If it's been a while since you've walked into your local car dealer, then you'll be surprised next time you visit. There aren't too many things a trip to the dealership won't offer above and beyond a new car. Barbeques, raffles, fire sales—you name it. The entire family's invited—oh, and bring your checkbook.
Not long ago, I walked into a local dealer, and I couldn't believe how nice it was on the inside. "Posh" would be a way of describing this particular dealer's showroom floor. Pastries, pretty people, and even saltwater fish tanks were all within viewing distance. Nothing about being on that showroom floor made me want to leave—well, other than the salespeople.
Ever wonder how Casinos get so big? It's because the house always wins, right? Gaming floors don't get that big, with entertainment venues so grand and money flowing through its veins like wine much like a Casino does, do they? Today, it feels like auto dealers have taken a piece of their recipe for success and installed that into their own businesses. After all, they certainly have the money! How do they earn as much as they do, though? Well, sometimes, not very honestly, as these "20 Auto Dealership Scams" will show.
20 Negotiating Scams
Have you heard of the old saying "Never be the first person to say a number when negotiating to purchase an item"? It's a good one to remember and an interesting play when negotiating with a car salesperson. If you're good at sitting through uncomfortable silences, let's hope you remember this trick. Dealers have been known to use negotiating scams like getting you to focus on your monthly payment only, lengthy negotiations (set your timer for 1 hour, max), one-day-only type sales and high-pressure sales tactics. The best thing a buyer can do is keep relaxed and don't be scared to walk away. That rule of thumb will continue to be acknowledged as you'll see in this article.
19 Co-Signer Scams
Cheatsheet.com reminds us of the c0-signer dealership scam, reporting, "Let’s say you are having trouble getting a loan for your car, for whatever reason. A dealer might suggest you just get a co-signer to obtain approval and head down the road. That solution might sound appealing until you realize that the co-signer with good credit ended up being the only one with the loan. It’s a scam because you wouldn’t have gotten the car without that loan and wouldn’t have gotten the loan without someone else’s credit. Catch this one before it’s too late by reading paperwork carefully. The co-signer is the one at risk." A co-signer scam is a dirty trick to play on a customer—that's for sure.
18 Credit Score Lies
Do you have good or bad credit? Let's hope it's good, right? Whichever side of the fence you happen to fall on, make sure you do your own credit score.
Carbuyingtips.com reports credit score lies are "one of the most common tricks that car dealers pull on unsuspecting shoppers. The Lie-nance manager tells you that your credit score is much lower than it really is, causing you to pay a much higher interest rate on your car loan than you should've paid. Keep in mind that not all finance managers are "Lie-nance managers."
You see, the way interest rates work on car loans is the higher your credit score, the lower the interest rate you'll have to pay."
17 Advertising Scams
Carbuyingtips.com reports seeing the "hidden rebate" advertising scam often.
Jeff Ostroff reports, "I see this tactic at dealers and in newspaper ads. They list a price that is less than MSRP, making you think it is a good deal. Unfortunately, the 'prices include the rebate.' Any rebates should be subtracted after you negotiate the price. Do not let them include the rebate in their 'asking price.'"
That's a good piece of information to know about negotiating with a salesperson. This was a scam I hadn't heard of before but feel much better knowing that this sort of sales tactic is an advertising scam. Auto dealers can be pretty sly in the ways they take advantage of you before your sale's final.
16 Warranty Scams
Cheatsheet.com provides us information on the "warranty scam" that auto dealerships use, saying, "Why would anyone buy an as-is, no-warranty car from a dealership? You might as well pick a seller off Craigslist blindfolded and accept whatever terms are being offered. In the no-warranty scam, wrecked cars are gussied up to look like they had a long weekend rather than a funeral. There are ways to check where a car came from and whether it was in a collision, or worse totaled, by one of its previous owners. If you see the no-warranty offer on a car, chances are it is one of these vehicles."
Every point that cheatsheet.com provides us should be automatic when negotiating—but rarely is—when buying a car.
15 Lower-Payments Scam
Carbuyingtips.com gives us some extremely valuable information about the "lower your payments" scam, reporting, "A few days after you drive your new car home, somebody from the dealership calls you and says something to the effect of 'I've got great news for you! We were able to get you a better loan that has a lower APR and smaller monthly payment!'"
If a dealership you've just made a deal with contacts you with this scam, you should hang up the phone.
Often, the dealer has drawn out the length of your loan from 48-60-72 months, depending on your initial agreement. Who knows? It could be even longer than that, so be sure to watch your behind. There's no need to renegotiate a deal that's already done either.
14 Pre-Owned Vehicle Scam
Autocheatsheet.com reports, "Every day, there are thousands of used cars bought and sold at auctions all over the country. Vehicles with previous damage are bought cheaply by dealers and are slipping through their certified inspection process. Dealers make mistakes when buying cars at auction, mechanics make mistakes when inspecting vehicles going through the process. Even though it may be an honest mistake, the uneducated consumer will be the one left driving the bad car."
In some cases pushing a car through inspection is a legit mistake; in other cases, dealerships want to sell you a car so that's what they do first. Make sure your pre-owned car is inspected by your own mechanic before purchase and, at the very least, the dealership service department.
13 We'll Pay Off Your Loan Scam
Carbuytips.com educates us on the "we'll pay off your loan" scam, reciting the typical steps that should normally take place when you trade in a car.
Here's what happens when you get caught up in a scam concerning the remaining loan on your old vehicle: "Two months after you buy your car, you are blindsided to hear the car dealer did not pay off your old car loan as promised. Now, the bank is sending you angry letters that your car payment is late. With this scam, dealers are effectively paying you less for your trade than they promised. This means they often are stealing your trade-in altogether."
That's a bad spot to be in. Let's hope it doesn't happen to you.
12 Dealer-Prep Scam
Cheatsheet.com knows how the "dealer-prep" scam works, saying, "These fees are supposed to compensate dealers for the exhausting work done in the trenches after your car arrives off the truck but before you drive it off the lot. According to CarBuyingTips.com, that amounts to removing the plastic covers from the seats and windows. That would hardly be worth the $600 you might see attributed to 'Dealer Prep' in a line on your invoice. This fee is almost always negotiable. Again, it is a fee that will be reduced or disappear if you take the deal off the table."
That hardly sounds like an exhausting task for the dealer and a good way to save yourself around a grand before you walk out the door.
11 As-Is Scam
It shouldn't matter what dealership you choose to do business with; they should at least handle any unforeseen expenses on any vehicle they sell for 30 days or 3,000 miles. In many cases, that's the best after-purchase piece of mind you're going to get for an aging, high-mileage car or truck.
It's not unreasonable to seek out warranties like the one mentioned from your auto dealer, regardless of what car you decide to buy.
If you're willing to take a chance and purchase a set of wheels "as-is," then there are plenty of other places you can shop for an automobile that could potentially save you money. Ebay, Craigslist, and many other classifieds immediately come to mind.
10 Spot Delivery
AutoCheatSheet.com reveals that they "receive a lot of email about this dirty little scam. The "spot delivery" scam happens when "a car dealer does not officially have a customer approved for a car loan. The dealer will have the customer sign all the paperwork and take delivery of the car. This leads the customer to believe their [sic] loan has been approved and the car deal is complete."
Talk about a heartbreaking endeavor driving your new car around for a couple weeks, only to have it snatched out from underneath you.
This sounds like a dirty little scam indeed and one you should be leery of when buying a new car. Don't be duped by the "spot delivery" scam if you can help it.
9 Juggling Scam
Caranddriver.com informs us about the "juggling" scam, saying, "This isn’t really a trick, but awareness here is important for a buyer. When you sit down to negotiate, the salesperson will pull out a 'foursquare' worksheet on which to figure out the terms of the deal. In the four quadrants of the sheet, the salesman (or -woman, but enough of being PC!) will record purchase price, down payment, monthly payments, and trade-in value. He will fill in the sheet as you talk, working the deal like a shell game."
This little trick can leave a buyer feeling like he's had a fast one pulled over on them on the sales floor. Hopefully, it's not you the next time you buy a vehicle.
8 Inflating Payments
Inflating car payments doesn't seem right, does it? Automobiles are expensive enough, but some dealers don't stop there. Inside-car-buying-tips.com describes one way dealers go out of their way to inflate payments. Dealers use "payment packing," and "it's by far the most common of the car-buying scams they've witnessed over their many years in the car business."
The website goes on to claim, "Payment packing is the deceptive act of presenting inflated monthly car loan payments to customers during negotiations. This act actually becomes illegal after a credit report has been obtained, the sale price has been disclosed, terms of the loan has been disclosed, or the finance rate has been disclosed."
7 Making A Profit From Rebates
Realcartips.com explains how auto dealerships can make a profit from rebates that are supposed to apply to your sale price saying, "It's not uncommon for some people to qualify for 3 or more rebates on one vehicle—the problem is knowing which ones you qualify for in the first place."
They add, "Some dealers take advantage of this lack of information and will attempt to keep some of these rebates for themselves. It's easy for them to get away with it because manufacturers don't audit every single sale. Sometimes, dealers will honestly fail to recognize you qualify for a special rebate, which is not that uncommon."
Make sure you take a look at what rebates you qualify for and take advantage of them yourself.
6 Mind Games
Negotiating can be a stressful, mind-bending experience that many people don't enjoy. Haggling over the prices of an item can bring stress that some people would rather not deal with. Salespeople know that they have experience on their side when referring to the art of negotiation; they do so every day, for a living. Salespeople know that you want to get in and out of your car-buying experience as quickly and as painlessly as possible, and they'll play any game they have to with you to make sure they get you to sign on the dotted line. If you feel uncomfortable discussing a new car purchase, then there's probably a good reason why. Trust your instincts, and if you have trouble with that, bring a friend.
5 Bait And Switch
Those experienced few who know how automotive dealers work from a financial standpoint feel the old "bait and switch" scam is one of the most common.
Publiccoucil.org reports on the scam, claiming there are "false statements about the price of the car. You walk into a dealership and a salesman gives you a price quote. But when you are preparing to finish the deal, the price on the contract is not the same price that you were quoted. You may also notice that your contract contains other fees that increase the Total Cash Price of your vehicle."
This isn't good business on the part of your dealer but is a common practice, so be aware. It looks like the "bait and switch" is one of the oldest tricks in the book.
4 Online Lender Scam
Cheatsheet.com defines the "online lender" scam, saying, "If you roll into the dealership with a pre-approval and [a] blank check from an online lender, you should be on your merry way once you choose the right automobile. Unfortunately, you may find your dealer refusing to accept the check because he claims online lenders are deadbeats who always bounce them. Then he will hit you with a loan package at a higher APR. His scam is convincing you other people are trying to scam him. It’s creative, but you can blow up the scam by walking out on the deal."
That's some good advice when a dealer tries to pull this trick on you. Sure, not every lender is created equal but that doesn't make theirs more qualified than yours.
3 Final Purchase Price Changes
Caranddriver.com advises, "Never sign a bill of sale with blanks or terms that are 'subject to bank approval' or have similar wording. Some dealerships will let a customer sign such a document and release the new car to its happy owner, only to call the buyer back a few days later to say that the loan fell through and you need to come back to sign some new paperwork, which just happens to cost the buyer more than the negotiated price. Never drive your car off the lot until all the paperwork is filled out completely."
A customer would like to think that a place where they were spending thousands of dollars wouldn't pull this scam on them, but auto dealers have been known to.
2 Over-The-Phone Offers
Businessinsider.com reports, "Over the phone offers aren't all they're cracked up to be. You call a dealer to see what they will offer for your trade-in. They give you an attractive offer and tell you to bring it in. When you bring it in, the dealer doesn't honor the offer after inspecting it in person. Their goal from the beginning was just to get you into the showroom where they can wear you down."
What do you do when that happens? "Shop your trade-in to multiple dealers and have them inspect the car in person. Any offer you receive from a dealer sight unseen is no good," according to Businessinsider.com. Just because they shoot you an offer over the phone doesn't mean they'll back it up once you get there.
1 Check Your Paperwork!
You never know what could've changed on all that paperwork you just signed after buying your new set of wheels. Better look closely at the final details then, huh? It's always better to be cautious despite how big a smile the person or salesperson sitting across from you has. We here at HotCars.com hope that you learned about some of the potential pitfalls, scams, and everyday bad business that some auto dealers practice. Keep in mind all the while that not all places where you'll buy your next car are created equal. Be choosy about whom you choose to do business with. It'll pay off in the long run, and if a deal sounds too good to be true, then it probably is.
Sources: businessinsider.com, autocheatsheet.com, carbuyingtips.com, caranddriver.com