Dealer Fraud

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.

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.

Generally, most car buyers are well aware of common dealer tricks and dealership scams. However, there are car buyers who are less experienced can easily fall for commonly used dealer tactics.

Remember that when selling a new or used car, the car dealer makes profit in two ways. First they profit from the sale of the vehicle itself, and second, from the interest paid by the buyer. One thing that you should keep in mind when you intend to buy a vehicle is that the dealer will, most probably, try to trick you into paying as much for the car as possible.

Dealership Mark-Ups is one of the tricks most commonly used by the dealers. Usually, car dealerships are in a tight relationship with certain finance companies and try to encourage their customers to use that specific finance company. Car buyers can avoid this auto scam if they secure their own financing with a bank or credit union rather than through a dealership. Dealerships make profit from the interest paid as the finance company of the dealer may increase the loan rate by a few points and the dealership receives the difference you have paid.

The car buyer can easily avoid the dealership mark-ups fraud by comparing auto loan lenders. Do not accept the first loan packaged offered, and never accept dealership financing. First shop around and find the deal that is the best for you.

In most of cases when you want to buy a car you go to new or used car dealers, and still you are not protected from different dealer scams. However, there are several other alternatives to buy a car. And one of those is buying repo car. In other words repo cars are privately owned vehicles that have been seized either by the bank, financial institutions or the government.

Reasons these cars have been repossessed is, most probably, because the owner failed to pay for the car mortgage or the car has been used as a lien for another loan, probably a house mortgage. In this case the vehicle becomes the property of a bank, financial institution, or the government.

Most car buyers wonder why repo cars are so cheap. In fact these vehicles occupy so much real property which equates to money lost. This is why instead of storing these useless vehicles banks or other institutions decide to sell it off converting them into liquid assets. You should take into consideration that these vehicles are not so much of a use to their new owners so they will be sold to the highest bidder, through auction. The car can cost as little as $100, depending on the seller.

When you think of buying a repo car there are several factors to take into consideration. One of them is to know that different people have different standards and priorities when it comes to buying a car. Of course, buying a repo car gives you an opportunity to own a car at a very affordable price. You can even buy a car with as much as 90% savings, and the car may be good as brand new.

Generally, it is easy to find repo car sellers/auctions, as they are websites that publish a list of repo cars on sale. It is important for the buyer to understand the terms and condition of purchasing a repo car be it through auction or non-auction purchase.

The decision whether or not buy a repo car is up to you but come to think of it, there is nothing wrong with buying repo cars. They are legal, same as other pre-owned cars, and most of all cheap.

Dealer scams are various and getting trapped has become easier than ever. However, there are some steps you can take that will significantly decline the chances of your becoming a dealer fraud victim.

The first thing you should always do is taking a test drive. This will give you a good feel for any problems that you might have with the car. If the suspension feels a little off, or you feel something is not quite right with the car, keep looking if you don’t think it will be a quick fix for you. Used cars tend to have different warranties than new cars, so you should find out for yourself whether you want to sink money into this car or not.

The next thing you should do is taking the car to a mechanic of your choice. Most dealers or private sellers will allow you to do this, and you should do it as a standard part of the buying process. This will enable you to know how the car is running, whether it needs repairs or not, and finally how much you will have to spend.

Always get a Carfax report on your car if possible.  It will enable to  identify any flooded vehicles, salvaged vehicles, prior major accidents, rolled-back odometers, etc.. This will give you a complete idea on the car you are going to buy.

Keep in mind that you get what you pay for. Sometimes you just need a car to get you through the winter, so it might not be a total shock if the thing junks out on you in spring. However, if you are buying a late model car, you should do everything that you can to protect the investment that you will make in it.

Of course this is not the exhaustive list of the things you may do, but the above mentioned steps are the basic ones for avoiding car dealer scams.

Forearming yourself against dealer scams is the wisest tactic one may use before buying a new or used car. You need some knowledge for making a smart chose. However we all know no one needs a Doctorate for purchasing a car. But that is precisely what the dealerships know and take an educated move to trick you into keeping as much as your hard earned money as they can. So, it is not unreasonable to arm yourself with tricks and tips the dealers use in selling you a car! One of the most hidden secrets of car dealer scams is in the financing.

Here are some critical things to do before you set forth in a dealership.

• Do some research! Find out what you want, how long you want to finance, know what the new car price quotes are, invoice price, models, equipment etc.

• Negotiate Price, not payment. You should plan on negotiating, and not the payment.

• Don’t reveal you have a trade-in. This information shouldn’t be part of the price you are negotiating even though they say it will be. Negotiate the trade-in separately.

• Arrange your own financing. If the dealer does it, it will cost you much more.

• Consider buying through other resources. The internet, Craigslist, Ebay, and auto trade magazines. When you buy directly from the seller, you exclude all the middle men that dealerships have to pay.

• Remember when you buy, you bought it. There are no returns.

Arm yourself with knowledge and avoid dealer tricks.

To secure yourself from car dealership tricks, you should learn dealer scams. In this blog we will discuss the situations when a car dealership financed contract may be cancelled.

• If you buy a car that is financed through the dealership, the dealer has a right to cancel the contract, but only if you are notified within 10 days of the date on the purchase contract.

It is based on the language of the purchase contract. Look at your purchase contract. That’s the long yellow document containing “RETAIL INSTALLMENT SALES CONTRACT” note at the top. Turn to the back of the purchase contract, and find the box with the “Seller’s Right to Cancel” note. It is at the bottom of the second column.
Car dealers are in the business of selling vehicles to consumers, not financing cars that consumers buy. So, this box advises you that after signing the purchase contract and leaving with the car, the dealership is going to find a finance company or bank to buy your contract. It gives an auto dealer the opportunity to find someone to buy your purchase contract. Most of the time this is not a problem. However, if the car dealer cannot find someone to buy your purchase contract, it can cancel the purchase contract. But, the car dealer must notify you within 10 days of the date on the purchase contract. If it does not, then the purchase is final and may not be canceled.

• If the car dealer exercises his/her right to cancel the purchase contract within 10 days, you are not required to sign a second contract to purchase that same car.

Let us repeat this. A car dealer cannot force you to sign a second contract. If the car dealer cancels the purchase contract within 10 days, you are obligated to return the car, and the car dealer must give you back any down payment or trade-in that you gave with the purchase.

There are car dealers in the industry that scam customers without even blinking an eye. If you intend to buy a new or used car and want to avoid being a victim of dealer fraud, then you should be well prepared with the best knowledge about most common dealer tricks , tactics and strategies used to make you pay more.

Remember, that a car dealers scam may start when you pull into the dealership lot. So be prepared even before you go to the dealer’s lot and talk to the dealer. If the car dealer notices that you are just starting to look and are not sure about the mark and price of the vehicle he will probably try to use the opportunity and play on your emotions. Thus, the dealer may talk you into a car deal that you are less than satisfied with.

Before going to the car dealership define for yourself what cars you are interested in. Do some research to find out the cost of the vehicle you consider to purchase.

When you find the car you like don’t show it to the car dealer. Always start your negotiations low. The car dealer will probably negotiate as high as he can, so if you start low you will be able to settle at a mid-range price that feels right.

Keep in mind that most consumers that become victims of dealer scams are those who are not well prepared. Get as much information as you can and you will be able to get a great deal on a car you love.

There are a number of things you can do to minimize the possibility to become a victim of a dealer fraud. The key to avoiding auto dealer scams is this: knowledge is power. We offer you a few tips to use:

- know your credit history and your credit score
- know the vehicle you want and research it’s fair value on the internet
- research the loan rates that a credit union or bank would give for a qualifying borrower (for reference)
- be prepared to pay for a 3rd party mechanical inspection/report on the vehicle before you commit to it
- be patient and be willing to simply walk away if you feel pressured or ’smell a rat’
- invest in good advice: study a good buying guide, from insiders who can teach you the dirty tricks to expect

Once on the lot:
- be patient and confident
- ask questions and pay strict attention to financing rates and terms
- if a warranty is offered or promises made, insist that they commit them to writing — it’s the law
- ask about grace periods and repossession policies, if you think this might become an issue (or not)

It is a wise decision to prepare a checklist when buying a used car, as it may help you avoid making impulsive choices, get a best deal possible, as well as avoid dealer scams.

Here are some of the most important points to include in your checklist.

1. First of all, determine exactly what you need. There are a lot of choices available when you want to buy a used car. With such a big number of choices, you will more often be tempted on getting what you want. So, clarify for yourself what you need, list the specifications that you want your future car to have, including the number of car seats, doors, airbags and fuel consumption.

2. Determine your budget and stick to it. This is another important point to include in your checklist. Sometimes a car dealer will offer you a car which is more expensive. If you do not have enough resources to pay for the car then don’t buy it.

3. Make a list of the model and make of the cars that you intend to purchase. Get information about the prices of that models and makes. This will help you avoid one more dealer fraud and purchase a car for much higher price.

4. Check the vehicle title and its ownership and make sure that there has been a clear transfer of ownership.

5. Take the car to a mechanic for a detailed inspection. When you are buying a pre - owned vehicle you need to check for the parts and engine to make sure that you pick one with zero to minimal defects and problems.

6. Always test – drive the car you intend to purchase. A fifteen minute test drive will be enough to understand the running condition of the car.

These are only some of the main points you should include in your checklist, so you can add as much items in this list as you want.