Sneaky car dealer scams plus four tips to keep you and your car safe: Internet ScamBusters #207
Today we've got a Special Issue for you on how to avoid the newest car dealer scams (they are really sneaky!). Plus, we have four tips to help you keep you and your auto safe during the holiday season, when auto thefts are especially high.
Let's get going with today's Special Issue...
How to avoid the two newest car dealer scams
It never ceases to amaze us how cunning some car dealers are -- they seem to constantly think of new ways to take advantage of car buyers. Here are two of the most recent car dealer ploys that we haven't yet written about:
1. Spot Delivery: You've chosen the car you want, filled out all the paperwork (including the car loan application with the car dealer's finance department). The car dealer tells you that although your loan hasn't been "officially" approved yet, you can drive the car home anyway.
Don't.
Here's what can happen if you do: A few days later, you'll get a call from the car dealership saying your loan wasn't approved at the interest rate you discussed. However, you were approved at a higher rate.
This means that you'll likely pay thousands of dollars more than you expected.
Further, if you try to call off the deal, the car dealer will either tell you that they already sold your trade-in so you have no options, or they simply will say they'll sue you if you don't agree to the new terms.
The worst part is that you probably are stuck, because the loan agreement included a "writ of rescission," which means that you agreed to pay a higher interest rate if you did not qualify for the loan at the original, agreed-upon rate.
Be careful. And don't take your new car home from the car dealer until all the i's are dotted and the t's are crossed.
2. Mandatory Arbitration or Conflict Resolution: This ploy sounds reasonable at first, but be very cautious...
After everything else has been agreed to, the sales person asks you to sign a "Dispute Resolution" or "Conflict Resolution" agreement. The sales person tells you it just says that if a problem occurs, you agree to settle through arbitration and not take the car dealer to court.
Although arbitration can certainly be a reasonable option, the fine print is where the problems lie.
The agreement may well say that the car dealer chooses the arbiter... and/or that you pay the entire arbitration fee (regardless of who wins)... and/or that you cannot appeal the decision but the car dealer can. It also often includes a clause that you can't participate in any class-action lawsuits against the dealership -- no matter what they do!
So, make sure you read any arbitration agreements before you sign them to make sure they are fair, and show them to your attorney.
In fact, we recommend that you ask the car dealer whether or not they require an arbitration agreement BEFORE you look at any cars. If they do require a dispute resolution agreement, check out the fine print first, and if it has the provisions we've just described, shop elsewhere.
Many sleazy car dealerships require these agreements because they'd get sued frequently without them.
Many people buy cars at this time of year. For more advice on how not to get taken by car dealers, check out some of our other articles:
Car Sales: Are They a Scam?
How to Sell a Car: Avoid the Consignment Scam
Learn how to avoid one of the biggest auto financing scams -- 'packed payments'
What is the Best Day to Purchase a Car?
Four tips to keep you and your car safe
During the holiday season people are busier than ever, and so are car thieves. Experts say auto theft and accident scams rise during the holiday season. So, here are some tips that will help keep you and your car safe:
1. This may seem obvious, but so many people seem to forget to do this, especially during the holidays: Don't leave valuable items, gifts, or other items that thieves might be interested in visible by people walking by your car. This is, of course, especially true in shopping mall parking lots. Store your valuables (and everything else, if possible) in the trunk of your car -- locked.
2. Never, ever leave your keys in your car (either with the motor on or off) while you quickly run into a store or to do some errand. And be sure to lock your car and close the windows, even for a few minutes.
Car thieves are very fast -- it only takes a moment for them to steal your car. Don't think auto theft can't happen to you; it can.
3. Be very aware of parking lots scams: Just because the perfume parking lot hoax is an urban legend doesn't mean there aren't many real parking lot scams. (You can read about the perfume hoax here.)
Here are two examples of real parking lot scams that are very common, especially at this time of year:
- The "parking lot peddler" or "white van" scams involve people who drive white vans parked in neighborhood malls displaying signs advertising very inexpensive, but supposedly high quality equipment, jewelry, and even artwork and furniture.
The sales people promise that all products come with a "satisfaction guarantee." Unfortunately, they'll be long gone by the time you realize the merchandise is either defective, counterfeit or very low quality.
- Another very different parking lot scam involves a driver that supposedly helps you back out of a parking space by waving you out, and then either runs into your car himself or works with a partner who collides with you. It's an easy way for them to falsify an insurance claim with you at fault.
4. Be especially careful during bad winter weather: take enough time so you don't have to rush and can get where you're going safely. If you do need a tow, make sure that the tow truck company is actually the one your car insurer or auto club sent, not a scam artist who just drove by and wants to rip you off.
That's all for today -- we'll see you next week.