Buying a new car is exciting, but the experience at the car dealership can also be overwhelming. Most dealerships strive to provide car buyers with excellent customer service. However, there are always a few bad apples in the bunch. Some car dealers might use questionable tactics to get you to make the purchase or squeeze a few extra pennies out of you. If you’re in the market for a new car, here are seven common scams you might run into at car dealerships.
1. The “Yo-Yo” Financing Scam
Car buyers with less-than-perfect credit will often fall victim to the “yo-yo” financing scam. This is when the dealership will let you drive your new vehicle off the lot. They make you believe that your financing has been approved. Then, days (possibly even weeks) later, they will call you back stating that the financing for your new car fell through. As a result, they’ll ask you to come back in and sign a new agreement. The new loan often has a much higher interest rate and usually a higher payment too. If you’re relying on the car, it can be easy to feel pressured to accept the new terms. You’ll want to make sure that your financing is finalized before you take the vehicle home.
2. Inflated Fees and Add-Ons
A car dealership needs to make a profit and sometimes they’ll go to great lengths to make a buck. One way car buyers are impacted by this is through inflated fees and unnecessary add-ons by the salesperson. After you’ve landed on an agreeable price for the car, they might trip to slip in additional charges for VIN etching, fabric protection, and extended warranties. These are often things you don’t really need, but they will add thousands to the final price. Make sure you read the entire contract line by line and question everything. You can always ask them to remove anything you don’t want or don’t agree to.
3. Bait-and-Switch Tactics
This is one of the classic car dealership scams. The dealership will often advertise the car at a very low price. This gets customers in the door. Then, once you arrive, they will inform you that the vehicle you’re looking for has already been sold and they’ll point you in the direction of a much more expensive car. It’s a good idea to call ahead and confirm that the car is still available before you go to the dealership. Remember, you can always walk out and find another dealer to help you.
4. Payment Packing
Many people are focused on whether or not they can afford their monthly payments. So, when a dealer starts talking to you about your car note, they may focus on that monthly number. Payment packing occurs when the dealer quotes you a specific monthly payment, but it actually includes several add-ons you didn’t ask for. Because you are focused on being able to afford the monthly payment, you might not realize that the total price of the car has increased. The best thing to do is negotiate the purchase price of the car first. Then you can shift focus to the financing terms and request a breakdown of everything that is included.
5. Lowballing Trade-In Offers
Having a trade-in can help with the down payment on your car. Many car dealerships will offer you a lowball price on your trade-in. Again, this helps boost their overall profits. They’ll probably try to make it seem like you’re getting a great deal on the new car, but they’ll make up for it by undercutting the value of your old vehicle. Make sure you research the fair market value of your trade-in before heading to the dealership. If you find that the dealer’s offer is much lower than your car’s appraised value, you can negotiate with them or even potentially sell your car privately.
6. Spot Delivery Scams
This common car dealership scam is similar to the “yo-yo” financing we previously discussed. Again, the dealer lets you take your car home before the financing is finalized. They’ll call you back to sign a new agreement with less-than-great terms. Dealerships often target customers who are eager to drive off with their new car. It’s important to make sure everything is 100% approved and finalized before you leave the lot.
7. Fake Vehicle History Reports
You should always get a vehicle history report for used cars. However, some dealerships will falsify this information. They might print up a report that leaves out big problems, like flood damage, accidents, or even issues with the title. Look for vehicle reports from reputable sources like AutoCheck or Carfax. It’s also a good idea to have used cars inspected by a trusted mechanic before you buy.
How to Protect Yourself
No one wants to become a victim of a scam. It’s important to do your homework before you set out to buy a car. You want to research the market value of your trade-in as well as the new car. Take time to understand your financing options and even get pre-approved for a loan, if possible. Don’t be afraid to read the fine print and ask questions. Remember, it’s okay to walk away. You shouldn’t feel rushed into making a decision. There are other cars and other dealers.