Dealer Fraud

The purchase of a new car is considered to be the second largest purchase that most Americans make. Of course, buying a new car can be exciting, but at the same time it can also be very stressful and confusing, taking into consideration all the dealer tricks and car scams that are present in the auto market.

Using just a few tips brought in this article you can easily buy a car and avoid becoming a victim of dealer fraud.

One of the most important questions a car buyer has is how to spot dealer scams, when buying a new or a used car. And this is pretty reasonable, as today there are more and more warnings about all of the different scams that dealers use to earn more money and to cheat consumers. However, there is always something that you can defend yourself against by taking some good advice and following several simple tips.

First of all, when you are shopping for a new car keep in mind that you should determine what car you want and how much monthly payment you can afford. However, be careful and pay attention to all the details, read each word in your agreement to make sure that everything written is exactly what you have negotiated and there is nothing confusing. Especially pay attention and make sure that you are not overpaying for your new car by extending out the term of the loan.

In other words, make a decision and stick to it. Don’t let the dealer trick you into any aspect of the deal that is not right.

If you have bad credit and want to buy a new car, you don’t have a lot of financing options. Therefore, you are likely to look for a car dealer who can provide the money required for the new car and encounter bad credit score scam.

Car dealer loans are not that bad, however they are more likely to have unfavorable terms.  Below are the two most common car scams that you should always keep in mind.

• The Bouncing Check Scam

Car dealers apply this scam to car buyers who managed to get the money for the purchase and will not ask the dealer for financing. The dealer will say that the check bounced and will offer you financing. Of course he will try to convince you that their deal is great and you can get the car immediately and so on. Do not be cheated by these sweet talks.

The dealer will offer you loan at higher interest rate. Moreover, some dealers will ring you up later to say that actually you do not qualify for the credit and will try to increase the rates even more.

• Previously Wrecked Car Sold “As Is”

Some car dealers really don’t know that the car is a wreck, yet others know and skillfully try to cheat you. The real issue with buying a wrecked car is that you will be asked to sign 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 simply step back and there is practically nothing you can do.

The best thing to do to avoid this dealer scam is running a Carfax report that will show everything about the car. Also get a mechanic to inspect the car.

Many of you have probably received postcards in the mail or phone calls urging them to buy auto warranties, but many of these unscrupulous companies simply take money from consumers and leave them with little help when repairs are needed. Read our blog to avoid these car scams.

1.   Step 1
Avoid companies with little history in the auto business. If the company goes out of business, you will have to pay for your own car repairs.

2.  Step 2
Stay away from any dealership that claims that you must buy a warranty in order for your financing to be approved. This is a common  car scam.

3.    Step 3
Say “no” whenever your car salesman tries to pressure you into buying an extended warranty or tells you that you will not be able to buy an extended warranty later.

4.    Step 4
Avoid scams by keeping your personal information private. Don’t give out bank-account details or Social Security numbers over the phone. Never give credit-card numbers to warranty companies unless you’ve contacted the company and are positive of whom you are speaking to.

5.    Step 5
Never make a down payment before you see the full written warranty and its terms.

6.    Step 6
Be particularly wary if you are a senior citizen. Some companies target seniors with scams involving high-pressure sales calls and mailings.

7.    Step 7
File a report with the Federal Trade Commission or the Better Business Bureau if you feel you have been ripped off or targeted by a scam. Also, you should report the scam to the United States Postal Service if it involved mail.

There are a lot of car dealers out there who try to use trade-in scams to make much profit. Being aware of the commonly used car scams is the best way to protect you from becoming a victim.

Some dealers will scam you by telling that they 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 you are not able to eliminate one when buying a new car. Through this trade-in scam the dealer will most likely try to make you pay higher monthly payments on your new car. Avoid this scam by simply waiting until your current lease is expired or paid off.

Beware of car dealers who forget to pay off your trade-in after the deal is complete. A lot of car buyers receive notices for a collection agency a few months after they trade-in their car and are surprised to learn that the dealer never made any payments. You can avoid this trade-in scam if you get all pay-off documentation in writing.

Always have your trade-in inspected by a mechanic in order to avoid car dealers who report “all sorts of problems” with the vehicle.

Never sign any documents if you feel that the dealer is trying to trick you. Simply walk away, and find a reputable dealer who will offer a good deal.

Used car buyers should be especially aware of one of the latest used car scams, which happen when used car dealers or individuals try to sell cars that do not even belong to them.

An individual who is not the true owner of an automobile cannot pass good title on the vehicle. That is why a car buyer of the used car should always ask to see the title for the car prior to purchasing it or signing any documents. This way a purchaser will be able to ensure that the individual who is transferring the vehicle title car has the legal right to do so.

One of the most important factors to consider when you are shopping for a used car is whether the car you intend to buy is really worth its price. Even though the car may look like it’s in a good condition there is still a possibility for you to become a victim of auto dealer fraud. Following are a few tips to help you estimate the real value of a used car.

1. First of all, do a little research on the car you consider to purchase. Find out how much that car costs if it were brand new. Check if the car is still in production and if its parts are still available. If you find out that the price of the car is too low it may have more problems than you think.

2. One of the most comprehensive used car value listings can be found in Kelly Blue Book.

3. Remember that brand new cars generally lose up to 30% in their value in 3 years. By the time the car is 5 years old, it may have lost up to 65%. So the older the car the cheaper it should become.

4. Another good idea would be to take a qualified mechanic along with you. The mechanic will be able to whether the car really is worth the used dealer’s tag price.

5. Get some information about the used car history. You can obtain a detailed vehicle history report on CarFax and other sites on the internet. The vehicle history should include any accident history and insurance data.

Keep in mind that some used car dealers will offer you defective cars, so try to look for a reputable dealer if you want to avoid all kinds of car scams.

According to some statistics 2.5 million cars are wrecked annually. One million of these vehicles end up back on the road again. Reading this article you can find several very useful tips on how to buy a used car and avoid most common dealer frauds.
Always use Vehicle History Reports to negotiate a lower price, check salvaged, wrecked and odometer fraud cars. Print out questions for you to ask the dealer. If you are buying a used car, make sure to get an AutoCheck Vehicle History Report on the Vehicle Identification Number (VIN). Also have a mechanic inspect the car on a lift. Your mechanic can put the car on a lift and instantly spot hidden frame damage, corrosion, previous crash damage, and fluid leaks. However you should know that your mechanic can’t tell you if your car title has been branded as a flooded vehicle, salvaged, rebuilt, stolen, junked, or passed through a salvage auction.

Irrespective of where you go to find your automobile, be sure to stand fast and continue within your means. Do not allow anybody talk you into purchasing an automobile that you either can’t afford or are not really in love with. At the same time there are tons of other cars you could fall in love with. Be prepared to walk away from the vehicle if the deal doesn’t conform to the criteria you laid out earlier. Your power to negotiate a good deal will increase by leaps and bounds.

Maybe most importantly, acquire the vehicle identification number (VIN) which is generally found on the driver’s side dash and is visible through the windshield. When you have the VIN, you are able to discover a lot of data about your potential car.

Log on to www.carfax.com and enter in the VIN. Once you do this, you’ll have a complete account on the history of the car including all previous owners, whether or not it has been in an accident with damage, and much more information. Armed with this knowledge can make a difference in whether or not you purchase that particular car.

The salesperson can tell you it was a “program” car which can mean an assortment of different things; it could be a dealer car, a rental car, or an executive car among other things. The salesperson can promise that this specific car was a car used by executives from the rental car company to use and that when it arrived at a certain amount of miles, it was offered up for sale. However,  the carfax report can proove that salesperson lied to you.

The moral of the story is to do your research. If you’re not certain about a car purchase, walk away. Trust your gut instinct, this is the biggest mistake most people make. Look very cautiously at what you are going to purchase and make certain that what the seller is presenting the car as is completey accurate.

Do not be in a hurry to sign the deal as, there is a chance that a good finance salesperson will nail you for $3,000 - $4,000 more dollars. This can be hidden in your contract if you do not keep your guard up. It is important to learn to say NO to anything they try to up sell you on. Read the contract very carefully to make sure the numbers are exactly what you agreed upon. There are many little car scams that can occur in the finance office, but the most common today is the Subject to financing scam.

Most of the consumers sign the contracts without reading it thoroughly. Later when they get home and thoroughly look through the paperwork they find items they didn’t want or loan rates that are higher, the length of the loan has been extended etc. Keep in mind that once you sign the contracts you are stuck. You already signed a form that stated that you read and understood all the items in the contract. So the best thing to do to avoid fraud is to take your time and read everything. If you are not good at reading contracts bring someone with you that can. Never take the Finance salespersons word for anything!

The Subject to Financing clause scam

This is a very common dealer tactic finance salespeople use. If you see this clause on the contract simply do not sign it. Another common term is Subject To Loan Approval. What usually happens here is several days after you drive home with your car, you receive a phone call from the salesperson that your loan fell through and you need to come back in and resign through another lender for more money. The dealer may say “we have great news, we got you a lower payment”. However, all they have done is increased the length of your loan. They do this more often with bad credit or sub prime buyers who are usually more cooperative. This occurs quite often on weekends when the lenders are closed. Just tell the finance salesperson you will come back Monday after we have a confirmed approval.

If they don’t have your loan approved, stand up and tell him that you will come back and sign when you have an approved loan with a payment book. Never sign a contract without knowing your lender, interest rate, length of loan and monthly payment. Once you sign and drive home with your new car you are at their mercy and you will end up paying more.

The car accessories, SUV accessories and truck accessories car scams are very common today among car dealer. This is one of the ways car dealers make their highest profits from. However, you can avoid this auto fraud.

Car accessories, in this case, are such options as custom wheels, special tires, high end car stereos, car DVD players and monitors, truck shells, custom seats, spoilers, fender flares & wings, special floor mats, pin stripes, alarm systems, etc.

Beware when you’re going to shop for a new car, truck or SUV. Remember, that car dealers make a higher profit off of auto accessories (i.e. options) then most anything else they sell. That’s the main reason why they push them so hard.

To avoid this scam try to buy your auto accessories on an aftermarket basis instead of through the new car dealer. It is a good idea to do them before you buy your new car.