Auto sales scams are still prevalent

When shopping for a car in person, watch out for a number of things the dealer or salesman might do in order to squeeze you for some extra money. Some are legal; some are less so. None of them work in your favor.

More below.

Car dealer scams are common; some are quite old

No one likes shopping for a car. The process is tiring, cumbersome, and works differently from the way we buy anything else. If you go to the grocery store for a gallon of milk, you don’t have to haggle with the cashier over the price; you pay what’s marked on the sign. Not so with car dealers, who may or may not offer you a good discount over what may or may not be the actual price on the car. And worse, if you try to finance through them, you may or may not get a good deal on that.

Here are a few things that dealers of both new and used cars have been known to try in order to maximize their profits:

The PATRIOT Act Ruse: You may visit the dealer with the full intention of financing your car through your own lender, but the dealer would rather have you do it through them. They can make more money if they get financing on top of the sales price. But when you tell the salesman that you are going to finance it yourself, they tell you that you must fill out a financing application with them just the same because “the PATRIOT Act requires it.” It isn’t true, of course, but if they can get you to fill out the application, they are that much closer to having you accept financing through them. There is nothing in the PATRIOT Act that requires you to fill out a credit application. If you don’t want to do it, then don’t,

Spot Delivery Scam - We have written about this one before. In this case, the dealer tries to take advantage of you by using the “subject to approved financing” clause in your purchase contract. You will work out a deal with the salesman and sign the paperwork. In this paperwork, all of the financial terms were spelled out, but that catchy phrase “subject to approved financing” was there. You signed it anyway. A week or two later, while you are enjoying your new ride, the salesman calls to tell you that you were not approved for financing at the rates you previously discussed. At this time you will have to pay more money and your payments will increase. Of course, the dealer knew about all of this when you drove away. It’s just their way of getting more money out of you after the fact. Your best way to avoid this problem is to arrange financing elsewhere, especially if you have a credit score that isn’t too good.

Extra Warranty Charges - Some salesmen will tell you that you must purchase an extended warranty if you finance through them. This is simple extortion; you don’t have to buy any extra anything, even if they tell you that it’s “required.” It isn’t.

There are other things a dealer might try to pull out of the woodwork when you are shopping for a car; we will cover some of the others in our next article.

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