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Avoiding Used Car Fraud Tips
Online Car Buying Scams
Purchasing a used car online can be a terrific choice in terms of selection and convenience. However, car buying scams are one drawback of online used car purchases. If you are considering buying a used car via the Internet, here are some tips to help you avoid car buying scams.
Choose Your Own Escrow Service
When you purchase online, an escrow service is supposed to be your guarantee that the seller doesn't take your money and run. If the dealer suggests or demands that you use a specific escrow service, do not move forward with the deal.
Avoid Any Deal That “Seems to Good to be True”
Common sense? That old adage is a good way to avoid used car fraud. Sure, we all want to get something for little or nothing but greed and/or naiveté is a sure way to get nothing at all.
Research the Escrow Service First
There are simple steps you can take to protect yourself from used car fraud when you are buying online.
Check with the Better Business Bureau for all parties you intend to conduct business with. You may also check with the Secretary of State to be sure the agency is registered and in good standing.
Review associated websites carefully. Look for sites that are professional and responsive. For example, are there any misspelled words? When you send an email with a question or comment, do you receive a response?
Car buying scams don’t happen to everyone. Most often, used car buying experiences are positive. You have a better chance of avoiding used car fraud with research and patience. Buy with your eyes wide open.
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Avoiding Auto Dealer Fraud
When we think of used car sales associates, usually unscrupulous sellers come to mind. While used car dealer fraud can be a problem, not all used car dealers are bad. There are many reputable dealers that conduct their used car business with integrity. You have the best chance of avoiding used car fraud if you use the following tips.
Conduct Your Research Before You Buy
Auto dealer fraud often happens because the buyer is uninformed.
Learn about the car you are considering.
How safe is it?
What are the average costs for maintenance of the car?
What is a fair price for the car?
You should also research your position. How does your credit report look? What is your credit score? Visits sites such as bankrate.com to get an idea of the interest rate you can expect to be charged for financing.
Plan to Avoid an Auto Dealer Fraud
Auto scams are more common when buyers are hasty. Take your time when making a used auto purchase.
Shop around
Be willing to negotiate
Don’t try and buy on the same day. Wait at least 24 hours before you decide and sign.
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Avoiding Auto Dealer Scams
Auto dealer scams are a big concern for many potential car buyers. It is probably wise to be cautious, but remember there are honest auto dealers out there. Wondering how you can tell the difference? Here are some scams you might encounter and tips you can use to avoid used car fraud..
Buyers are led to believe they can only get a car at a high interest rate.
How to avoid this scam: Know your credit score and what kind of rate you can get before you begin shopping. When it comes to avoiding auto dealer scams, knowledge is power.
Buyers Often Ask the Wrong Questions.
When approaching the auto dealer, buyers usually have some idea of how much they can afford for their monthly payment. Unfortunately, their focus is limited to this number and dealers know it. Unscrupulous dealers use this to scam buyers. Avoid the numbers scam by:
Asking about the invoice price for the car.
Asking about your total cost of the car and the loan.
Understanding the loan terms and fees.
Buyers Don’t Research Alternative Financing Options.
One of the easiest ways to avoid used car fraud and scams? Get your financing before you go to the dealer. Even if you get a great deal on the car, many auto dealer scams come into play when it's time to talk financing. Head to your bank or credit union before you shop for your car. That doesn't mean you shouldn't find out what financing options are available from the dealer, but you are in the best position to compare and negotiate when you shop around.
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A Common Auto Scam
Auto scams are becoming increasingly difficult to recognize. Separate the scams from the real deals with these tips.
The Internet is a great resource for used car buyers, but beware – auto scams abound.
The old bait and switch is a common one. You see a great car on the auto dealer’s site. You stop in ready to buy, but the car is not there. Not to worry the dealer has a better car at a great deal just for you (wink, wink).
How to avoid this auto scam:
Call the dealership before you visit.
If you just show up and decide to look around anyway leave the dealership if you begin to feel pressured or uncomfortable.
Check the Basics to Avoid Auto Scams
Learn as much as you can about the history of the car you intend to purchase. A vehicle report can tell you if the car has sustained significant damage, as well as give you an idea of the approximate odometer reading. Also, find out if the car is still under warranty or if a warranty is available. What is the Kelley Blue Book value of the car?
You might also want to read the Technical Service Bulletin for the car you are considering to learn about potential problems or past recalls, etc. Also, learn about the laws governing used car sales in your state. If you are the victim of used car fraud, you should contact consumer affairs or your Attorney General’s office immediately.
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Look for the Buyer's Guide on a Used Car
If you are ready to buy a used car, there are some things to look for when you visit the dealer.
Look for a Buyer’s Guide on the Car You Are Considering. The guide is a requirement of the Federal Trade Commission (FTC). It is designed as a protection against used car fraud.
The guide should be clearly posted on the vehicle. If it isn’t, ask the dealer to provide it for your review. According to the FTC, the Buyer’s Guide includes useful information such as:
How the car is being sold (as is or under warranty).
How much you can expect the dealer to contribute to repair costs if the car is still under warranty.
The guide also offers useful advice. Buyers should:
Obtain written documentation of any promises or agreements.
Retain a copy of the Buyer’s Guide for future reference.
Have the used car inspected by a qualified mechanic before purchase.
The Buyer’s Guide may include a signature line, which the seller uses as proof of the buyer’s receipt of the document. As always, be sure you read every word before you sign. Finally, (listed on the back) the Buyer’s Guide should include:
The name and address of the dealership.
The name and address of appropriate contacts if you think you are the victim of a car dealer scam.
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Get an Inspection on the Used Car
Buying a used car can offer significant savings over a new car unless you are the victim of car dealer fraud. Here is what you should know about avoiding the car scams that can leave you on foot.
Use An Inspection Checklist
Inspection checklist are widely available (used car guides or Internet sites are good sources). The checklist may help you narrow your choices to those that are worth a mechanic’s inspection.
Get a Mechanic’s Inspection
Costs vary from state to state (the average is around $100).
Inspectors are listed under headings such as "pre-purchase inspection."
Ask the mechanic for a full written report of all findings. You should discuss these findings with the used car dealer.
If the dealer does not allow you to remove the vehicle from the lot for inspection, you can arrange to have the dealer deliver the vehicle for inspection. You will be responsible for associated costs.
Know Something About the Car Other Than the Make and Model.
You can avoid used car fraud by getting additional information about the car from:
The previous owner
Reviewing service records
Purchasing a vehicle history report (carfax.com is a popular resource).
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Ask the Right Questions When Buying a Used Car
The best weapon for avoiding used car fraud? Arm yourself with information. When you know what questions to ask you increase your chances of buying a used car without a hitch.
No Question is Silly
Reputable used car dealers want you to feel comfortable with the sales experience and your used car. Look for dealers that:
Invite your questions
Appear knowledgeable in their response
Make sales transactions transparent
Know What Questions Help You Avoid Car Buying Scams
There are countless valuable questions that you can ask. Here are a few samples:
Where was the vehicle purchased from?
Has the vehicle sustained any damage?
Have you inspected the vehicle? What did you find?
Has the vehicle been serviced? What did you do?
Is all of the paperwork required for registration available on site? If you cannot leave with the appropriate documents of sale, don’t leave with the car.
Has the car ever been used as a rental car?
Know Something About the Used Car Dealer.
Avoid used car dealers that look like fly-by-night operations. Be sure the car you are purchasing is genuinely available from the seller for legitimate sale.
Check with the Better Business Bureau or your local Chamber of Commerce to be sure the dealer is legitimate.
