Buying Used Cars - Top 10 Dealership Scams

By: Andy McDowell


Top 10 Dealership Scams:

1. The VIN# window etching scam

Basically a dealer will charge you $300-$900 for
window etching and they will tell you that you
have to pay the money to get the loan because the
banks insists on it.

Some dealers might tell you that the etching is
free but will add on the etch money to your
monthly payments to make up for it.

The best way to avoid this scam is to force the
dealer to put it in writing if they say that the
etching is free or simply etch the car yourself.

Remember a lender doesn't require that you
purchase any extras on a car. All the lender
cares about is that you can make your payments on
time regularly. Don't buy into it.

2. The Financing Scam

I have mentioned this before already, but here it
is in more detail.

Basically you trade in your old car and the
finance manager tells you that your interest rate
is good and then gives you the car.

After a week or two passes you get the call from
him that you didn't qualify for the interest
rates that they gave you upon making the deal.

Every new purchase has a clause in the contract
that usually states that the deal is "subject to
loan approval."

This gives the finance manager a loop hole in
getting more money out of you.

All that this means in the contract is that the
deal is not finished yet even you already have
possession of the car and have signed the
contract.

The dealer can then charge you $1000 more in
finance fees and up your monthly payments by $50.

This scam is generally pulled on people with bad
credit because it is more plausible.

If you are wondering why they would sell you the
car at 6% APR if they knew you had bad credit
(remember they ran the credit search already) the
answer is simple; to sell the car.

You can avoid this scam by not financing the car
with the dealer if you know that you have bad
credit.

You are better off going to a credit union and
financing the car yourself. When you buy a new
car the deal should be made on the price of the
car, not on the monthly payments.

3. The Credit Score Scam

This scam is ridiculous at best. This is when the
finance manager tells you that your credit score
is lower than it really is so that they can get
you for higher interest rates.

This scam is pulled on everyone; good or bad
credit.

This scam is easy to avoid. Just get your own
copy of your credit report from Equifax.com, and
bring it with you.

It is really difficult to lie to you about your
credit score if you have your own copy of it. If
your paper and theirs doesn't say the same thing,
go somewhere else because that dealership is
lying to you.

Don't forget to let them know it too because
it'll be nice to watch them squirm.

4. The Forced Warranty Scam

This is when the finance manager tells you that
you are not eligible for the loan by the bank
unless you pay an extra $2000 for a 2-3 year
extended warranty.

This scam just doesn't make sense. Basically the
finance manager is telling you that the bank
won't trust you to pay the $20,000 loan for the
car, but they will trust you if you pay even more
money. That's just stupid.

You can avoid this scam if you can force them to
put it in writing that you "have" to pay the
extended warranty in order to get the loan.

That way you can bring a copy of the contract to
your local State's Attorney's office to verify
that the deal is valid. I can bet that the
finance manager will change his tune pretty
quickly.

5. The Dealer Prep Scam

Let me first let you know that cost is not only
legal but very much common practice. I still
refer to it as a scam because it is just another
way for you to end up paying more money for the
car.

Basically the dealer will tell you have to an
extra $500 to cover the labor costs of the
dealership's 5-point inspection.

You are paying for the time it took for the
dealership to make sure that the car wouldn't
explode on you in the first week of owning it.

This check up that you are paying so much money
for is for the dealership to remove plastic from
the seats etc, vacuum the car out, and making
sure that all of the fuses and fluids are ready
to go.

When factories deliver the new cars to the
dealerships the cost of delivery and prep is
already covered, so basically you are paying the
dealership for work that they haven't really
done.

I swear they could get the car in perfectly ready
to drive condition and put everything right back
in it just so that they can make you pay the fee
again.

You can avoid this scam by simply asking the
dealership to add an extra $500 credit to the
deal to make sure you do not have to pay the
money.

If they refuse, you can then decide if the car is
worth the money. If it is fine; buy the car, if
not; go to another dealer that will remove the
dealer prep costs.

6. The Dealer Mark up Scam

This is an unnecessary fee that the dealer
charges for no reason other than greed. This fee
can be seen on the orange sticker marked on the
manufacturer's suggested retail price (MSRP).

The additional dealer markup is nothing more than
requiring more money for no real reason. They can
include all kinds of extra fees in the additional
dealer markup.

When you see an extra dealer mark up fee, ask the
dealer to get rid of it. If they refuse, it is
pretty much up to you, but remember that if you
do pay the extra dealer markup, you are
overpaying for no real reason.

7. The Payoff Your Loan Scam

This is when the dealer offers to pay off the
balance of your current car loan no matter how
much money you still owe. It is a common sales
strategy.

When the average buyer hears it, they think that
by purchasing a new car with a new dealership,
they will automatically owe no more money on
their current car.

That couldn't be further from the truth.

What really happens is that the dealership does
help you get out of your current contract;
however, they normally are forgetting to tell you
how high your fees are going to be for breaking
the lease agreement with your old dealership.

You will now be responsible to pay fees that are
in the thousands to make up for it.

You also will not be able to refinance for a new
car until those fees are paid. Of course the
dealership can add the cost on to your contract
with them at a substantially higher rate.

The dealership only agrees to this deal because
they want to get more money off of your current
car. They aren't really doing anything for you at
all.

The dealership will also give you far less then
the car is worth on the trade off. Basically this
scam works because they will up your monthly
fees, and then sell your trade in for a more
money than its worth.

The dealership then extends your monthly payments
so that they can make it appear that you are
paying a small amount monthly when you don't even
realize that you have committed to an extra year
of payments.

To avoid this scam, you have to bite the bullet
and ride out your current lease till the end. If
you are really determined to get a new car, then
you should try selling your current car on your
own.

Just sell it so that the buyer just takes over
the lease payments.

8. The Used Car Sold "As Is" Scam

This is when a dealership will sell you a car
that has been in a car wreck, but they will tell
you that the car has been completely refurbished.

When you see the car it has a sticker on it that
says "as is" on it and no warranty is included
with your purchase.

This is the dealer's way of telling you that you
can't bring the car back, you are assuming all
risks for the car, and that it is not under
warranty.

To avoid this scam, don't buy a car without a
warranty or one that says "as is" on it. By doing
this, you might as well buy a car from a stranger
on the street with the same deal.

9. The Bounced Check Scam

This is when you walk into a dealership with a
bank draft and the dealership charges that they
can't accept your draft because your bank bounces
checks often so they now refuse checks from that
bank.

Of course, this leaves the table open for them to
get the extra money they want by offering to sell
you a car at a higher interest rate.

You can avoid this scam first by getting your
drafts from Capital One Auto Finance.

Then let the finance manager know that you are
aware of the scam that they are pulling and that
Capital One Auto Finance is in the business of
giving loans so the checks don't bounce.

10. The Forced Credit Application

If you are hoping to pay for a car outright or in
cash with a bank draft or check that is what you
should do. Some dealerships will not let you.

You will hear one of these lines so that they can
try and get you into paying monthly terms for
more money.

"State laws require that you must fill out a
credit application before I can sell you this
car."

"Everyone that buys a car from us fills out a
credit application first."

"It's the company's policy".

If you hear any of these lies, then know what's
going on. When you are paying cash why would you
think that you need to fill out a credit
application?

It doesn't make sense. No state will force you to
apply for credit when paying cash.

Would you have to fill out a credit report if you
want to buy a sofa or groceries while paying
cash? See how silly this is. To avoid this scam,
just laugh in their faces.