There are a lot of great people out there willing to help you through the car buying process, but that doesn’t mean there aren’t many people who want to take advantage of unsuspecting buyers and exploit dealership scams.
From “bait and switch” offers to phantom extended warranties, there are all sorts of scams out there that can cost you time, money, and stress. In this blog post, we’ll take a look at 9 of the most common dealership scams so you can be prepared the next time you’re looking for a new car on the market.
Table of Contents
1. Extended Warranty Fraud
An extended warranty is essentially insurance for your new car; if something goes wrong, you are insured. Many dealerships will try to sell you an extended warranty when you buy a new car, often claiming it’s required by the manufacturer or offering a discount if you buy it right then and there.
In reality, however, an extended dealer warranty is almost always a waste of money, as most new cars come with a factory warranty that lasts several years anyway. And if something goes wrong with your car after the warranty expires, you can invest in a third party warranty to protect your car. Just be sure to read Endurance Guarantee Reviews to make sure you know what you are looking for.
2. Bait and Switch
This is perhaps the oldest trick in the car sales book. You walk into a dealership intending to buy a certain car, only to find out that it has just been sold, but they have another car in the parking lot that is very similar and perfect for you.
The bait is an attempt to get you to buy a more expensive car than you originally planned. If you find yourself being directed to a different vehicle than the one you came for, politely apologize and leave.
3. Offer “Low ball”
When you sell your old car as part of a deal to buy a new one, the dealership will usually give you a low offer, that is, an offer that is well below the real value of your car. They do this in the hope that you won’t bother researching and will just accept their offer.
Don’t fall for it! Use sites like Kelley Blue Book or Edmunds to estimate the true value of your car before heading to the dealership so you know what offer to expect.
4. Phantom Extended Warranty Fraud
This looks like a common extended warranty scam. Except for this, instead of trying to sell you a real extended warranty, the dealership will add the cost of a fictitious warranty to your financing agreement without telling you.
Once again, if you’re buying a used car without a factory warranty, you don’t have to pay for an extended warranty, so be sure to read your financing agreement carefully before you sign anything.
5 Yo-Yo Funding Fraud
This is another funding trick. In this case, the dealership will notify you that you have been approved for a loan at a certain interest rate. But then, after you have already taken the car, they will call you back. Then say there was an error. The interest rate on your loan is actually higher than what they originally told you.
They say that in order to solve the problem, you need to return the car and sign a new financing agreement at a higher rate. If this happens to you, don’t fall for it! Insist on talking to a manager. If they can’t give you a satisfactory explanation, threaten to move your business elsewhere.
6. Trade-in scam with false promises
This is another common bait-and-switch tactic. With this, the dealership will tell you that they are willing to give you a great deal of value to trade in for your old car. But when it comes time to sign the paperwork, they undercharge you for the trade, saying that the offer was only good if you bought a new car from them.
This is another reason why it is so important to get an estimate of the value of your trade-in before heading to the dealership. This way you’ll know exactly how much your old car is worth and won’t take advantage of it when it’s time to turn it in.
7. High Pressure Selling Fraud
This is a common tactic used by pushy salespeople to try and get you to buy a car before you’re ready. They will use various high pressure tactics. These include messages that the car you want will be sold to someone else. Or that the price will go up if you don’t buy it right now. Don’t fall for it! If you’re not ready to buy, just say so and walk away. The seller may try to tell you that you won’t get a better deal elsewhere. But it is not.
8. Credit Recovery Fraud
This scam is a trap that is often used against people with bad credit. The dealership will check your credit report and tell you that you won’t be able to get financing unless you pay for expensive credit repair services. They may even offer to do the repairs themselves for an additional fee.
9. Fraud with add-ons
This is another common tactic used to inflate the value of a car. With this, the dealer will try to sell you a bunch of unnecessary extras. These include extended warranties, paint protection plans, and tear insurance. It is often said that the lender requires these add-ons. Or that they will lower your interest rate if you buy them.
Buying a new car should be an exciting experience. But all too often, unscrupulous dealers turn it into a stressful nightmare, trying to swindle unsuspecting buyers of their hard-earned money. By being aware of these common scams in advance, you can arm yourself with the knowledge and avoid becoming a victim.
Remember: knowledge is power! Now that you know about some of the more common dealer scams, you can negotiate with confidence. And hopefully drive away in your new dream car and they won’t take you for a ride.