SCAMS OR DIRTY TRICKS TO BE AWARE OF
- THE SPOT
This is by far one of the most used and costly tricks. Dealers use this powerful tool in closing a deal. You walk into a dealership, choose a vehicle, do a little negotiation, and the contract is signed. Within two hours of walking into the dealership, you are driving away in your new vehicle. The whole idea is that the dealer is not allowing you to do any comparison-shopping for the vehicle or finance options. You have now contracted for a higher sales price and percentage rate than if you had looked around.
- ROOKIE PLOY
This is a “feel sorry for me” ploy used by the sales person. They will simply tell you that they are new on the job and in order to get out of their probation period, they need to make some quick sales. Do not fall for this one.
- TRADE-IN DISAPPEARANCE
As silly and outrageous as this is, this is a really a scam. You walk into a dealership with a trade-in. The sales person wants to look at the trade-in and decides he wants his mechanic to put it up on the rack. You willingly hand over the keys. While the mechanic drives off in your vehicle, you decide not to buy anything at that time. The sales person summons the mechanic to bring your vehicle out but they have trouble finding it. Assuring you that they will bring it out in just a few minutes, the sales person now has a little more time to try to sell you a vehicle.
- THE “QUESTION”
Everyone has heard “What will it take for me to sell you this vehicle today?” When you are asked this question, you are now placed in a position to answer, which gives the sales person more advantage. If you respond that the payments are too high, they quickly promise to work with you in bringing them down. To avoid this trap, simply reply with “Nothing, I am just looking and not ready to buy.”
- THE FINAL DEAL
The sales person states that he has done everything possible and that you need to either buy the vehicle or forget it. This is just a scare tactic where the sales person is trying to get you to think that you will never find a better deal anywhere else. You can control this situation by simply choosing to leave. More than likely the sales person will follow you and have yet another idea up his sleeve. At this point, you should seriously consider if you are even interested in purchasing a vehicle from someone like this.
- PACKED OR LOADED PAYMENTS
A common practice of dealers is to “pack” or “load” payments. When you request a quote on a monthly payment for any particular vehicle, the sales person provides you with an inflated number, which represents a higher APR loan amount. If you, as an unknowing and trusting buyer, agree to this monthly payment, the sales person has a variety of options on how to pocket the difference. For example, if you could secure a loan outside of the dealership with a payment of $350 per month and the sales person quotes $375 over a four-year period, the difference of $1,200 would end up in the pocket of the sales person.
- To avoid being caught up in this fraud, secure rates from your bank or credit union, or dive into some online research to see what the going rate might be. Then if a sales person should quote you something too high, a warning flag will be raised.
- EXTENDED WARRANTIES
When buying a used vehicle, extended warranties are worth their weight in gold. However, even with this great option, there are risks are being scammed.
- Because you are at the mercy of the seller when it comes to how much extended warranties cost, it is pretty easy for a sales person to markup the warranty and make a nice profit. Some dealerships have even gone as far as selling virtually worthless off-brand warranties for astronomical prices as a way of making a buck. Before you agree to any extended warranty, do your homework. You can quickly go online to CARCHEX.com and get quotes.
- VEHICLE ALARMS
Increasingly, vehicle alarms have begun to be a regular feature on a vehicle instead of an option. However, buyers need to beware that this is a prime opportunity for the seller to make some extra money. To purchase what is called an ignition/fuel cut-off system, you can expect to pay around $50. However, the buyer is usually charged anywhere from $200 to $300 for this “alarm,” which in reality is not even a real alarm. It is the same for a full-blown vehicle alarm. You can purchase this type of system for $150 to $300, depending on the features. However, the dealer turns around and charges between $500 and $3,000 to install.
- Your best bet is to locate a reputable auto alarm company in your area instead of having a dealer provide the installation. More than likely, you will save a ton of money and will probably also receive a better warranty.
- DEALER PREP SCAM
This is one of the oldest tricks in the book and opens an opportunity for the sales person to pocket $150 to $200. Some dealerships try to pass on to you, a “dealer prep” fee. In reality, the factory has already paid the dealers for this preparation. Look over any paperwork carefully and if you see this listed, refuse to pay it.
- SIGN HERE AND HERE
The sales person lays out a stack of papers all requiring your signature. As you go to sign, the fine print is purposely covered up preventing you from reading any hidden costs or information.
- DO OVER
The sales person states that something was wrong on the first set of papers and they had to redo them. This should be a red flag for you to carefully check the numbers, options, warranties, and anything else to ensure there have been no changes made.
- ONE PRICE DEALS
This is a new idea, already being done by Saturn, where the sale of both used and new vehicles are fixed with a no-hassle, one price. The offer is presented as an attempt to eliminate haggling for pricing. However, there have been studies done with one such study showing that with this new “customer friendly” option, the dealer is actually making from $500 to $1,000 more in profit.
- CONTROLLING THE CONVERSATION
This is a prime example of how your research will pay off. A common practice is for the sales person to try to maintain control over your conversation. You might reign in some of this control but not get all your answers. If you need to repeat your question, do so until you are comfortable that you have the required information.
- MAILED COUPONS
If you ever receive coupons in the mail offering to cut the price of a vehicle by $1,000, beware! The coupon will probably be applied to your purchase, but the finance manager will somehow sneak the $1,000 back into the contract. Therefore, in reality, you have not received any bargain at all.
Always check your warranty carefully. Dealers have been known to inflate the price of an extended warrant, which actually overlaps with the warranty of the manufacturer.
- Again, the more knowledge you have, the better off you are. Thousands of people daily pay far too much for vehicles. The only reason is that they are not informed. Remember that although the Internet is a super highway of information that does not mean all the information is 100% accurate. This is why it is crucial that all buyers do extensive research. Check out the Internet, talk to friends, visit several dealerships, and ask tons of questions.