Americans love SUVs, trucks, crossovers, vans, and other vehicles. But they don’t love the process of buying them…especially from car dealerships or, as some call them, stealerships.
It’s enough of a problem that the Federal Trade Commission last year announced its Combating Auto Retail Scams (CARS) initiative to protect consumers. The new rule is expected to save people more than $3.4 billion and an estimated 72 million hours annually.
Here are 20 car dealership scams and tricks to know so you don’t get fleeced.
Bait & Switch
The bait-and-switch technique is a devious scheme. It’s a dishonest sales tactic where a car dealership advertises a vehicle at an attractive rate to get you to visit the showroom. If you take the bait, a car salesperson will inform you that the car advertised was just recently sold.
Upon delivering the bad news, the salesperson will try to sell you a more expensive car.
Focus on Monthly Payments
Beware of car salespersons with the gift of gab. They’ll chat you up, find out what monthly amount you’re comfortable with, and work their magic to give you what you want. The problem? A dishonest salesperson can hide extra fees within the super-low monthly payments you seek. All they have to do is extend the loan duration to keep the monthly payments low.
Offer Too Little for Trade-Ins
Some car owners sell vehicles privately rather than accept insultingly low trade-in valuations from auto dealerships. But car salespersons know this and have a trick to circumvent this strategy. They might make a better-than-expected offer and then, unbeknownst to you, boost your monthly car payments to claw back that extra trade-in valuation.
High Over-the-Phone Offer for Trade-Ins
Yet another scam some car dealerships use is offering high trade-in valuations over the phone. But they might revise their offer downward after you bring it in. They’ll say your vehicle’s overall condition warrants a lower trade-in valuation than the one quoted over the phone. You can be pretty sure they never intended to honor the high over-the-phone offer.
Odometer Fraud
Unfortunately, odometer fraud is still a thing. It’s a scam where someone tampers with a vehicle odometer so that it displays a lower-than-accurate reading. The National Highway Traffic Safety Administration estimates 450,000+ vehicles are sold annually with incorrect odometer readings. It’s a crime costing American car buyers north of $1 billion each year.
Shop at reputable dealerships, and be wary of vehicles with unbelievably low mileage. If, for instance, you see a 1980 sedan with 35,000 total miles, you should be suspicious. Americans drive an average of 14,263 miles annually. While a super-low mileage reading doesn’t necessarily mean fraud is at play, you must do your homework and ask the right questions.
Vague Contracts
Sneaky car dealerships also use vague contracts. Using contracts containing language and terminology most people aren’t familiar with, car dealerships often confound consumers. Before signing any contracts, ask questions. Don’t sign the contract and ask questions later.
Cosign Auto Loans
Do you want to ruin relationships with people you care about? Ask them to cosign an auto loan. It’s not a scam, per se. But it’s still shady. The cosigner will be responsible for the loan if you can’t pay. Why would you put that burden on someone else?
Forced Car Warranty
While a warranty can offer peace of mind to car buyers, it’s still optional. You can deduct thousands of dollars from the total purchase price by waiving the warranty. Some car dealers will insist that you must get a warranty to get a car loan. But you don’t have to buy a warranty.
Higher Interest Rate
Another scam involves telling car buyers their credit doesn’t allow for the best interest rates. While such news isn’t necessarily a lie, some car salespersons will use this strategy to make more money by charging higher-than-necessary interest rates.
All Credit Applications Approved
Be wary of any car dealership that claims to approve all credit applications. There’s no way that everyone can be approved. It’s a tactic to get everyone, even people with no business financing a vehicle, to come to the car dealership. A salesperson will then pick which ones to focus on.
Payment Packing
What’s payment packing? It’s a trick some car dealerships use to inflate the amount you pay for your vehicle. A car salesperson might add things, such as an extended warranty, to boost your monthly payment. And this is done without getting your permission.
Over-the-Top Dealers Fees
Car dealerships make money from add-ons that unsuspecting consumers accept without question — often because they don’t know they can decline them. An extended warranty, paint protection, GAP insurance, and tire and wheel protection are optional.
Prices Above MSRP
While setting a car price above the MSRP isn’t illegal, it’s a raw deal for car buyers. Do you want to pay more for a car than the sticker price? Of course not. Yet, it’s perfectly legal for car dealerships to do so if the demand exceeds the supply.
Over Promise and Under Deliver
Beware of car dealerships that promise you the sun, the moon, and the stars but don’t deliver. Some car salespersons will say whatever it takes to get you to come down to the showroom.
Hard of Hearing
Yet another trick to watch out for is selective hearing. A car salesperson might pretend to listen to your instructions but behave like they didn’t hear a thing. If you say you have a budget ceiling of $25,000, beware of a salesperson who shows you cars well above that price.
Not Getting Things in Writing
A trick you must avoid is failing to get things in writing. If a car salesperson wants to be sneaky, they can promise you many things — without writing anything down — and then deny it later. Putting everything in writing — no exceptions — protects you and the car dealership.
Play on Emotions
One of the worst things you can do is look too excited when shopping at a car dealership. Car salespersons will know if you’re emotionally attached to a specific make or model. And they may play on your emotions and get you to overpay.
High-Pressure Sales Tactics
Some car dealerships specialize in employing high-pressure sales tactics. These strategies can be successful when dealing with customers desperate to get into a new car. Don’t fall for the trap!
Title Washing
While you likely don’t have to worry about title washing when working with reputable car dealers, don’t let down your guard. Title washing is a scheme where someone yanks vital data from a vehicle title using dishonest tactics. A clean title is granted to a car in good condition, but a bonded title is given to a compromised car, such as one rebuilt after an accident. Title washing is about taking a bonded title, removing negative information, and illegally making it a clean title.
Get Less Than Advertised
Yet another trick to avoid is ordering one thing and getting another. Even if it’s the same make and model, ensure you get all the features you agreed to and paid for.
Stay on Your Toes and Avoid These Tricks and Scams
Don’t let down your guard when buying a new vehicle at a car dealership. Some companies pull out all the stops to help car buyers get the right vehicles. But some car dealers aren’t nearly as concerned with customer satisfaction. Remember these 20 points and proceed with caution.
