When you buy a new or a used car, you must be wary of car buying scams. Whether you are purchasing through a dealer or a private owner, car selling scams can cost you hundreds, even thousands, of extra dollars. While most car dealerships conduct their business in a professional and honest manner, the reality is that car salespeople, car sales managers, and car finance managers are paid on commission. The more they sell, the more they earn. The more you pay them, the more money they can put in their own pocket. This is true of private sellers of used cars, too. That means it can be hard to resist the temptation to engage in car buying scams and car selling scams.
In this article about car buying scams and car selling scams, we take a look at 10 of the most prevalent car scams, explaining what they are and how you can protect yourself. However, you should be aware that there are many more car selling scams and car buying scams to watch out for, so be sure to educate yourself about as many as possible before approaching the negotiating table. If you’ve been the victim of car scams, be sure to lodge a complaint with the Better Business Bureau and the Internet Crime Complaint Center.
1. The Title Washing Car Scams
When a car is wrecked and repaired, when a car is damaged by a natural disaster like a flood or tornado, or when a car is stolen and recovered, it will frequently be referred to as a salvage vehicle, and the vehicle’s title will reflect this status. Salvage vehicles often suffer significant problems after they have been repaired, even if they look like new inside and out. Because of this potential for trouble down the road, salvage vehicles are worth much less on the used car market.
Title washing is a car selling scam that rids a vehicle of its salvaged status. Rules and regulations exist to restrict the ability to wash a title, but vary from state to state. Unscrupulous sellers can still remove the stigma of salvaged status if they determine that making the effort will prove profitable. Because used car dealers almost always sell a used car “as is,” meaning that the buyer takes on all responsibility for the vehicle after purchase, buyers are stuck with the car and its problems once the sale is completed.
This is why it is important for you to get a vehicle history report from a reputable source for any used car you decide to purchase. Try the National Insurance Crime Bureau’s VIN Check for a free report, or buy a report from a company like CarFax or AutoCheck.
2. The Fake Escrow Account Car Scams
The advent of online car buying has popularized the use of escrow accounts to hold funds until a vehicle is delivered to its new owner, and it has given rise to a new form of car selling scam associated with the practice: the fake escrow account scam.
The most common way to lure used car buyers into this car selling scam is to advertise a car for sale on an online classifieds website, usually a model that is highly desirable. The advertised price is low, typically too good to be true. The seller may claim hardship, may claim to be located abroad, and may even offer to pay shipping fees to strike a deal. In some cases scam artists have gone so far as to duplicate the logo and website design of a legitimate car dealer and advertise irresistible prices.
If a price seems too good to be true, it probably is. And if you are asked to deposit funds into an escrow account not of your own choosing, or to wire transfer a deposit to secure a deal, turn and walk away. Unless the seller agrees to use an established and thoroughly verified online escrow service approved by both parties, this car selling scam could lighten your bank account by thousands of dollars.
3. The Disappearing Trade-in Car Scams
If you’re buying a new or used car from a dealer and you trade your old car in, the dealer can potentially make the trade “disappear” in the maze of paperwork and numbers. This is especially true if the trade-in vehicle is of little value. To guard against this popular car buying scam, it is absolutely critical that the amount given to you for the trade-in is reflected in the final deal, and that it is listed as an item applied to the negotiated price of the vehicle.
Another way dealers make trade-ins disappear is by using the “push, pull, or tow” scam. You’ve seen the advertisements for this car buying scam on TV and in newspapers, in which the dealer guarantees a minimum amount of money for any trade-in, no matter it’s condition. Guess what? You would have gotten that money anyway in the form of a rebate, a discount, or some other kind of incentive if you walked in the door without a trade-in. Instead, the dealer will use this money to “buy” your old car and apply the amount to the new car. Then, after you leave, the dealer will sell your old car and make a few hundred more dollars on the deal.
If you give a dealer a trade-in using a program like this, know that you are essentially getting nothing for your old car. Unless you have some rusting hulk with flat tires cluttering up the yard and you’re looking for an easy way to get rid of it, don’t take this bait.
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