5 Car Dealer Scams That Should Be on Every Consumer’s Radar
Everyone loves shopping for a new car. Actually, no one does. It’s right up there with looking for an apartment in the cold of winter or pricing caskets. The only part that’s fun is test-driving a car you know you would never buy. But that’s not really shopping. That’s borrowing someone’s car for a joy ride.
When it comes to comparing model specs, looking for discounts, factoring in finance terms, understanding fuel economy quotes, and looking at resale value (matching pre-owned versus new models), there is little to love about the car buying process. It only gets worse when an unethical auto dealer is trying to put one over on you. Then it’s anarchy. Here’s a look at the scams you should be ready to avoid.
The lost financing scam
Signing a deal for a new car is foolish if you don’t have loan terms locked in already. Leaving the dealership in a new car with on-the-spot financing leaves you open to this scam. After a few weeks, you learn from the dealer that your loan application was rejected. Now you have to accept a higher annual percentage rate (APR) on the dealer’s new loan because the original rate is no longer available.
The ‘your credit sucks’ scam
In this scam, dealers suggest your credit has seen better days, downgrading it by a hundred or so points. That gives them the right to give you a worse financing deal and pick up some extra cash on the loan. Of course, this scam is easily avoidable if you check your credit before you head into a dealership. When the dealer says he wanted you to get a better deal but your credit score was 640, you can call him out on the lie. Before you left the cozy confines of your home, your saw your credit rating was higher.
Car dealer never pays off trade-in loan
Trading in a car with a loan balance opens you up to some risks. CarBuyingTips.com shows where it’s most dangerous: when a car dealer “forgets” to pay off the loan and you are stuck with the balance because you never got the paperwork. A car ought to be paid off in full if you are trading it in or otherwise be sold to a buyer on the open market. Dealers would be especially shady if they tried this scam, but it has been done in the past.
The co-signer scam
Let’s say you are having trouble getting a loan for your car, for whatever reason. A dealer might suggest you just get a co-signer to obtain approval and head down the road. That solution might sound appealing until you realize that the co-signer with good credit ended up being the only one with the loan. It’s a scam because you wouldn’t have gotten the car without that loan and wouldn’t have gotten the loan without someone else’s credit. Catch this one before it’s too late by reading paperwork carefully. The co-signer is the one at risk.
The ‘online lenders are deadbeats’ scam
If you roll into the dealership with a pre-approval and blank check from an online lender, you should be on your merry way once you choose the right automobile. Unfortunately, you may find your dealer refusing to accept the check because he claims online lenders are deadbeats who always bounce them. Then he will hit you with a loan package at a higher APR. His scam is convincing you other people are trying to scam him. It’s creative, but you can blow up the scam by walking out on the deal.
Scams Used By Devious Car Dealers — And How To Avoid Them
Lies, Lies, and More Lies
The Scam: The majority of car salesmen I interacted with have lied about small things: That color is not available; there are only three left state-wide; the price is good only for today; someone else is interested in the car, better decide quickly, etc.
What To Do: Take your time and be patient when shopping for a car. Don’t rush into anything, especially based on what a salesman tells you. Just treat salesmen fairly and take everything they say with a grain of salt.
Shell Games
The Scam: The salesperson finds out what your hot buttons are and exploits them. If you have a trade-in, and they know you want a certain price for it, they will offer you what you want, but at the same time will raise the price of the new car.
If they know you want a certain monthly payment, they’ll make sure you get that, but they will extend the loan term so you end up paying more over the long-term. There are all kinds of shell games that happen at dealerships.
What To Do: Negotiate each portion of your car purchase separately. Shop your trade-in to multiple dealers, shop for an auto loan among multiple lenders, compare new car prices with multiple dealers. Don’t let them bundle everything into one big deal.
Bait and Switch
The Scam: The dealer advertises a car with a great price, but when you show up at the dealership, they say it’s already been sold. They then try to get you to buy a more expensive vehicle. The whole point of a bait-and-switch ad is to get you to the showroom.
What To Do: Call the dealership just prior to visiting to confirm they still have the vehicle in stock. If so, ask them to email or fax you a signed statement indicating that the vehicle is still in stock and available for sale.
Try to avoid spending all day at the dealership.
Buying a new car is a big financial decision. It’s also an emotional one.
People spend a lot of time in their cars. It becomes emotional because it becomes part of our identity.”This works against you in the car dealership, and salespeople know it. You forget that you can get up and walk away at any moment.
Less scrupulous car salespeople will “lose” the keys to your trade-in. They’ll claim they have to get the car you want from an offsite lot. Or they might be detailing the car they want to show you The longer you stay at the dealership, the more likely you are to get tired and hungry. You just want to go home. If they wear you down enough, you’ll say yes to everything. That’s when you are susceptible to an upsell you might regret later.
If you want to make a good financial decision, leave your emotions out of it. Don’t be afraid to walk away and come back later, no matter how much you like the car.
Loading Payments
One of the most classic tricks that dealerships try to pull on you is “loading” your payments. By quoting you with an APR higher than what you’ll actually end up with, you can end up paying extra without even knowing it! An excellent way to avoid this happening to you is by arming yourself with information and knowledge. Arriving at a Harker Heights car dealership with pricing information on the vehicles you’re interested in will allow you to stay a step ahead. However, if you do let a dealer find out you can be conned by this scam, they’ll keep trying to add on more and more fees until you’re paying an arm and a leg. An educated consumer is one that leaves satisfied, which is why you should always come prepared and stand your ground when searching for used cars for sale near you.
Dealer Prep Fee
A common thing many shoppers also tend to encounter when it comes to scams is an auto dealer prep fee. Most manufacturers pay dealers right off the bat for prep fees on a vehicle, which makes them seem quite suspicious. If you’re not interested in having to pay thousands more for unnecessary fees, make sure that you pay attention to each charge on the final contract. Although this is primarily something to worry about with new car dealerships, McLeod wants everyone to make sure they never get taken for a ride when buying or financing!
7 STEPS TO PREVENT YOUR NEXT CAR DEALER SCAM
“CAR DEALER JAILED 7 YEARS FOR SCAM INVOLVING S$3.2M”
The number of scams involving car dealers has been on a steady rise in Singapore. Even if they don’t make the headlines, it is a well-known fact that dealing with a car dealer automatically incurs a premium. I mean, how else are these people expected to make a living for themselves? Dealers are not the only one to blame. We, as consumers, should also take the responsibility of knowing what the precautionary steps needed when dealing with a car dealer are. Don’t know how to deal with car dealer? Below are some simple steps to always remember whenever you come face to face with a car dealer.
1) ALWAYS OBTAIN A LOG CARD
This is one mistake many people always make. They don’t ask for the log card after they have completed the transaction of their cars. The purpose of the log card is to ensure that YOU are the owner of the car as the log card states clearly who the owner of the car is. If you didn’t manage to get the log card from the dealer, you can simply log into one.motoring and use your SingPass to check. If you don’t see your name under the car in a week, you better start calling as something might be up. Transfers usually take place within a week!
2) ALWAYS HAVE YOUR PAPERWORK ON HAND
Here is a list of things you should always have wirh you, although this is by no means extensive
- Sales and Purchase Agreement (shows that you bought the particular car unit)
- Payment Receipt (containing the number of transfer and the detailed car mileage)
These two points will affect the future resale value of your car so make sure that the car you get after your paper work is finally processed does not get modified. You do not want an additional transfer costs or mileage added to your car
3) CHECK ALL DOCUMENTS
Have a checklist of documents you need to sign or take note of. Any additional document that you sign can be used as leverage against you, so never never never sign documents under pressure. Don’t overlook it. Also, a good habit would be to photocopy every document you sign or return to the dealer.
4. TERMS AND CONDITIONS
Don’t we all hate that small little font at the bottom of the page? However, don’t overlook it. Look out for any penalties imposed, or any additional “admin fees or loopholes.
5) OBTAIN THE APPROPRIATE LOAN AMOUNT
Make sure that you request for the loan application form. If you don’t, you might be applying for a loan higher than you would otherwise have been willing to and eventually have to spend a longer time and more money trying to repay your loan.
6) HAND OVER FORM
Ensure that there is proper handover of liability. The dates, time and name must be accurately detailed on the form.
7. WHEN YOU DON’T KNOW WHAT TO DO, CALL CARRO TO ASK OUR CAR SPECIALIST FOR ADVICE.
At Carro, our core principle is transparency. We help customers by guiding them through buying or selling process.