The series of bumps in the price and the attempts of grinding you to spend more money is known as the Bump and Grind scam. Here is how this car dealer scam happens and how you can avoid it. The Bump and Grind scam happens during the car buying negotiation process. It’s a common sales technique used to gradually raise the price of the vehicle. If the salesperson tried to raise the price by $2000.00 right off the bat then you would freak and run out the door. So the technique of gradually raising the price by just a little here and a little there is much more subtle …

Dishonest car dealers might fiddle with your financing as a way to jack up their profits. The most popular way of this car scam involves calling back car buyers into the dealership a week or so after purchasing a car. Once you’re back, the car dealer tries to renegotiate the interest rate based on whether you buy extra services, accessories or warranties. They might also try to focus on the amount of the monthly payment to divert attention from the fact that the total amount being financed has gone up. Another variation of this scam involves dealers letting you drive off the lot without finalizing the loan papers, promising …

Misleading advertising consists of any claims that are untruthful or deceptive and may give a consumer the wrong impression about a product they wish to purchase or use. It has the following types: •    Bait and switch advertising. It is illegal to promote a product that a company does not intend to sell or provide. Companies using bait and switch tactics will pull in consumers by promising to sell an item at a certain cost, when in fact they plan to sell something that is more costly. •    High-pressure sales tactics •    The use of deceptive form contracts •    Artificial inflation of prices •    Use of fine print to …

Title fraud is on the rise because of the current recession and is often the result of poor business management on the dealer’s part. It mostly happens when dealers on the verge of bankruptcy, without enough money to keep operations going, can’t pay off the liens on titles for the vehicles they’ve purchased and sold. Surprisingly, a lot of car dealers don’t technically own the vehicles they sell. They borrow money from financiers, called “flooring agents,” to pay for them. Once a dealer sells a car paid for by a flooring agent, he or she is supposed to pay off the agent to get the title — or clear …

Rewritten Contract/Backdating A customer often won’t qualify for financing under the terms of the first purchase contract and may be required to increase a down payment, APR, etc. to qualify for a loan. Then the dealership has the customer sign a second contract with the new terms but backdates it with the date of the first contract, sticking the customer with financing charges for a period during which the contract wasn’t yet in effect. In addition to misrepresenting when the customer takes the obligation of the new contract, a backdated contract often violates the single document rule because another form, usually called “Acknowledgment of the Rewritten Contract,” has the …

In our previous blogs we have already presented some tricky questions that may lead to dealer fraud. Below are three more questions and the most preferable ways of answering them in order to avoid becoming a dealer fraud victim. 1. “What were you hoping to get for your trade?” This may be an honest question, but why tell the price first? If you say you want $10,000 and the car is really worth $12,000, you’ll give the dealer a $2,000 present. It’s essential to have a realistic idea of what your trade-in is worth and let the dealer throw out the first number. Don’t get confused in case he/she …

There are a significant number of cases in which dealers represent to consumers that a car was not previously wrecked.  The consumer then buys it based on the representation.  Naturally, mechanical problems occur, and the consumer takes the car in for repairs.  Only then does the consumer learn of the prior wreck. To avoid this situation, you should pay attention to the following: Carfax or Autocheck Reports – Dealers normally run reports from Carfax and/or Autocheck to determine whether either of those databases lists any prior wreck of or damage to a vehicle they intend to sell.  An honest dealer would pass on the reports if they indicate prior …

Car dealers usually ask key questions for diverting your attention and maximizing their profit. Knowing these questions and refusing to take the bait will help you stay in control of the negotiations and get the best deal. Below are some of these tricky questions and the best ways of answering them and thus avoiding various dealer tricks. 1. “What kind of monthly payment are you looking for?” In some cases, this question doesn’t presuppose any upcoming vehicle scam. If you’re looking to buy a $50,000 car on a budget of $300 per month with a $1,000 down payment and no trade-in, the dealer will know right away that you’re …

Payment packing is one of the most common of the car buying scams. It is the act of presenting much more inflated monthly car loan payments to customers during negotiations. This act actually becomes illegal once: A credit report has been obtained The sale price has been disclosed The term of the loan has been disclosed The finance rate has been disclosed. How to avoid payment packing? All the tricky games may easily be avoided by asking them to: Disclose the sale price Disclose the total amount financed Disclose the term Disclose the estimated finance rate By having car dealers disclose all of this upfront, they have to give …

Buying a car means that you will own the vehicle when you finish making payments on it. Leasing means that there is a period of time – the lease period – when you’ll be making monthly payments on the car and at the end of the lease period you will not own the car (unless you make a large payment to own it). Plus, if you want to return the car before the lease period is over, you’ll have to pay a big penalty (an “early-termination fee”) to do that. Customers routinely fall into auto scam when car dealers lead you to believe that you are purchasing when you …