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The Top 10 Car Dealership Scams
1. The VIN# Window Etching Scam:
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 that fee 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. You can get an etch-it-yourself kits for
around $30. 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. Don’t buy into it.
2. The Financing Scam:
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 getting outside financing for the the car
yourself.
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 Annual Credit
Report, 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. We
can
bet that the finance manager will change his tune pretty
quickly.
5. The Dealer Prep Scam
Let us first let you know that
this cost is not only legal but
very much common practice. We still refer to it as a scam
because it is just another way for you to end up paying more
money for the car. The dealer will tell you have to pay 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 in reality you
are paying the dealership for work that they haven’t really
done. 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 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 in. 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 ride out
your current lease until the end. If you are really determined to
get a new car, then you should try selling your current car on
your own.
Possibly make a deal so that the buyer pays so much down and takes over the lease
payments.
Make sure you get legal documents so you don't end up with
bad credit from someone who decides not to pay. Also make
sure the buyer carries enough car insurance.
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 of some
sort. 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 asking the
dealership if they have any banks they don't deal with.
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
furniture or groceries with cash? Just leave and find an honest dealership.
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