buying. Indicating real interest in buying a car will help in the negotiating process, but when asked about price, a buyer should persistently insist that the dealer value the trade in vehicle before details of the purchase are discussed. The two dealings should be treated as completely separate transactions.

Purchase Price Up Front

Several customers may prefer to negotiate the purchase price first, relying on publically available resources that are very clear on trade in value. As many dealers have a preference to pay the wholesale price, claiming that they have no intention of taking the vehicle into their own inventory, if one’s car is easily salable or an “in-demand” make or model, insisting on a higher price is important. The dealer is not obliged to wholesale the vehicle for a low price after the sale is complete. It is not obligated for the buyer to sell at a disadvantageous price.

Misinformation Provided

Extra similar scams include so-called mistakes as to the model or features on the trade in car. Asking early in the process if the dealer will purchase your car regardless of what you ultimately decide may help avoid some of these dealer tricks but being watchful and sticking to your budget and car-buying plan is critical.

A salvage car is one that has been involved in a major accident and been deemed to not be worth repairing by an insurance company. As an insurance company declares a vehicle, it pays the maximum market value of the vehicle to the insured and then disposes of the vehicle by auction it off to the highest bidder.

The vehicle is then issued a special type of title by the states where the vehicle is registered. Any salvage title has a stigma that is always attached to it and is worth nowhere near as much as than comparable vehicle that has a clean title — even if the vehicle has been restored to 100% operating condition.

While most state and federal laws require a used car dealer or private seller of a vehicle with a salvage title to disclose the fact to the buyer, some unscrupulous sellers did not. So, here is some ordinary car scams associated with salvage titles that you should be aware of.

Title Washing Scam

Numerous salvaged title vehicles are purchased by rebuilders and then rebuilt so that they appear to be normal used cars. During a salvage title vehicle purchase you can certainly save a lot of money, you have to be aware of the title washing scam. This type of scam refers to lemon laundering, and is still practiced by many unscrupulous used car dealers and car brokers.
The scam includes registering the vehicle in several states, one after another. This usually takes place in states that have rather lax or loose rules and regulations concerning the documentation of car titles. In any case when a dealer makes a vehicle registration the, there is a good chance that the title will eventually end up not having a salvage or junk title annotation on it. The dealer is then able to sell the vehicles as a normal used car, and usually collects a premium on the vehicle.
The best way to avoid a title washing, or lemon laundering, scam is to do a title search on the Internet.

Insurance are paying millions to defend themselves against car scams where people stage an accident in the hope to making some gains through insurance claims. How do these scams affect you? Besides any possible deaths could occur from a planned scam gone wrong, it is not the insurance companies who pay the consequences of these wicked scams. Factually the innocent and honest citizens end up paying higher premiums so insurance companies could cut their losses.

You should learn how to prevent getting in the middle of these scams and should contact your insurance if you feel you could be scammed or are a witness to a scam. You could potentially be rewarded for providing this information.

Here are some most popular methods that scammers use to cheat auto insurance providers and create false claims.

Paper Accident- when the scammer gets those in the auto repair to get involved and report an accident that never happened in reality. Normally the claim would not exceed $1000 to avoid raising any red flag where insurance companies would feel the need to conduct an investigation.

Hit & Run- occurs when the criminal reports a fake hit and run and tries to get claims from their insurance policy.

Swoop & Squat - happens when the scammer suddenly rushes in from of the car and drastically slows down or stops suddenly. There is an accomplice vehicle that does not allow the trapped vehicle from moving away to prevent an accident. The passengers in the squat car then send in claim reports for their injuries which are then accompanied by reports from doctors who are also involved in the scam.

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.

Is buying a car at a car show a wise investment? Should you listen to the inner child who is probably screaming to buy the car or should you calm down and walk away.

Buying a car at a car show is risky and may involve car scam practices. You should avoid buying a car at a car show unless you have had enough time to carefully shop around and see how much the vehicle that you are interested in would be worth.

Additionally, during a car show the owner is not going to have much time to discuss the car details with you. This is simply because the car they are responsible for is surrounded by a lot of people who are all interested in it. So it is not surprising that while they may be talking to you about the car, they are probably only half-paying attention.

Additionally, during a car show you cannot take the vehicle on a test drive just because most car shows are not designed to allow the cars to move once they have been parked in their assigned place. Besides, because there are usually large groups of people at car shows trying to drive through the crowds may be dangerous.

If you find a car at a car show that you are crazy about do not be in a hurry to buy it. Ask the owner for his/her contact information and tell them you will contact them after the show. This will enable you to do some research on the car’s market price and judge your purchase rationally.

When you meet the buyer ask him/her to take the car for a test drive and examine it closely. Also ask about the engine, transmission, overall condition of the vehicle and its age. Many cars that are in auto shows do not have original parts. If this fact is acceptable for you, then there is nothing to worry. But even at this point you should not hurry to buy the car, wait for a couple of days to consider the purchase once you have taken a test drive.

If you have bought a car, but are dissatisfied with any conditions or have doubts that you are a victim of dealer fraud, please contact an experienced Los Angeles dealer fraud attorney for help and consultation.

“Is this a car sales scam?” is one of the most common questions among car buyers who have found an unbelievably “great car deal” online. Buyers become suspicious since the price is “too good” and the payment and pickup arrangements seem a little tricky. Here’s how car selling scams work.

The seller usually has a picture of the car he/she claims to be selling for a low price. He/she will describe the car and its condition, and explain why the car is being sold so cheap. His/her story almost always involves some unusual personal situation e.g. a death of a relative or an unexpected financial difficulty which urges him/her to sell the car even at a low price, etc..

In the majority of car scam cases the seller claims to be out of the country or in the military, although his/her car is in the country somewhere and just needs to be shipped to the buyer.

The seller might claim that “eBay protection” with “eBay shipping” services will be used, and that the buyer’s money will be protected by using a third-party escrow or bank account for safe payment. The buyer will have some days for him/her to make a final decision on whether to keep the car or return it and get the money back.
This is a way for the scammer to get your money fast and disappear, since eBay has no such program or services for cars not sold through the eBay site and the escrow service or bank account is not legitimate. The fact is that there is no car at all.

Though this car scam is an old one, many people still fall victim to it. If you suspect that you have been in a similar situation as described above, please contact our CA law firm.

Car title fraud is the act of deliberately misrepresenting the car’s title history. This is a big issue in US as the states have different approaches to what constitutes a “salvaged car”. The frequency of car title fraud leaves a heavy stain on the car buying process.

There are different ways for determining car title fraud. The first and primary advice for avoiding this car scam is to conduct a proper inspection and ensure that you are getting the original title. However, if you have been defrauded and own a car with a bad title, you may still seek legal restitution by turning to an experienced car lawyer.

The only solution that may finally settle this problem will be the federal government’s decision on what is considered a ‘salvaged car’ so that there isn’t a discrepancy between states.

But until that happens, here are a few simple steps for the purchaser to avoid car title fraud.

-Perform a vehicle title history check for any vehicle made after 1981. This protects the purchaser and ensures that the vehicle being purchased has a title that accurately reflects its history.

-Purchase car title insurance. This will save hundreds of dollars if the buyer runs into a fraudulent title.

Visit our blog for more articles on car title fraud and ways for avoiding it or simply contact a knowledgeable car attorney for advice and legal protection.

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.