contact: paul@bhka.com
May 2012
Don't be a victim to a car dealer scam
Most car dealerships aren't trying to rip you off. But some, let's face it, are on the prowl for victims. Even reputable dealers sometimes stretch the truth or misrepresent products when desperate to make a sale. So if you're considering an automobile purchase, remember the age-old maxim: Buyer beware. Here are some schemes to watch out for.
According to the FBI, there are over 14,000 scam artists at work on any given day. Perhaps the information presented here will help you avoid becoming a victim. If you have questions, please call us. Remember, if it sounds too good to be true, it may well be a scam.
- Hidden fees. Such fees might show up on a "dealer addendum," a sticker that's placed on the car window. Such addendums often add hundreds of dollars to the car's price for stuff you may not want or need — paint sealant, rust-proofing, fabric protection, cleaning, "prepping," pinstripes, and so on. Also watch out for hidden fees lurking on the purchase agreement.
- Transaction tricks. Buying a car is often a three-pronged transaction — purchase price, trade-in allowance, and financing. Each of these elements can be negotiated separately. You might, for example, get a better trade-in price by selling your old car on the private market. Also, think in terms of total purchase price, not monthly payments. Dealers play all kinds of games to lower the monthly payment. They might pump up the down payment, toggle the interest rate, or stretch out the loan term to six or seven years. As with a home mortgage, during the early years of a car loan you'll be paying a higher percentage of the monthly payment toward interest. As a result, you may pass through a period in which your car is worth less than the amount you owe. Woe to buyers who have car accidents in those years! They may find that they're on the hook to pay off a loan that exceeds the car's market value.
- Bait and switch. An advertisement in the newspaper proclaims that your dream car is on sale at a great price. Unfortunately, when you arrive at the dealership that particular vehicle has been sold. So the dealer steers you toward a more expensive car — and a higher commission for the salesman.
- Bad credit score. In this scam, the dealer calls you a week after you've signed a purchase agreement and claims that the financing has fallen through. Again, the goal is to get you back to the dealership so you can buy a more expensive car.
Guard against these practices and others by researching car values, knowing your credit score, and considering alternatives to dealer financing — before walking into the dealership.
