Buying a car is a big investment. Even used cars can cost tens of thousands of dollars. Unfortunately, the amount of money you spend doesn’t always match up with value. Some car dealerships take advantage of consumers to sell unnecessary add-ons. Financing is another way for automobile dealers to trick buyers into paying more than they should for a car.
Understanding how unscrupulous dealers can scam buyers can help you avoid getting ripped off. If a car salesman scams you, a consumer protection lawyer can help you get your money back. Talk to an auto dealer fraud lawyer to find out about your legal options after a dealership scam.
Many car salespeople make their money from commissions. The more cars they sell for more money — the more money goes into their pocket. This purely financial incentive can make them do whatever it takes to move vehicles off the lot.
Dealership scams could involve everything from making you come into the dealership with a false advertisement to sending you out with a higher interest rate. Common scams from car dealerships include:
- Bait and switch
- Extended warranty fraud
- Credit report scams
- Trade-in scams
- Advertisement scams
- False repair reports
- Odometer fraud
There can be a thin line between salesmanship and fraud. Car dealerships know that consumers are wary of their questionable business practices. Unfortunately, dealers have gotten better at tricking even the most skeptical buyers. Some of these tricks are even considered legal. There is a difference between fraud and a bad deal. However, state consumer protection and lemon laws can protect buyers defrauded by the dealership or finance company.
Buyers flip through the newspaper and see a car advertised at a great price. Unfortunately, when the buyer gets to the dealership, that car was “just sold.” Advertisements often only show one vehicle available at that price just to bring in other buyers. However, if a used car dealer never had that vehicle or never offered it for the advertised price of the car, that could be fraud.
These warranty scams generally don’t come from the dealership. Instead, these are phone scams to offer a fake warranty that puts you at risk of identity theft. You may have already received a robocall telling you your warranty is up and can buy an extended warranty to protect you from expensive repairs. These unsolicited calls are usually a scam, and any personal information you offer can put you at risk of fraud.
Some buyers go in to finance a car without understanding their credit rating and financing rates. A dealer may offer you a car at a great monthly payment rate, but after the credit check, the down payment and payment amounts go much higher. The dealer may make it seem like they are being generous by offering to offer such a great rate for someone with bad credit. You can find out about your auto loan financing options through your bank before going to the dealer.
Trade-ins can be tricky. Car dealers can use your old vehicle as a way to make you think they’re giving you a deal to get you to buy a car. The dealer can offer a cash value that is below the actual value. Any adjustments can seem like they are being generous, but they are still offering lower than the market value, hoping you will accept what they offer.
The odometer shows how many miles are on the car. Rolling back the mileage can increase the value of a vehicle. But tampering with the odometer is not only fraud, it is a federal offense.
A vehicle history report shows any accidents or major repairs. But the vehicle report may only be as good as what is reported. Some accidents are never reported and may not show up. You should think about an independent inspection and not rely on the car dealer’s version of the vehicle history.
It’s hard to know when a car dealer is trying to scam you or just being pushy. A salesperson’s job is to make the sale. Some dealers just don’t mind going too far to make it happen. You may not recognize the scam until after it’s too late. But look out for some red flags, including:
- Pressuring you to sign a contract when you don’t have time to review the fine print
- Insisting on in-house financing
- Different terms on the contract than what was offered
- Encouraging you to put false information on the credit application
- Letting you take the car home before getting the rates from the finance manager
- Making promises about one car and then selling another
You can protect yourself from some financing scams by arranging financing with your credit union or bank before going to the dealership. Separating any trade-in vehicles from your car purchase can also help avoid some scams. Don’t just rely on the salesperson showing you a carfax report for a used vehicle. Make sure you can get an independent inspection from a repair shop you trust.
State lemon laws can protect consumers against some dealer scams. If a new car has problems within a certain mileage, these laws may force the dealer to repair the problems or refund you.
Lemon law protections vary by state. Only some states protect both new cars and used vehicle purchases. If you think a car dealer ripped you off, find out about your rights and legal protections from an attorney experienced with dealer scams.