Don’t get scammed! How to spot deals from shady car dealerships

Buying a car can be extremely stressful. This is especially true when buying from a used car dealership. Let’s face it; used car salespeople have a certain stigma. While most of them are lovely people, there are always a handful of bad guys who give the rest of them a bad name. There are plenty of sketchy dealerships out there who will do just about anything for a car to sell it. Thus, buyers should exercise caution when buying a car to avoid being scammed.

How to Avoid Getting Sold a Lemon and What to Look for to Spot a Shady Deal

A lot of used cars at a private dealership. | Getty Images

CBS Pittsburgh recently reported on a sleazy dealer who lost his business license due to his sketchy ways. According to the report, an elderly customer had a car whose brakes failed two weeks later with children in the car. Another story describes a rusty car having been “fixed” with duct tape and painted to hide the damage.

Unfortunately, such situations are all too common. However, there are a few steps buyers can take to make sure these predatory dealerships aren’t selling them a car.

Above all, buyers should always request a VIN report on the car. If there’s an accident or trademarked title in the vehicle’s history, a service like Carfax can shed some light on it. If the dealer refuses to deliver a report, that should be a big red flag. However, if they claim they can’t get it, buyers can access the VIN reports themselves. Simply read the VIN on the vehicle’s dashboard and enter it into a VIN history site to reveal any accident history. Plus, some are free, so it’s not a step to skip in the process of buying a used car.

To take it a step further, buyers can take the vehicle to a trusted mechanic for a pre-purchase inspection. As a rule, these are not free. However, having the vehicle checked by a professional is the surest way to detect problems. Again, if the dealership is unwilling to allow an outside mechanic to inspect the vehicle, that’s a massive red flag. Worse still, there is a high risk of getting scammed. At this point, it’s best to walk away, no matter how good the deal.

Bring your own financing to avoid overpaying

A sign showing finance rates in a window

A sign showing finance rates in a window. | Barbara Alper/Getty Images

Even if the car itself is in good condition, dealers can still try a few tricks to squeeze more money out of you. One of the most prominent examples, according to Fraud Guides, is kickbacks on dealer loans.

When paying off a loan, dealers will raise the interest rate on a loan to a higher number than you actually qualify for. So, if you sign the loan agreement, the bank providing the dealership gives the dealer some of the extra money generated by taking advantage of you.

Some dealerships will also add a small amount to your monthly payment for various totally unnecessary fees and charges. This is called “loading payments”. Even if it’s just a small fee per payment, thousands of people could be heading to the dealership for no reason.

Other things to watch out for are extended warranty programs and “preparation fees” that dealers know they can add to a loan to put more money in their pockets. Most extended warranty programs offered by a used car dealership aren’t worth paying for. If you want an extended warranty, it’s best to get one externally from a more reliable source. Some car manufacturers even offer them.

Overall, buyers can avoid most of these price hikes by providing their own financing. Getting pre-approval from a trusted bank or credit union lets you know how much you can spend. Plus, it gives you leverage in purchases. The ability to tell a dealer that you have your own financing and will only pay for what’s on the window is more powerful than you think!

Buy smart and don’t get scammed!

A line of Ram trucks at a CDJR car sales dealership

A Chrysler, Dodge, Jeep and Ram dealership | Artur Widak/NurPhoto via Getty Images

As unfortunate as it sounds, there are plenty of people out there who want other people’s money and will do just about anything to get it from them. So car buyers need to play it safe and smart.

Keep these tips in mind and remember not to let a sales rep pressure you into doing something you don’t want to do. Remember that you are the deciding factor in whether or not they close the sale. So play your tight hand and don’t do anything you didn’t want to do!

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