Typical Car Dealer Scams

Car dealers are often portrayed as predators just waiting for an unsuspecting customer to come along.

This is because many people believe that they are always on the prowl for unsuspecting car buyers that are not very knowledgeable about cars.

This can be unfair because we can argue that there are car dealers out there who would not cheat just to get an extra profit.

How do you tell the difference?

To avoid becoming a victim of sneaky car dealers, look at the following auto financing scams.

Yoyo Scam

You will be allowed by the dealer to bring the car home as soon as possible. The dealer will take care of the financing, a few days later he will contact you again and tell you that there was a problem with your financing plan.

He will tell you to set up a new financing scheme through him which, of course, will be at a higher cost and this will also entail a very high profit on the dealer’s part.

Be wary of this trick and avoid it at all costs if you detect it. If you have a bad credit standing, don’t have your financing done by the dealer and make arrangements for your own financing.

If you ever do avail of the car dealer’s financing, you should never drive the car back to your home immediately. Wait for at least 24 hours just to make sure that the processing of your financing scheme has been completed already.

By allowing 1 whole day to pass by, you are assured that the dealer cannot use this scam on you.

Window Etching Trick

Window etching is a very common scam. What the dealer will do is to offer to etch the VIN number of your car onto the window of the car for a price.

Basically, the price ranges from as low as $300 to as high as $1,000. Some buyers think that they did a good job by being able to talk down the price to a few hundred dollars, but unfortunately for them, a few hundred dollars is still a good amount of money.

The best way to avoid this kind of scam is for you to buy an etching kit that you can do on your own. This is available in most auto shops and costs around $20. See how much they profit from you!

Dealer Preparation Fees

For preparing your car, the dealer will often add an additional preparation fee to your bill.

Just to conduct a test drive, replace fuses, or take the car’s plastic cover off can have your bill increasing by at least $500!  If you visit other shops, you can get the information that these add on costs are already included in the MSRP as set by the manufacturer. Some dealers automatically add it to the buyer’s order to make it look mandatory.

To take care of this scam, you can ask the dealer to classify it as credit (it should be identical to the amount of the preparation fee) on the following line. If the dealer does not agree to this, you can just simply walk away from the dealership.

Market Adjustment

The dealer will convince you that the vehicle you want is selling like hot cakes and very popular. In order to sell you the vehicle, they will do some “market adjustments” amounting to a few thousand dollars.

This is usually indicated by a tag near the MSRP tag set by the manufacturer. Even if the car you want is very popular and is very much in demand, if it is in stock you should not be tempted because getting a “popular” car is not worth it if you have to pay a few thousand dollars more.

You should never pay more than the MSRP set by the manufacturers. If you do, then you are allowing others to take advantage of you.

Warranty Extension

Although this type of scam is old already, it is still being used and there are many who fall for this trick. What happens in this kind of scam is that when you make a loan for the car, the dealer will tell you that you are required to purchase an extended warranty because it is one of the conditions of the bank. There is a simple way of avoiding this scam.

Ask the dealer to specify clearly in writing that the extended warranty is required for the loan to be approved. The dealer will most probably find a way to have it excluded. If he persists in including the extended warranty, do not do business with this guy and go to other dealerships.

These are some of the most common auto financing scams that are utilized by some car dealers. Always keep these in mind if you are going to buy a car. If you or a friend were treated fairly by a dealer in the past, consider using the same dealership again.

It’s a good indication that they do care about their customers and aren’t just looking for a “fast buck.”

Think very carefully and do not buy on impulse.

Some Car Dealer Scams Still Remain

Are you thinking of buying a car but hesitant to approach your local car dealer because you are not sure about the processes of buying a car as well as wary of possible dealership scams?

Do you feel that your knowledge about cars and getting great deals is not good enough and you want to learn more about this matter? Then this chapter will enhance your understanding about dealership scams.

The car dealer and his trade

To have a proper understanding of car dealership scams, you must first have an idea of the car dealers themselves and how they go about their trade selling cars.

First of all, the car dealer will try and avoid giving you a price quote. This is because the tendency of the buyer would be to go to another dealer and the other one will probably offer a lower price thus, the first dealer loses the buyer to the second dealer.

To increase their chances of getting you to buy their car, they will try to make you commit to them before they give you the final selling price.

On your part, you can do two things: maneuver the dealer into telling you the price quotation or negotiate the terms of the deal with them. If you decided to negotiate with the dealer then be always on the lookout for the following tricks:

Low Balling

This is one of the tricks most commonly done by dealers. They will try to convince the buyer that they can provide the lowest possible price for the car thereby prompting the buyer to start negotiations with the dealer. The salesman will probably tell you that you can get the car that you want for a lesser amount but when you are about to enter negotiations, it turns out that you were not promised a lower price after all. It is just an empty promise.

Best Price Matching

When you tell the dealer that you will try to look around and check other car dealerships, the salesman will ask you to return when you get the best possible price and he will offer to match it. By this time, you will probably be too tired and sick of looking around. Chances are that you will take their offer.

Trade In Scam

When you have already bought the car, the car salesman will try to contact you before your new car is delivered and tell you that the initial pricing of the car was $500 lower and would like to collect the balance from you. If you fall for this, he will get an extra $500 at your expense.

Spraying

What the dealer will do is to pursue you relentlessly until you give up and buy the car. On the other hand, if you decided to buy from another dealer, he will call you and tell you that he could have given you a lower price thus making you upset. To avoid this, you should not hand out your contact number. Some people even give wrong contact numbers just to evade very irritating car dealers.

Puppy Dog Trick

The dealer will allow you to take the car for an overnight or for a whole day, his aim is for you to fall for the car and buy it. This falls in line with the “Yoyo scam in the next chapter.

Immediate Sale

The dealer will give you a very attractive price but he will also make you believe that this deal can only be made until the end of the day. This will cause you to think too much and in the end, make the mistake of buying the car without checking what other car dealers have to offer.

Extra Accessories

The dealer will offer to give you extras like: car mats, window tinting, and other accessories. This aims to stop you from asking for a lower price because of the perceived “extras” that you will be receiving from the dealer. It will slow down the price negotiations and divert your attention away from the price.

All of us want the best deal available and we abhor the notion that someone will take advantage of us through modis operandi like car dealership scams.

So before going to the local car dealer, you better have a good idea of what he will be talking about.

As they say, only a fool will go to battle unprepared and with no weapons. Your weapon will be knowledge, always remember that.

Tips On Car Financing

Before purchasing your dream car whether new or used, try to assess if the budget can really afford it.

Questions like:

• How will it be paid?
• Who will be helping to pay for it?
  
• What is the price limit of the car to be bought?
  
• How long will it take to pay off the car?

These should be considered even while planning to buy the car. The trend nowadays is that people buy the cars by cashing out the down payment, and the balance will be paid by installment.

Others are just lucky enough to have saved the right amount of money that they are able to cash out the total cost of the car, which, by the way, seldom happens anymore.  Never set aside the possibility of paying thousands of dollars when buying from a dealer or a specific car company, where in the end, they charge you more for the interest which takes years to pay off.

Once you have found a way to finance the car you have your eye on, then it’s time to start shopping around.  There are credit unions and even local banks that are willing to loan the needed amount to purchase the car with an Annual Percentage Rate of only 1.9 per cent.

However, this may turn out to be a catch, since this will only be happening on the first year.  Without prior notice, these interest rates can increase which is a total inconvenience for those with just a fixed income every year.

It is a big plus if a buyer is a member of a credit union.  Being a member could save you the trouble of spending a whole day in a lender’s office because the processing of the loan could only take just a few minutes after filling out the necessary papers for the request.  In a credit union, fifteen to twenty minutes is all that is needed to do the application. They could even loan up to $25,000.00 within just an hour after signing the papers.

It can save you quite a bit of money by researching prior to making that loan for a car.  Car dealers are really digging out most of the pennies in a buyer’s pocket by issuing interest that is sometimes unreasonable.  There are two things to consider when thinking of financing a new car:

First, what’s the price you are willing to be spend?  More often than not, asking yourself the question: How much of the car price do you intend to buy instead?  Only do so if you know you can afford the car of your choice.  Consider regular monthly expenditures.

The monthly payment for the new car should not get in the way of paying the fixed expenses.  If in case it does, by merely doing the math, then just consider an older car or one that may not be quite as “upscale.”  Just make sure that all is checked and examined to avoid hassle in the future.

Second, is it really important to change cars every two to four years?  Consider cars offered on a lease, if so.  Other dealers and car companies offer the leasing of a car for that amount of time, which you can return but no money will be refunded.

However, there is an allotted amount of distance or mileage that should be covered during those years of lease, but this is negotiable.  On the other hand, if a buyer is not interested in changing cars, it’s best not to opt for the cars for lease.

It is safest to get a loan from a credit union or a financial institution instead of a local car salesman; they will definitely try to squeeze your bottom dollar.  Get information from someone you can trust and is expert about financing a car, for they will be able to give you tips to benefit your own interests.

Financing either a new or a second hand car is a lot of sweat, but the determination to get the best car at the best price can be considered a success.

This should be a win, win situation for anyone.  After all it’s your money that is at stake here.  Do your research and it can be a beneficial decision on your part.

Buying Used Cars

A franchised new car dealership is a reliable, if not the only, source for anyone who wants to buy a new car.  But to those who prefer buying used or previously owned cars, there are plenty of options and sources one could choose from to be able to make that vehicle purchase the perfect one.

The following are some of the readily as well as easily available resources to consider when buying a used car.

The Used Car Superstore

Imagine it as the Wal-Mart of used cars.  There have been numerous used car superstores that have mushroomed over the last five years. These superstores usually have a large inventory of used cars, and can number anywhere from 400 to 500 vehicles.  The cars found in these stores more often than not are late models. 

The vehicles found in these stores come from auctions that cater specially to car dealers. The good thing about buying from these used car superstores is that the warranty they provide are often equivalent to the warranty coverage provided by dealers who sell new cars.   However, it is still best to compare.

New Car Dealer

The logic here is that since new car buyers usually trade in their old cars when they buy a new one, the collection that new car dealerships have are almost always extensive.  So used car buyers have a wider range of vehicles to choose from.  Also, new car dealerships provide better reconditioning to the used cars traded to them.  They are also a more reliable source of used cars because their business is more established compared to other used car dealers. Be aware though that sometimes it would take a lot of negotiation on the price of the vehicle to be purchased.  They may also attempt to make you buy more car than what you would actually need.

Used Car Dealers

There are usually hundreds of used car dealerships in every state.  Sometimes, they are small operations that contain not more than fifteen cars in a lot.

Established used car dealers, can have as many as 100 cars or more on their lot.  The great thing about buying from used car dealers is that the prices they offer are a lot less than new car dealerships.  Also, it is fairly easier to negotiate with them.  Not so good news though, the quality of these cars are usually less than the new ones of course.  There also may be a smaller selection of makes and models.

Private Owners

The good thing about buying from private owners is that the prices that they offer are usually reasonable compared to dealers because this is in accordance with book values.  You also get the opportunity to actually speak with the owner of the vehicle and witness for yourself how the car was or was not, cared for.  A potential disadvantage of this scenario, however, is that it could be a bit inconvenient driving to the private owner’s place especially if you are considering looking at eight different cars.  Basically that would be eight different places, time and appointments.

Beware though private owners who have a stable of used cars to sell may actually be a dealer.  Do not be afraid to ask if you could possibly see the title and registration.  Start to get suspicious if you see it is only a few days old.

Car Auctions

The last decade has seen the development of public auctions for vehicles.  Originally, auctions like these were reserved primarily for licensed car dealers.  Now, even individuals have the opportunity to bid aggressively for used cars.

The quality of these cars put up for auction, as well as the selections of vehicles, actually vary from one auction to another.  There are those auctions that specialize in late model vehicles while there are others which dedicate themselves to cheaper and less expensive vehicles.

The good thing about buying used cars from auctions is that you can conveniently compare prices and cars because they are shown side by side with each other.

Also, the prices that they offer are most likely lower than dealerships.  However, there is not much chance for you to thoroughly inspect the vehicle being auctioned off.  And since you are buying from an auction, it is therefore understood that all sales are final. Any car purchased is automatically yours.

Plus, the bidding frenzy could take a hold of anyone and there is a great possibility that you could pay way more than what a vehicle actually costs.

Car Buying Tips - First Impressions

First impressions usually last.

Though not always true, in buying cars, you can gather a great deal of information by just observing how car salespersons deal with you. Usually, these non-verbal signals are fairly correct enough to give you a good idea of what to expect from the salesperson and your car purchasing experience.

If at any time you feel that the person selling you the car is not trustworthy or you simply do not like him or her, always remember that you have the option to leave.  And, time is precious, especially yours.  So do not waste it.  You are always free to politely walk away, anytime, anywhere, and in any way you like it.  

But if there are just a few car dealers in your area, you may want to linger for a few moments more and wait until the negotiations you have with your dealer breaks down and you simply have no option but to run off.

The Invoice Price

Another thing to consider when buying a car is the invoice price.  Make sure to ask that you see the invoice.  If dealers are working their tails off against it, you have enough reason to believe that the car being offered is an unpleasant deal.

Usually, the price on the invoice is the cost the dealer paid the manufacturer for buying the car. This is before any rebates or incentives were included.  Once this is known, only then will you have an idea as to how much the dealer could profit from each vehicle sold.  Knowing this information could enable you to feel more confident in negotiating the price.

You may also run across this occasionally when purchasing a “used car.”  This would occur primarily where you are buying a very late model used car with low mileage and still under the factory warranty.

The Manufacturer’s Suggested Retail Price

In layman’s terms, this is commonly called the sticker price.  This is the price one usually sees in the window of the car that is being sold.

Never ever consider paying the amount stated on the sticker price.  This amount is just the starting point to your negotiations with the dealer.

Basic Car Buying Tips

Besides the obvious reason, that being transportation, just like water a car is now considered a necessity in most urban areas.

One of the reasons to consider when buying a car is if the vehicle being purchased is a good deal.
Is it in good condition?

How long a life does it have left?

Is it an excellent ride?

Does it have a great warranty, etc.

As we said, it’s virtually impossible to get along without a car and if you can’t afford a new car, following are some basic reasons you should consider when making that all important car purchase.

Is it a good buy?

The best time period to buy a car is later in the month. Usually, there are numerous rebate programs and bonuses offered by month’s end based on a dealer’s monthly sales quotas. The idea is, sometimes dealers fall short of meeting their sales objectives if their performance is assessed by the end of the month.

This happens more often than not. The result of this is good news to most car buyers. Since dealers are more desperate to meet their quotas, they now have no choice but to sell the vehicle at a lesser than normal price just to make the sales they need to meet their goals.

Peace of mind

Sometimes dealers will do a “dog and pony show” just for them to make that sale. The result is that car buyers then end up with features that they realize later on they do not really need with a price they actually could not afford. The moral? Don’t buy more than you absolutely need. Avoid unnecessary stress and/or sleepless nights.

Always remember to trust your instincts. If ever you feel in doubt, the answer to that is don’t — do not let yourself be pressured into making that purchase now. This is the common strategy of car dealers where they would compel the customer to buy that car, now, this moment, today!

Do not forget that you can always sleep on it and then decide. This is a lot better than making your mind up now and forever holding your peace. If the car is gone the next day, there’s probably a good reason why you shouldn’t have had it in the first place.