Dealer Fraud

As you look for a used car, you might come across the phrase “salvage title” in a used car advertisement. The price is going to seem right and you’re really going to buy it. Used car salvage titles are not bad idea at all, but make sure you know what you’re getting into before purchasing a used car with a salvage title.
Here you have four things for you to do before buying a vehicle with a salvage title:

•    Understand What a Salvage Title Is
•    Get a CarFax report
•    Get a Qualified Inspection
•    Weigh the savings vs. future costs

Understand What a Salvage Title Is

Basically salvage title is given to any vehicle that has persistent damage worth 75% or more of its value. For example, if you drive a 2003 car $9415 and it suffers $7061 in damage in a collision, it’s going to be branded with a title stamped “salvage.” In other words, it’s not considered fit to drive. Sometimes it is also called a junk title.

Normally it is fraud to sell a vehicle without disclosing that it once had a salvage or junk title. That’s why titles will be branded “resalvaged” or something similar to denote a vehicle that has been repaired from a salvage title.

Here you have a chief tip when dealing with a “resalvaged” title. Make the seller demonstrate what work has been done. In some states, revenues for parts and repair work have to be submitted in order to get the resalvage title.

Get a CarFax Report

Usually, CarFax reports aren’t the be-all and end-all, but you’ll find them useful when dealing with vehicles with salvage titles. They give basic facts about a vehicle’s history if you know what you’re looking for.

Unhappy used car shoppers are finding out horrible information after purchasing used cars. They are learning that their cars have been damaged in floods and they didn’t realize it before purchasing the car itself.
Here are some tips that can help you to escape being stuck with a vehicle that has many hidden repairs needed which can cost you much more than you planned on spending when you purchased that used vehicle.

Water-damaged car is something that can be much easier to hide than it is to repair, that is the reason you need to inspect in hidden areas to determine if the used car you are considering to buy might have flood damage.

Inside the car the first thing you should do is to give the car a good test. Many car dealers use odor but see if you can detect a rotten tinge to the air that would be a definitely warning sign.

Moreover touch the carpet of the car, many times cars with flood damage have water trapped under the carpet that remains there and is not detected. When inspecting the carpet, note if it is new. If the car is an older one, made sure you ask the sales person why the new carpet was installed in the car and have the answer documented if you buy the car in case you need to refer to that conversation due to a complaint you have after purchasing.

Another point to examine while you are still on the floor of the car is the brake and gas pedals. You will want to look under the pedals to see if there are any signs of wear from water including rust. Also check the bolts and screws under the seats as well.

Auto dealer fraud can crop up at almost any stage of the vehicle purchase process, from advertising to signing on the dotted line. Here are some common states that can give rise to auto dealer fraud:

•   Incorrectly inflating a vehicle’s invoice price - The “invoice” is the amount that the auto dealer is charged for the vehicle, by the vehicle manufacturer. Examples of incorrect inflation of the invoice price include making additions to the invoice figure, when those charges were initially included in the invoice price (i.e. “destination” charges).

•    “Bait and Switch” - A form of false or unreliable advertising, in which a car dealer attracts customers to the dealership by advertising one vehicle at a certain price, then informs the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle.

•   Covering “Add-On” Up- covering up the inclusion of certain optional “add-ons” during the negotiation, or the costs of those add-ons, but including those add-ons in the final vehicle price.

•    Auto Trade-Ins - underestimating and underpaying for a car buyer’s trade-in auto.

•    “New” Dealer Returns - Selling a vehicle as “new” that was actually returned to the dealer because of a defect or persistent mechanical problem or was returned shortly after purchase for some other reason.

•    Recovered and Flood-Damaged Vehicles - In used car sales, failing to disclose that a vehicle has been designated “recovered” after a car accident, or has been flood-damaged.

•    Odometer Backoff- In used car sales, odometer “backoff” are intended to conceal a vehicle’s actual mileage.

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.

You’ve probably already heard about the C.A.R.S (Car Allowance Rebate System) Act, otherwise known as the Cash for Clunkers program. Pursuant to the act, the government will give a used car owner a credit of $3500-$4500 toward the purchase of a new car when the old clunker is traded in at an automobile dealer. The system encourages individuals to get rid of their old cars in favor of more fuel-efficient vehicles.

There are a few requirements that must be met in order to be eligible for a rebate on your trade in. The basic rules of the Cash for Clunkers program are as follows:

• The vehicle being turned in must be less than 25 years old on the trade-in date.
• The trade-in vehicle must get 18 miles per gallon or less according to revised EPA standards.
• The trade-in vehicle must be drivable.
• The fuel efficient automobile must have a MSRP of $45,000 or less.
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in date.
• Rebate money can only be applied to the purchase or lease of new vehicles that qualify. The money cannot be applied to used vehicles.
• A qualifying lease means a lease of an automobile of not less than 5 years.
• Car rebates must be $3500 if the new car gets at least 4 mpg more than the trade-in, or $4500 rebate if the car gets at least 10 mpg or more than trade-in.
• For SUV’s, pick-ups, or minivans, a rebate of $3500 will be given if the new vehicle gets at least 2 mpg more than the trade-in, or $4500 if it gets at least 5 mpg more than the trade-in.

Participating in the program is very simple. All the customer needs to do is bring the required information to a local dealer. The dealer then prepares the necessary paperwork and submits it to the appropriate agency. The National Highway Traffic Safety Administration makes sure that all requirements have been properly met and sends a finance credit voucher to the dealership.

However, consumers should be aware that there are scammers who will try to take advantage of uninformed consumers. There are websites offering pre-registration for the CARS program and offer to register the consumer with local dealers. Buyers should be aware that they don’t need any pre-registration.

Another type of fraud perpetrated by car dealers through the Cash for Clunkers program is charging the consumer a specific fee (usually $250) for administering the CARS program. Please remember that the dealer cannot charge you this fee when you purchase or lease a new vehicle.

The CARS program can be a great opportunity for you, the car dealer, and the economy if you know the rules.

Sometimes car dealers sell poorly rebuilt, wrecked or salvaged vehicles. Thus, after the purchase car buyers find that the vehicle is unsafe and moreover it is priced too high. The majority of these vehicles were involved in accidents or floods. Most of the vehicles look good on the surface, but they may have steering problems, defective brakes, inadequately welded parts and overall, poor handling.

Most of the state laws require car dealers to inform customers before purchase if the car has, to their knowledge, a “salvage title” or has been involved in an accident. If a car dealer fails to disclose any such information it is considered fraud.

Make sure to inspect the vehicle thoroughly before buying. Especially, look for the following;

• matching of paint on the outside and inside of the door frame.
• parts of the car should line up with each other and the spaces between the hood and trunk and around the doors are straight.
• flood damage is fairly evident in certain vehicles by the presence of mud or dirt under the mat in the trunk, or moisture under the seats or inside the trunk or hood. There may also be watermarks inside the doors.
• if the car has an out of state title, it may have been moved to another state due to its extensive damage.

During the car negotiations of the car deal customers get to know a number of terms, such as purchase price, options, down payment, trade-in credit, monthly payment, interest rate, loan term, and balloon payment. All these elements of a car deal lead to confusion or fraud. It is difficult for the customer to focus on all of the terms mentioned by the car dealer. If the customer focuses on one of the terms he will probably miss all the others and car dealers know this.

Distraction is an art that many car salesmen study diligently. For example, many people have become a victim of dealer fraud by focusing on just monthly payments. You will be able to avoid car scam and to get the best deal if you separately handle your financing and trade car. This simplifies the negotiation and leaves you able to focus only on the best purchase price for the vehicle.

This fraud is common when you go to the dealership and want to lease a new car. The salesperson will tell you that the dealership is ready to accept your old leased vehicle as a trade-in and may offer you a good deal on a new lease. However, you should remember, that trading in a leased car is not a good idea.
Most people don’t have any equity in their old leased car to help them buy or lease a new car. Many problems can arise from this situation. One of the dealer tricks used when you lease a vehicle is taking your old leased vehicle and returning it to the leasing company. Leasing company later sends you a bill for early termination or buyout. Another thing the dealership may do is putting the car on their used car lot after buying the car from the leasing company and adding the buyout cost, less the trade-in credit, to the price of your new vehicle. If you have reached the end of your lease and have no equity in your leased vehicle, it is better to return the car to the leasing company.

In case you don’t want to pay for the preparation fee, simply tell the car dealership to credit you the amount of the preparation fee service on your contract. If the car dealer refuses to do so, just walk away from the deal. Remember, that it is legal for a car dealer to charge you for preparation fee, however if you step into the dealership armed with information it will be very hard for dealer to scam you and you will be able to save your money. There are more and more scams and fraud going on today and the best way to protect yourself from dishonest dealers and car fraud is to educate yourself and be well informed.

If you think you are a victim of the preparation fee scam, you won’t be able to report it to the authorities. However, you should report the car dealership to your state’s Better Business Bureau.

Car preparation fee is a good way for the dealer to make a quick profit from customers in the range between $500 and $2500. In fact, this fee is not illegal, but it is considered a dealer fraud, because these fees are covered not by the consumer, but by the factory.

Generally, car dealers charge consumers for peeling of plastic off the seats, checking of fluid levels, vacuuming the interior, and washing and waxing the exterior. Most consumers do pay for this because they are not informed that these fees are already paid for and listed on the MSRP. The fraud when you have to pay for something that is already paid for is also known as Double Collecting. This car fraud is very common among car dealers today and you should be very careful not to be a victim of this scam.