Dealer Fraud

We have discussed CA dealer fraud cases more than once. The one we will disclose today is a really dastard type of trick that dishonest car dealers will use on people with the least ability to pay.  The rationale is that if someone can hardly afford the car, they almost certainly can’t afford an attorney to represent them and will just “live with it.”

Here’s how this dealer trick is set up.  You go to the car dealer and everything seems normal.  You find a car, negotiate the price and go into the “finance office.”  The finance manager then takes out a Retail Sales Installment Contract, which is a really long document.  It’s all filled in and reflects all the numbers that you discussed.  The finance manager spends a lot of time explaining everything to you and going over all the numbers, starting at the top of the document and pulling it toward him.  He’s meticulously going down the contract ensuring that all your questions are answered. As he’s getting toward the bottom of the document, the top is now hanging off the top of his desk – on the finance manager’s side.

And then comes the most decisive moment: all of a sudden he drops that big piece of paper down… So he backs up, and reaches down to pick up the contract, but doesn’t pick up the contract you thoroughly reviewed a moment ago. He picks up a totally different contract that is loaded with additional costs and items.  You might not catch it at first because the payment might even be the same – but the term of the contract has increased by a year.  If your payment is $400 a month for a 60-month contract and you were tricked into signing a 72-month or even 84-month contract, then you were just defrauded out of $4,800 – or $9,600 in the case of adding two more years! You have lost almost $10,000.

So how to protect yourself? During this transaction, there’s no way to protect yourself against this type of  trick. This dealer scam is really dastard as you might not realize this for years because there might not be a difference in payment!  The only real protection you have is to re-read your contract once you get home.  Make sure that it’s what you agreed to.  If it’s not then you should call a experienced dealer fraud attorney who specializes in this particular type of fraud.

Here are some tips to help car buyers avoid the bad credit score scam and save hundreds and even more when you buy a car.

First of all, it is important to mention that not all car dealers want to scam you. However, you should still be careful to prevent this car scam.

The credit score scam occurs in the car dealers auto finance department. When you have already negotiated that price for the vehicle the salesperson will go to the finance department and return some time later to inform you that your credit score is too low.

This is a common dealer trick used to get the car buyer into a high interest car loan. This way most dealerships make their profit.

The best way to avoid the bad credit score scam is not to finance your car through the car dealer. This way you can not only save hundreds of dollars, but will also save yourself a lot of time as well. Know your credit score before you go to the dealership. The higher your credit score is, the lower the interest on your car loan.

The Bump and Grind car dealer scam is a common dealer trick, used to increase the price of the vehicle and occurs during the negotiation process.

Car dealers know that if they try to raise the price of the vehicle for $2000.00 right off, the consumer will probably go away from the deal. So what they basically do is just raising the price by just a little here and a little there. This technique proves to be quite effective.

When the car buyer makes an offer on a car, the sales person will most likely tell some bogus line like: “Gee, I know my boss will kick me out of his office if I take this offer to him, so how about if we raise it (bump it) by $150.00 (or whatever) and then he will at least listen to me?”

This is only the first “bump” and what consumers don’t know is that later there will be more bumps in the price.

Then the dealer leaves you for about fifteen minutes to supposedly present your offer to the sales manager. The salesmen will pretend to argue on your behalf. When the dealer comes back and he/she will say something lame like: “Gee, that sales manager is such a hard head! If you could just agree to add another $200.00 (or whatever) to your offer then I’m almost positive he will agree to your price”.

You can avoid the bump and grind car dealer scam if you are well informed and let the dealer know that you are aware of it. If you feel that the dealer is trying to scam you tell him that you will leave if they continue to do so.

This leasing fraud happens when the car dealer sells the customer an over-priced extended warranty on a lease vehicle. Unsuspecting consumers purchase there warranties not knowing that the vehicle is already under warranty during the entire period of the lease. According to the research conducted the extended warranties are high-profit items for most car dealers, that is why they try to add it to every contract- even when they are not needed.

The car dealer will, most likely, try to get you into the deal by telling that he offers a special price on the warranty and that it won’t be available later during the lease or at the end of the lease when you decide to buy the vehicle.

Another dealer trick used is when the dealer tells the customer that the warranty is refundable if you turn in the vehicle at the end of lease. This is simply not true, so when the dealer offers you this option just refuse.

The best way to avoid the extended warranty scam when leasing a vehicle is to sign a lease for no longer than the manufacturer’s warranty period. Always remember that you lease the car and don’t own it.

Of course there are a lot of car dealers with high integrity who are interested in making you a good deal, but the fact is used car dealer scams do happen and must be aware of car dealers who will do anything to earn as much money as possible. Knowing the several tips introduced in this article will help you protect yourself from used car dealer scams.

1. “This offer is only good today.” This is one of the most commonly used dealer trick. The truth is the car dealer wants you to buy today because they are afraid if you go home and think about it you will start to see that the deal is not so great.

2. A good deal might turn out to be not as good by the end. This scam happens when the dealer makes you a great deal on the cost of the used car and later addes to the deal a bunch of over-priced extras. This way the salesman makes more profit than you think. Avoid this scam by refusing all extras offered by the dealer.

3. Remember that the salesman is interested to get you to purchase as soon as possible. If you feel uncertain about the vehicle then don’t buy.

4. Always negotiate! Keep in mind that the first offer of the dealer will be high. Start negotiating low. This way you can meet in the middle at an acceptable price.

Used car dealer scams happen every day, but that doesn’t mean that you have to be a victim. Be informed and you will be able to walk away with a great deal.

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.

There is nothing worse for a consumer than falling for an auto sales scam. The purchase of the vehicle is one of the most important purchases and if you fall for the scams of a car dealer you can loose a lot of money. However with a little bit of information you can avoid auto sales scams. Following are 5 important tips you can use to avoid auto dealer fraud.

1. Always go into a dealership with a strong understanding of how much you can afford for monthly payments. Remember, that a car dealer wants to sell you a car and make a profit and will often try to get you to spend more.

2. Watch out for predetermined monthly payments. It’s a common tactic for dealerships to plaster a sign on the vehicle windshield advertising a low monthly payment for the car. This makes a customers believe like they are getting a good deal. However, when you add up the total cost you find you are actually overpaying. This is why you should always have the total cost calculated before signing any document.

3. One of the oldest scams is a classic bait and switch. The car dealer will give you a great price break on the car up-front only to load up his profits by adding a lot of unnecessary extras such as extended warranties, gap insurance plans and special paint sealants. Avoid it by declining any extras.

4. “This deal is only good for today.” This is a common dealer trick and is designed to get you to buy today. The truth is car dealer is afraid that if you leave the dealership and think the deal over you will never come back again. Dealership will still be willing to sell you the car and make you a deal tomorrow.

5. You can negotiate any price. Never get to thinking that the terms of the sale are final. It is good for you to know that any price is negotiable at a car dealership.

Buying a new or a used car is not always easy and fun, as you should always watch out for dealer scams. There are car dealers who work trying to get that deal from you no matter how much it costs. If you are not careful enough you will pay a lot of money and in the end get a piece of junk. You may end up buying a used vehicle which is worth its price because it was involved in an accident and the problems are masked so you the buyer are not aware of the problems.

Very often car dealers push you into buying the car today. Do not fall for this dealer trick. In fact it is a common practice for car dealers, who will tell you that they can’t “promise this car will be here tomorrow.”

Another common dealer fraud is including a lot of fees and extras you don’t need to the vehicle you intend to buy. This is simply a scam to get you pay more down payment or add more to your loan agreement. The dealer will probably tell you that “everybody pays this fee, it is standard procedure.” Do not believe him.

When you are trying to bargain on a used car to get the price down a car dealer will probably use a sentence “I am loosing the shirt off my back.” It’s a common practice for salesperson used for many years. However the truth is he probably took the car in on trade and did not pay anything to the party who did the trade.

One of the things that most customers do not notice is that salesperson at the dealership continues negotiating till the contract is signed. Remember that even if you have clarified all the terms and shaken hands on the deal, the final contract presented to you for signing may be different from what you have agreed. Look thoroughly and you may find out that the terms in the contract are different than those you agreed upon during the long period of negotiations.

Many customers are often mistaken by thinking that the Finance and Insurance (F&I) Department of the dealerships deals with the paperwork only. This is not true. First the person in the Finance and Insurance (F&I) Department will persuade you to agree with monthly payment higher than what your credit status requires and then will try to sell you some extras. This could be done during a friendly talk and you will not even notice how these extras are added to the final contract you are signing.

Be careful not to purchase worthless products such as undercoating, paint sealant, extended warranties, credit and disability insurance and other add-ons.

If you haven’t securing your own financing before going to the dealership, than you are relying on the Finance salesperson at the dealership to arrange the financing and get the best rate for you. However, they may shop for the most profitable loan for the dealership and not for you. The most common dealer trick is to get you approved at the lowest rate and later add a couple extra points on it. For example they may get you 6% interest rate but tell you the best rate they were able to find is 9%. Remember, that financing is the good way for the dealer to make more profit.

You may be able to avoid this dealer fraud if you know your credit score. Also get information about the current interest rates to know what interest rate is right for you. If you think the interest rate the dealer offers is too high tell him he needs to do better. If the dealer tells he can’t get you a better rate, tell him you will arrange your own financing. Probably your dealer will calculate the numbers again and you will win. However, make sure that the dealer did not increase the length of the loan to keep your payment lower.