Scams To Avoid When Buying A Used Car

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Buying a new car should be a pleasant experience for both the customer and the seller. However, many used car purchasers fall prey to the scams of unscrupulous dealers.

This article will introduce you to some of the common tactics used by bad car dealers. Once you are already familiar with how they’re played, you will be able avoid it and save yourself from being scammed.

 

Multiple Buyers Bluff

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When a salesman notice that you are interested in one of his cars, he will tell you that there are multiple intrested parties who may come back to buy the car. He will do this to pressure you to buy the car on the spot. He will make you feel that if you do not take it now, somebody else will.

If you sense that the negotiation is headed this way, take it easy. Do not show that you are worried because you already know at the back of your head that it’s just a tactic. Take your time, do your research and make sure that you do a thorough inspection. He may be hiding something that’s why he’s rushing you to get it on the spot.

 

Title Washing

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Bad dealers hide the history of a vehicle that’s been salvaged. Salvage titles are assigned to cars that are deemed total loss by insurance companies. This is also referred to as “branding” a vehicle. Vehicles with branded titles have lower market value and difficult to sell. Title washing washes away the brand. Once the brand has been eliminated, the car’s value goes up and it’s a lot easier to sell.

Titles are washed by transfering a salvaged vehicle to a state that doesn’t recognize the brand. When the state issues a new title, it may no longer show that it had been salvaged. If not, the seller will move it from state to state until the branding is gone. When it is, the vehicle’s history will have been “washed” clean.

Make sure that you get the VIN and get a vehicle history report. This will help you check if the car has a clean title.

 

Fake Escrow Service Scam

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The target of this scam are online used car buyers. The scammer will use stolen images and post bogus vehicle listings online. The scammer will pretend to be the owner of the car being sold. The selling price is much lower than other listings for the same car, to lure you into contacting the seller.

The seller will refuse to meet up since he’s overseas and he can only do the transaction using the “fake escrow service”. After you register you will get a bogus email, telling you to deposit the payment through cash wiring services like Western Union, Moneygram etc.. After the payment has been sent, the seller will no longer respond and your hard earned money is gone.

Be careful when buying online. If the price is too good to be true do a background check. If you find the seller shady, walk away from the deal. Look for established sellers with sufficient feedback to back up their credibility.

 

Curbstoners

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Curbstoners are people who actively and regularly buy and sell vehicles without a license, proper permit or a legally established place of business and pretends to be private sellers in order to attract buyers.

You can easily become a victim of fraud involving issues like Odometer Tampering, Undisclosed Frame Damage or Salvage Rebuilt Vehicles, Faulty Safety Devices, Mechanics or Promissory Liens and other problems that may not be truthfully disclosed at the time of sale.

When a car is bought from him, he will leave the title blank or “open.” Without his name on the document to avoid paying Sales Tax, Federal Income Tax and any other declarations that are legally required.

You will find them along the highway and on free advertising sites, like Craigslist. Be sure to check the contact number, if it appears on various private-party listings. If it does, then you know that the seller is one of them. Verify the name on the Certificate of Ownership (title) matches the seller’s name. Avoid sellers who only accepts  cash and refuses checks or money orders.

 

Yoyo Financing

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In this situation, the dealer allows you to leave with the car before the financing have been finalized. You will later receive a call informing you that the deal cannot be made as agreed. So you would have to come back and they will pressure you to accept new, more expensive terms using a variety of tactics.

To avoid this, make sure that the financing is final before you leave with the car. Do not forget to ask for a copy of confirmation, signed by the lender.


These are some of the dirty tactics used by bad dealers. Make sure that you remember them when you go out there to begin your search. If you sense that the negotiation is headed towards any of these, then it’s time to walk away and find a better deal somewhere else.

The Basic Structure Of A Used Car Dealership

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When you are in the market for a used car, it is important that you know and understand the basic structure of a used car dealership. This will give you a heads up on what to expect once you’re there and an idea on how they will accommodate you on your visit.

Here I will enumerate the basic structure of a used car dealership and how they function. It will help out in your preparation so you’ll have the confidence in implementing your car buying strategy.

 

The Sales Force

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They are the front liners. They would assist you and facilitate the car sale. They will hand you the buyer’s guide for the car that you will be interested in. They’ll go over it with you and make sure that all your questions are answered.

Keep in mind that they are there to make sure that your time spent was worth it. So better use it to your advantage. Make sure that you have all the time that you need for inspection, do not be pressured. Ask as many questions as you can and do not hesitate to haggle.

 

The Management

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This team is composed of the head of each department. Most probably you will have a brief moment with one of them while inspecting a car. They are likely to approach you and the associate to check on the progress of the sale or to simply give you a warm welcome.

You will see them on their designated area working with their team. They are there to coach, mentor and train their members.They make sure that they are motivated and equipped to take on their assigned tasks.

They also make sure that business strategies are wisely implemented. Above all, they make sure that the firm’s operation is flowing accordingly.

 

The Accounting Department

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This department is responsible for recording and tracking sales, services and repair bills and all warranty claims.

The people behind this department are the machinery behind the sales team. They determine the amount of discount and price to be attached to each vehicle model. They work in very close coordination with all the other departments in the dealership.

 

The Service Department

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When the car that you bought fails to operate properly while under warranty, the dealership is under obligation to offer a refund or servicing.

Most used car dealerships have an in house servicing department that is responsible for all repairs and maintenance of vehicles. The guys and gals in this department have a sixth sense that can diagnose a car by listening to the roar of the engine.

 

Finance and Insurance department

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After you confirm your intention to purchase a vehicle, the sales person will take you to the F&I team. It is then the mandate of this department to figure out which loan or payment module best suit you.

I will encourage you to go through this carefully to make sure that terms that you will get is within your range. Analyze your monthly expenditures and be as honest as you can when disclosing other financial commitments so that you will be able to get the payment scheme that will work out well for you.

Most of the cars bought in the US are financed. Financing can come in a number of ways, one of which is loans. Loans are a preference of most new car owners because of their easy repayment, the department responsible for marketing car loans is the finance and insurance department (F&I).

Used car dealerships work in close coordination with banks, this ensures that they get lease or loan financing at lower rates. A dealership may get the financing from a partner bank at about 6% they would then offer the car buyer the same car financing at 8%, they will have a profit of 2% on the loan.

There are good dealers and bad dealers out there, so you should be careful when buying a car to ensure the overall package you are getting is fair for you.