The Unlucky 13: Common Car Dealer Scams
Most car dealers and salespeople are honest and up-front in their transactions when they sell you a car. Unfortunately, there are also plenty who are NOT. Here are some tips to save you money and misery.
1. The Patriot Act Requires You to Provide this Information Scam
Some dealers will try to require buyers who have their own car financing from a credit union or other lender to sign a credit application anyway. They will say it’s required by the Patriot Act. This is the link to the Patriot Act language. Read through it. You’ll see that no where in there is a car buyer required to provide social security or other credit information. http://www.lifeandliberty.gov/highlights.htm.
2. Extended Warranty Scam
They tell you your credit is bad and the bank is requiring you to buy an extended warranty or the warranty is “included” or the APR on your loan will be higher without the warranty.
The bank does not ever require you to buy an extended warranty and nothing is “included”. You’re paying for it. Read the bill of sale very carefully, the warranty will be listed there. And interest rates are never tied to warranties. Warranties are great profit centers for car dealers so it’s no wonder they’ve found so many creative ways to trick you into buying one.
3. Bait & Switch Scam
If you saw a car advertised with certain features at a certain price, but that car is “not available” when you show up to buy it and they only have something with fewer features or a higher price, walk away. This is the age-old bait-and-switch.
4. Bogus Bill Scam
Always read your invoice very
carefully before signing. Dealers have been adding “mystery fees” to bills for
ages. Question anything that you don’t understand and don’t accept, “that’s
just the way we do it”. Negotiate costs
like “dealer prep fees”, VIN etching and any other fee that seems questionable.
They may even try to charge you for disability insurance, rust inhibitor, and
other add-ons without your consent. Don’t be afraid to say “the deal is off” if
they don’t remove unacceptable fees.
5. Holding You Hostage
Scam
Whatever you do, don't give up the keys to your current vehicle or your
driver’s license or your social security number. Unscrupulous sellers will try
to hold you hostage by saying that the person who has your keys or license has
stepped out and then you are trapped. The dealer doesn’t need your social
security number until you have agreed on a vehicle and a price, and only then
if you are getting your financing from the dealer. (Hint: Smart buyers bring
their own financing.)
6. Go Ahead Take the Car Home Scam
Never, never, never take the car off the lot until every “I” has been dotted and every “T” has been crossed. If you do, you put yourself in a vulnerable position of having to accept any terms the dealer sets. Sometimes a seller will say that you can go ahead and take the car for the weekend, and finish up the paperwork on Monday. This opens the door for him to change the terms of the deal and you are stuck, you’ve already taken possession of the vehicle, they’ll say they’ve sold your trade-in, and you’ve probably already signed an agreement to take a higher interest rate if the lower rate was not available.
7. Mandatory Conflict Resolution/Arbitration Scam
If near the end of your transaction with the dealership they try to have you sign a “Mandatory Conflict Resolution or Arbitration Agreement let the dealer know that your attorney will have to review it first. Often these are very one-sided agreements that give every advantage to the dealership NO MATTER WHAT they may have done. Be careful on this one. Don’t sign it unless you’ve thoroughly read it and/or your attorney has reviewed it.
8. "Oops, Forgot To Pay Off Your Trade In" Scam
It’s best not to trade in a car you owe money on, first of all. But if you do, be sure to get a letter in writing from the dealer where he specifically says he is to pay off the car within 10 days. Then if he doesn’t you have some recourse. Again, it’s best to sell your car yourself, and pay off the loan yourself before shopping. You will probably get more money for your old car that way, too.
9 The “Your Credit Score is a Little Low” Scam
Know your credit score before you go into the showroom or you open yourself up to those dealers who will try to tell you “I’m sorry, you don’t qualify for the lowest interest rate your credit score is a little low”. The dealer shouldn’t know more about your credit than you do. Check the credit reporting agencies before you shop.
10 "We'll Payoff Your Loan OR Lease No Matter How Much You Still Owe!"
You know when something sounds too good to be true it probably is. So don’t believe the hype when you hear these false promises. No matter how badly you want to get rid of your current vehicle--wait. Finish out your lease, pay off your loan or sell it if you want and pay the note that way. If you walk into a dealership looking for one of these deals it’s your own fault when you walk out with an unfavorable price or a high interest rate loan.
11. The Previously Wrecked Used Car, Sold "As Is" Scam.
Private seller vehicles are always sold "As Is", but car dealers should provide at least a 30 day warranty. If they claim the car they are selling you is really great, they should really stand behind it with a 3 month warranty, and if they won’t, consider that a Big. Red. Flag. Always run a vehicle history report and have a mechanic put the car on a lift and inspect it before you buy, too. This will tell you immediately if the car was wrecked. The mechanic can also tell you if there are noticeable repairs needed, which will help you negotiate the best price for the vehicle.
12. "We lowered your payments! Come back and re-sign!"
Be skeptical if you receive a phone call from the dealership inviting you to come back down and re-sign for a new loan since they were able to get you lower payments, etc. Tell them to fax or mail the paperwork for you to review. Most likely you will find that they have changed the terms of the loan, either added months or done other trickery to find the “lower monthly payment”. If you want lower monthly payments, seek out your own refinancing options with trusted lenders.
13. The “We’ve Gotcha Now” Scam
If you wait until your old junker is ready to die before you head out to shop for a new car you are putting yourself in a bad negotiating position and dealers will love to see you coming. They get excited when desperate folks show up to buy a car. It means that you will make hasty decisions and probably sign a deal you would have turned down if you had more time.
If you know you’re going to need a car, get shopping now. Get your financing lined up; research the price range for the car you want to buy. Be prepared. Most people spend weeks online making arrangements for a vacation but jump right into a car buying decision unprepared. Don’t let this be you.