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Used Car Scams

2014-09-10 Used Cars For Sale San Diego


 

 

Below are a few of the most often used scams by used car dealerships. Car Buying Tips explains these and others in more detail. Everyday people are being cheated by these or variations of these scams. Not all dealers stoop to this level, but the scams are in widespread use.

Lies About Loan Approval

People with bad credit are the most vulnerable. Most of the scams occur in the business or finance office, when the buyers have let down their guard. Instead of negotiations being over, they are just beginning. Some contracts, thought to be binding, are hit with the scam several weeks after the purchase.

The car dealer calls back and tells the buyer the loan application was not approved for a low-interest rate that was quoted. Threats to call law enforcement, if the car is not returned and new paperwork filled out are made. Buyers are told the car will be reported as stolen.

Complicated legal verbage on sales contracts that are subject to approval of the loan means a signed contract does not indicate the deal is final. Buyers are informed that an additional $1000+ down payment is needed, and monthly payments have been increased.

The scam works, because dealers know people with bad credit have been previously rejected. The bad credit is one reason they are looking for cheap used cars. Knowing possession of the car for two weeks makes protecting ownership a priority, little resistance from the duped buyers is experienced as they figure out some way to pay up.

Lies About Credit Scores

A common trick dealers pull is lie about the buyer’s credit score. The buyer is told the credit score is lower than his or her actual score. A higher interest rate is placed on the loan.

Salespeople are sharks waiting to devour buyers. They have years of experience that has honed their skills against uninformed buyers. Marginal credit score individuals fall prey to the scam. Most people do not know what their credit score is. They trust official looking printouts that car dealers produce without knowing if it is correct.

Lies About Trade-ins

Trading in a vehicle that has a remaining loan balance is risky business. The outstanding balance on the trade-in is supposed to be paid off by the dealer in ten days. The old loan balance amount is added to the new care purchase amount.

Two months after buying the car, buyers are blindsided when they learn the dealer did not pay for the old car as promised. Angry notes are sent indicating the car payment is late. In reality, the dealer has stolen the trade-in.

Lenders have a contract with the buyer, not the dealer. The loan remains in the buyer’s name until the dealer makes payment. Credit dings occur because of late payments. Taking legal action will be futile. The contract will not say the dealer is obligated to pay off the old car loan. Dealers know how to cover their tracks.

 

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