Buying a car from a dealership gets you in the circle of possibilities of potential scams, which can lead to overpayment, faulty products, and far worse issues. The scams are majorly related to finance and loans. We have covered you with some usual scams when buying a car from dealerships, so you don’t fall prey.
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Bait and Switch
This starts with the advertisement of the car at a meagre price which is to of course attract buyers. And when you arrive at the dealership, the car is said to be sold already, and now that you have walked in they try to sell you a more expensive car.
Avoid it by confirming the vehicle’s availability and walk off if the deal is not available at all.
Yo-Yo Financing
It's just like a Yo-yo which comes back to the hand it just left. The dealership calls you back after you have taken the delivery, tells you the financing has been disapproved and now you have to accept a higher interest rate or longer term.
Avoid it by financing in advance through a bank and also don’t drive out till the financing is confirmed.
Hidden Fees
This is the most usual one when dealers add different fees to the final bill like preparation charges, delivery charges, inventory charges, or advertising fees. This is to get a suitable margin in the profit bank.
Avoid it by clarifying all the possible charges before going ahead with the deal. Don’t let yourself be overpowered by any questionable fees.
Extended Warranty and Add-Ons
Dealers always try to push unwanted accessories, coatings, warranties, inflated insurance costs, or other sellable that won’t make much difference to you or the vehicle.
Avoid it by researching what you exactly need on the car and, the terms of the extended warranty by the manufacturer. Always decline any deliberate add-on by the dealer.
Low Trade-In Value
This works by the dealer not giving you the actual value of your old vehicle that you drove in for a trade. Dealerships try to make it sound very low when it might hold its value otherwise in the used car market.
Avoid it by checking out different dealers so you can get the best value amongst them. Always know the market value of your vehicle in the used car market. You may also sell it at a good price at online marketplaces.
Inflated Interest Rates
In this case, a dealer usually inflates the interest rates more than what you are supposed to get in the first place and will then earn on the difference between rates.
Avoid it by pre-checking financial rates before stepping inside a dealership or getting the loan sanctioned from the bank before you head to buy the car.
Payment Packing
In this scam dealer usually adds additional extras to your loan eg. Extended Warranties or Gap Insurance) without your knowledge which eventually increases your monthly payment, hence earning extra profit.
Avoid it by reviewing the loan conditions and monthly payment details. Always observe the breakdowns on the monthly payment bill.
VIN Etching Scam
Dealerships usually charge heftily for etching the VIN on the vehicle’s window to prevent any theft from happening. This is something that can be easily replaced by something like a GPS tracker but you are charged exorbitantly for etching the number.
Avoid it by simply declining the service as it is a very passive deterrent to thefts also etching the VIN costs a lot less if done elsewhere.
Military Affiliation
Our troops also come under dealership targets when the salesperson lies about their military affiliation. The military members come under these scams because they go through a lot of relocations and special repossession protections.
Avoid it by not falling prey to such claims of affiliations, let the deal remain around the car only.
Title Washing
This refers to the lies about the title of the vehicle, trying to pass off a vehicle with a clean history. These are given to the vehicle that has been in an accident or some kind of altercation. Darker truths can also be vehicles that have been salvaged, were in a flood, or odometer rollback.
Avoid it by getting the vehicle checked thoroughly pre-purchase by a third-party technician for potential issues or red flags.
There are new protections in place to curb, the CAR Rule, and according to the FTC,
Pricing and Installments
- The dealer must tell you the offer price, which is the full price of the vehicle. This offer price must include all the costs and fees excluding government fees, like taxes and registration costs.
- If the vehicle is financed, the dealer must tell you the final full price of the vehicle. If the monthly installments are lower then the customer should be told about the rise in the total cost of the vehicle.
Extra Value Services and Products
- As a customer, you now get the right to refuse any kind of products and services that would increase the price of the vehicle. This can include paint coatings, extended warranties, and wheel and tire warranties.
Consent for any Charge
- Dealers cannot charge you for any item unless you are made aware of any such charge and can’t process unless you have agreed to the charge.
And there is a reaction from National Automobile Dealers Association CEO Mike Stanton:
“This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction… We are exploring all options on how to keep this ill-conceived rule from taking effect."
The best way to buy a car is to research a lot, being curious can save a lot of these scams from happening. Always take your time and settle when most of your questions are answered. Any money not spent is money generated. Happy Buying!
