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2016-01-13 / News

BBB Warns of Car-Buying Scams

Online car shopping and buying has been a growing trend since 2013. According to Autotrader.com, car buyers spent an average of 12.5 hours shopping online with 45 percent of that time being on a third-party Website. Do your research online into what type of car works for you and what options you can’t live without, let alone what price is good, before ever visiting the dealership.

BBB warns all consumers not to purchase autos online ever. Why, you ask? There are too many opportunities for consumers to get scammed with their online auto purchases. The increased online research can put consumers in the line of fire with scammers. Knowing what to look for and avoid should you stumble into these situations, online or at the dealer, can save you headaches and a lot of money. Beware of:

1. Title Washing: After a car has been damaged beyond reasonable repair due to things like hurricanes, catastrophic weather or simply a really bad crash, the car is referred to as a salvage vehicle/ title because of the potential trouble with the car down the road. Title washing is a carselling scam that rids the vehicle of its salvaged status.

How to Avoid: Get a vehicle history report from a reputable source such as the National Insurance

Crime Bureau’s VIN Check, CarFax or AutoCheck before you buy any vehicle. Understanding what the used car has been through before you purchase is imperative.

2. Disappearing Trade-In: Unscrupulous dealers sometimes make the trade-in amount disappear in a maze of paperwork and numbers. Another way is the dealer will offer a certain amount for the trade-in, no matter the car’s condition in spite of current rebates or other incentives that could have reduced the new car’s purchase price. Then the dealership takes the trade-in and sells it for a few hundred dollars more than what it gave as the guaranteed tradein amount.

How to Avoid: Don’t just accept the initial trade-in program the dealer has to offer. Know, in advance, the value of your trade, no matter the car’s condition. Ask for a contract, with the amount of your trade-in itemized, to reflect the “all in” cost of acquiring the new car. Make sure the trade-in value is reflected throughout all of your buying paperwork.

3. Negative Equity: A dealer says he’ll pay off your trade, no matter how much you owe. Sounds great, right? But actually, he may pay off what you owe on the trade-in that’s more than what the actual car is worth, creating what is known as negative equity. This becomes your problem when the car dealer adds the difference to your new car loan, or lease, which can total more than the value of your new car!

How to Avoid: Pay off the trade-in car before signing any new loan or lease documents, no matter how much that really hot car is calling your name. Watching the pennies and dollars of your new car acquisition is your responsibility, not the dealer’s, so make sure you understand all the documentation. Do not be embarrassed to ask questions. You’re the one in the driver’s seat.

4. Low Credit Score: You’ve gone through all the ups and extras you want. You’ve been told what the price of the car is and how much your payments will be. You can’t live without this car!

But wait! After seeing the financing department regarding your purchase, the salesperson tells you that your credit score is too low to get the original financing package. Now, the car is going to cost you more, especially in the cost of the loan through increased interest rates.

What do you do? Keep in mind that the fine print of advertised prices at a car dealer will likely say that the payments and price will vary according to your credit score.

How to Avoid: Know before you go! If you need to take a loan to acquire your dream car, it is imperative you know your credit score. Visit Equifax, Experian or TransUnion for a copy of your credit report. Review it in advance to make sure there’s nothing improper with the report. If there is, you may want to postpone the car purchase and work on your credit report so you can get the best loan terms out there.

Knowing your score can save you embarrassment and time should the cost of your favorite ride be above your ability to pay for it.

You could take it a step further and have a pre-approved loan in your back pocket to leverage against the dealership’s price proposals. Visit your bank or credit union with the exact vehicle you’re looking to purchase (including all the options and additional warranties) to see what your options are before you step foot into a dealership.

5. As-Is: Buying a used car from a dealer? Looking at cars that come with the “as-is” label could mean a lower price, but, before signing the contract, know what “as-is” could mean for you later on.

If a dealer makes extra promises, such as to repair the vehicle or cancel the sale if you’re not satisfied, make sure to get that written in the contract. If no such promises are made, once you drive the car off the lot, the dealer/seller is no longer responsible for any further maintenance, breakdowns or other problems.

How to Avoid: Before making a purchase, check the dealer’s policy about purchasing cars as-is. Test drive the car under as many driving conditions as you can. Lastly, be sure to take it to a trusted mechanic to check it for current or potential problems. Always carefully examine and save all paperwork with all things in writing that were agreed upon or promised.

Also, be sure to know the lemon laws of the state. Michigan’s can be found here: http://1.usa.gov/1R7KRcn. If your auto manufacturer participates in the BBB AUTO LINE program, the BBB can help you negotiate with the manufacturer and, if necessary, hold an arbitration hearing. If your manufacturer does not participate in the AUTO LINE program, the BBB will route your complaint to that manufacturer.

For more information about the program go to www.lemonlaw.bbb.org.

Have more questions? Don’t know if you have everything you need before visiting the dealership? Check out www.bbb.org/detroit/get-consumerhelp/ bbb-auto-resource-center/ knowing BBB is here to help.

If you experience one of these scams, report it to the BBB at bbb.org/scamtracker. We will do our best to assist!

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