Common fraud: car buying scams

Protect your finances by learning the most common car buying scams in order to avoid being taken by unscrupulous car dealers.

New and used car sales are one of the biggest consumer rip-offs. Although many of the tactics used are perfectly legal, it doesn’t change the fact that individuals are being taken by unscrupulous sales people every single day. These dodgy dealers use questionable advertising methods that draw people in, and they try to conceal the facts and figures with confusing jargon.

Beware of car dealers that promise to pay off your current vehicle loan no matter the amount you owe. They will gladly pay off your existing loan because they tack the existing balance onto your new loan. Not only will you be paying for your new vehicle, but you will also pay for a vehicle you no longer have. It is likely that you will end up paying an amount that far exceeds the value of the new vehicle.

When you end up owing the bank or finance company more than your vehicle is worth, this is called “upside down credit”. This is a very bad financial situation to be in. If your vehicle is stolen or totaled you may still owe a considerable amount of money after the insurance company compensates for the damage. Gap insurance is available to cover upside down credit loans, but these policies are hard to find and have numerous stipulations. Avoid upside down credit by not allowing yourself to be taken in by friendly salespeople who promise to pay off your current loan. Their primary concern is their commission, and they don’t care if you end up paying more than your new vehicle is worth.

The car dealer doesn’t always have your best interest in mind. This is true in more ways than one. Car dealers typically use affiliate banks and finance companies with no regard to the percentage of interest their customers will be required to pay. Shop around on your own to find a loan with the best possible interest rate.

Car dealers will work hard to come up with almost any monthly payment you suggest in order to make a sale. They don’t do this by giving you a break on the price. They extend the time it takes to pay off the vehicle. The monthly payment ends up looking good, but the total cost of the vehicle is what you need to consider before signing on the dotted line.

Carefully examine the vehicle you are considering from top to bottom. Used car dealerships employ people who are very good at covering up scratches and blemishes on previously owned vehicles. They use colored wax that’s temporary at best. After being exposed to car washes and the elements, the once beautiful paint job will start to wear away.

Pay careful attention to the condition of the tires on the vehicle you are considering for purchase. It’s a common practice for car dealers to remove original tires from low-mileage vehicles and replace them with worn tires that will soon need to be replaced. If you’re unsatisfied with the condition of the tires on the vehicle you are considering, demand they be replaced or walk away from the deal. Chances are the salesperson will meet your demands in order to make the sale.

Have an independently licensed car mechanic inspect the vehicle you are considering for purchase. Used vehicles don’t often come with extensive warranties. Any problems you notice should be mentioned and corrected before signing the final papers. Don’t believe car sales people who offer excuses for why a vehicle is doing something you suspect to be a problem. The more they have to correct on a vehicle, the less they earn in commission.

Remember, friendly car dealers and sales people want your business, and they will often use questionable practices to gain it. Make sure everything is clearly understood before signing anything. It’s your prerogative to walk away if you’re not completely sure of the proposal, or if you aren’t completely satisfied with the final price of the vehicle you are considering. Take time to shop around, and you’ll find the right vehicle at the right price.