Avoiding Scams

There are a lot of shady characters out there in the used car market, and they’re looking for one thing: your money. The average American buys a new car once every three or four years, but a good salesman might sell ten every month. That gap in experience puts the buyer at a huge disadvantage, and that’s why we all recognize the character of the predatory, fast-talking salesman from movies and TV. Knowledge is power, and the best teacher is experience. But fear not! They only have so many tricks, and if you do your homework, you can learn from the mistakes of others who have been scammed before you.

A quick note before getting started – Before you consider doing any business with any used car dealership, check out their reputation with the Better Business Bureau first. It’s a fair bet that businesses using unethical practices won’t get away with it for too long.

The Bait and Switch

One of the oldest tricks in the book – the dealer puts out an ad featuring one product, but when you get to the dealership, it has “already been sold.” Of course, if you’re interested in something more expensive, they have it right over here…

You can always just leave – that way, all they’ve done is waste your time. Don’t listen to their protests: They will try to stop you, but you have no obligation to be there. Of course, it’s better if you can avoid that in the first place. Call ahead of time, ask if the car in the ad is still available, and ask for it in writing. If despite all that, they still pull this trick on you, take your evidence straight to the BBB.

Confusing Negotiations

If you can confuse your customers about the price, there’s no limit to how much you can squeeze out of them. When it comes time to negotiate price, you really have to be on your game, and there are multiple aspects to watch out for.

The first thing you can do to protect yourself is Secure Independent Financing. If you separate this part of the transaction, then you’re separating all concerns about interest rates, monthly payments, rebates – anything beyond the bottom-line price of the car.

All those aspects you eliminate right off the bat are the areas where dealers will try and screw you mercilessly. The list of scams that involve interest rates, variable leases, financing, etc., etc., could fill a book. Secure your financing from a respectable institution, like a bank, where there are stricter regulations protecting you from scams.

Next, don’t be tricked by a bad trade-in deal. Many dealers are hoping that, by the time everything else has been argued, signed, and filed away, you’ll be too tired to worry about your old car’s trade-in value. Using this tactic, they secure used cars at incredibly low prices, only to turn around and sell them for more than they’re worth. Why give the dealership that money when you could use it just as well?

One way to subvert this is to shop around to different dealers on the phone before you ever step foot in a showroom, to find one that will offer you the most for your trade-in. In the eyes of a salesman, if you’re willing to accept a low trade-in, that’s proof that you don’t know what it’s worth, and they’ll take it as a green light to fleece you on the rest of the transaction as well.

If you have the patience, you stand to make the most by foregoing the trade-in process entirely, instead selling it on your own. Put some ads up on Craigslist or in the local Want Ad and just wait for someone to call.

Finally, there’s the meat of the issue – what you will actually pay to drive off the lot. There are a lot of numbers out there meant to distract you: Manufacturer’s Suggested Retail Price (MSRP), invoice price, not to mention the additional things the dealer will try to tack on, like undercoating or extended warrantees. Don’t pay attention to these – stay focused on the bottom line. And don’t pay sticker price! Do your research and find the fair market value for the car. Kelley Blue Book and CARFAX are great places to start.

Curbstoning

Sometimes, used car dealers will pretend to be independent sellers, in an attempt to get around certain laws, or simply to sell a vehicle they could never get away with putting on the lot. Always check the CARFAX on any private sale, and also make sure the name of the seller matches the name on the car’s title. It may seem harmless, but it is illegal and results in salvaged, dangerous vehicles being sold as lightly used.

Title Washing

This scam is usually run on vehicles that have been salvaged from natural disasters. Many states require totaled vehicles to be “branded” with that information on the title – however, many others do not. To “wash” this brand clean, dealers will sometimes bring the title to a state without these laws, and register it there, giving them a clean title and the opportunity to sell a lemon for significantly more money. This shady practice cannot hide from a CARFAX report, though, which provides the complete owner and title history, across state lines.

Intentional Contract Mistakes

A car salesman will say anything to get you to sign a contract, but it is what has been written down that forms a legal agreement. As such, it is incredibly important that you read anything before you sign it. Pay special attention to the numbers – bring a calculator and make sure everything adds up, or you may accidentally agree to a much higher price than you agreed on orally. This is especially easy to fall for if you’ve worked out any sort of payment plan – though if you followed our advice about compartmentalizing this part of the process, that shouldn’t be a big consideration.