Beware of Used Car Financing Scams
Buying a used car can become a nerve-wracking experience, especially for the consumers who have no idea what to look for and expect. Unfortunately, such customers often fall prey to car dealer scams. Let`s discuss a few of these scams so consumers can be safe when they purchase vehicles.
The Negative Equity Scam
This scam is often being perpetrated on customers at the dealership. The dealers promise them «to pay off the trade-in no matter what they owe». But what they actually do differs a lot from it. They take the old vehicle in trade, pay off the balance and then include the negative equity into the new car loan. Now the car owner is entitled to pay for his old and new vehicle simultaneously and has a higher amount of negative equity. Learn more about the negative equity scam.
Good Cop, Bad Cop
Dealers have taken over this psychological tactic from police officers, who use it for interrogation. This fraudulent scheme involves salesperson playing the sympathy card (“good cop”) and the management, which appears to be the “bad cop”. The salesperson at the dealer`s lot is acting as your best friend and bends over backwards to get the best deal for you. Don`t let him fool you, if you are not happy with the price, don`t agree. Bear in mind, the more you pay for the vehicle, the higher is the salesperson`s commissions.
This scam occurs when an auto dealer leads the customer to believe that the financing has been approved, accept a down payment or a trade-in and send him home in the vehicle. In a couple of days or weeks, the dealer calls the customer to tell him that the credit is not enough and the financing fell through. So the customer should come back to sign another contract with higher interest rate or return the vehicle. Yo-yo financing scam often targets customers with poor credit score and fewer financing options. That`s why customers with no credit profile or bad credit score should always make sure that their financing agreements are properly signed before leaving a dealer`s lot with the car. Read our article about Yo-Yo financing here.
The Dealer Addendum Scam
Car dealers often use rip-off practices to make extra profits on the vehicles they sell. They place a dealer addendum sticker with multiple add-ons such as fabric protection, paint sealant, alarm system on it. These options combined can cost the customer hundreds or even thousands of dollars. In order to avoid this scam always read the contract thoroughly and don`t sign it if it contains products or services you haven`t agreed to.
Protect Your Rights
Victims of a car dealer fraud can get a legal assistance at the Margarian Law Firm. They can call us at (818) 553-1000 and get a free consultation.