People hate car dealers. Of course, there are always nice guys, but many car dealers just have to cheat their way to profits. Here are the top 5 auto scams that you absolutely must avoid, or risk paying way too much for your car.
Scam 1: The Yo-Yo Financing Scam
The dealer sells you a car and allows you to take it home immediately. You finance your car through the dealer, but a few days later, the dealer calls and tells you that your financing has fallen through. You are then told to set up new financing through the dealer, at a much higher cost to you, and a much higher profit to them. Avoid this at all costs! If you have bad credit, don’t finance at the dealer. Arrange your own financing. If you finance through the dealer, never drive off your car immediately. You should wait at least 24 hours before taking your new car, so as to make sure financing is complete. This allows the dealer no way to play the scam on you.
Scam 2: The Window Etching Fee
This is one of the most ridiculous but common scams I’ve heard off. Basically the dealer offers to window etch your VIN number in the window of your car for you, at a price ranging from $300 to $1000. Some people have tried to talk down the price, and they often succeed, but the dealer still makes a few hundreds off you. The easiest way to solve this problem? Just purchase a do it yourself window etching kit at any decent auto parts store. It only costs $20.
Scam 3: The Dealer Preparation Fee
The dealer charges you a preparation fee to prepare your car. Some often charge an outrageous $500 or more just to peel off the plastic protection on the car, test drive the car and put in the fuses. Most MSRP stickers indicate that these costs have already been covered by the manufacturer. In fact, some car dealers permanently print it on the buyer’s order to make it seem mandatory, but one way you can get it removed is by telling the dealer to add a credit (of the same amount as the dealer preparation fees) on the next line. If they refuse to do so, you should simply walk out of the dealership.
Scam 4: The Market Adjustment Fee
In this scam, the dealer tells you that your car is a really popular vehicle, and so to sell you the vehicle they have to add “Market Adjustment Fees” of several thousand dollars. This amount is usually indicated on an orange sticker next to the manufacturer’s MSRP sticker. A car may be popular, but if it is in stock, it is not worth paying extra for it. Many buyers, especially trade-in buyers, have been ripped off before. They focus only on what they get for their old car, and so they don’t see the big picture. They may get an extra few thousand for their car, but they don’t notice that they are charged a much higher Market Adjustment Fee. The dealer sells the car, gets the trade-in, and makes an extra off the buyer. Never pay more than the manufacturer’s MSRP.
Scam 5: The Extended Warranty Scam
The Extended Warranty scam is quite old but it is still in use. And many people still do fall for it. Basically, when you take a loan on your car, the dealer will say that you have to purchase an extended warranty because the bank requires it for the loan. Avoiding this scam is very simple actually. Tell the dealer to write down in black and white that the extended warranty is required for the loan and they’ll most probably find some excuse to remove the extended warranty. If they refuse to do so, then please do not buy from that dealership. Actually, the extended warranty is a great thing to have, but don’t ever get it from the dealer. You can get far better deals elsewhere, especially online. Don’t get ripped off by car dealers!