ARE YOU BEING SCAMMED BY A DEALERSHIP?
There are many scams that less-than-honest used car dealers will attempt to employ when trying to sell a customer a used car
. Here's a shortlist of some of the "dealership scams" you can keep your eye peeled for when purchasing a new used car:
The VIN# window etching [or "additional costs"] scam
There are some dealers out there who will charge you an additional $300-$900 for window etching, stating that you have to pay this fee in order to get the loan because "the banks" insist 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 to simply etch the car yourself. Remember unlike a dealer, 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.
The Financing Scam
At trade-in of your old car, the finance manager tells you that your interest rate is good, and he hands over the keys. After a week or two passes, you receive a call from that same finance manager, telling you that you didn't qualify for the interest rate they gave you the day you made 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 loophole that he can exploit to get money out of you.
All that this means contractually is that the deal is not a finished deal, yet, even if you already have possession of the car and have signed the contract. The dealer can then charge you $1000 more in finance fees and increase your monthly payments by $50. This scam is generally pulled on people with bad credit because it sounds much more plausible. If you are wondering why they would sell you the car at 6% APR, when they already knew you had bad credit (remember they ran the credit search already), the answer is simple; to sell the car by any means.
You can avoid this scam by not financing the car with the dealer - especially 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.
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 finance the car at a much higher rate of interest. This scam is pulled on everyone; good or bad credit. But it's 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 possess your own copy. 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.
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 two-to-three 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 plain stupid. You can avoid this scam if you can force the dealership to put in writing that you "have" to pay the extended warranty in order to get the loan." If you can actually get a finance manager to put this in writing, you will then possess a copy of the contract to bring to your local State's Attorney's office to verify that the deal is or is not valid. You can bet that the finance manager will change his tune pretty quickly.
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 break down during the first week of owning it. This "inspection - for which you would pay a large chunk of money - comes down to this: it is for the dealership to remove plastic from the seats, vacuum the car, and check all of the fuses and fluids. 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.
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.
ARE YOU BEING SCAMMED BY A DEALERSHIP?
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