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Avoid Auto Financing Scams
from: Sports Car MagicCar dealers have a reputation as being predators waiting to pounce on unsuspecting customers because they always seem to be on the prowl for buyers who aren't knowledgeable about cars and buying a car. Of course, this is a generalization because there certainly car dealers out there who would never try to cheat anyone for extra profits.
How Do You Tell the Difference?
Therefore, the best way to avoid being a victim of dishonest car dealers is to be aware of the following auto financing scams.
Yoyo Scam
The dealer will allow you to take the car home as soon as possible while he takes care of the financing. However, a few days later he'll contact you and inform you there was a problem with your financing plan. He'll then tell you to set up a new financing scheme through his dealership which, of course, will be at a higher rate and this give the dealer a very high profit.
Be very wary of this trick and do everything you can to avoid it. If you have a bad credit rating, don't finance your purchase with the dealer, try to make your own financing arrangements. If you do decide to use the dealer's financing, don't take the car home immediately. Wait at least 24 hours to make sure the processing of your financing plan has been completed. Allowing a day will assure the dealer can't use this scam on you.
Window Etching Trick
Watch out for this very common scam. In this instance, the dealer offers to etch the VIN number of your car onto the window of the car for a price which ranges from $300 to $1,000. Some buyers believe they did a good job by talking down the price by a few hundred dollars, but unfortunately, a few hundred dollars is a fair bit of money. To avoid this scam, purcase an etching kit and do this yourself. Kits are available at auto shops for about $20. Can you see how much they're trying to profit from you!
Preparation Fees
Dealers often add an additional preparation fee to your bill. Conducting a test drive, replacing fuses or simply taking the car's plastic cover off could see your bill increase by $500! If you visit other shops, you'll discover that these costs are already included in the MSRP as set by the manufacturer. However, some dealers automatically add this to every order to make it look as if it's mandatory. To deal with this scam, you can ask the dealer to classify it as credit (it should be identical to the amount of the preparation fee) on the following line. If the dealer has a problem with doing this, your best bet is to simply walk away and try to find yourself a more honest dealer.
Market adjustment
In this instance, the sales person will try to convince you the vehicle you're interested in is selling like crazy and getting very popular. Thus, if you want to purchase the vehicle, they do some "market adjustments" which could amount to a few thousand dollars which is usually indicated by a tag near the MSRP tag set by the manufacturer. However, even if the car you're interested in is very popular and is very much in demand, if the car's in stock you should never be tempted because just becasue a car is "popular" it's not worth paying a few thousand dollars more. Never ever pay more than the MSRP set by the manufacturers. If you do, you're just being taken to the cleaners. Go somewhere else, there's lots of cars out there that you can buy.
Warranty extension
This is another old scam that's be around for awhile and it's still being used and it's surprising how many fall for this trick. What happens in this scam is that when you get a loan for the car, the dealer explains that you're required to purchase an extended warranty because it's one of the conditions of the bank. There is a very simple way to avoid this scam -- tell the dealer to specify specifically and clearly in writing that the extended warranty is required for the loan to be approved. The dealer will likely try to find a way to have this excluded. If he insists that he must include the extended warranty, walk away and never do business with this guy. Go to another dealerships and find someone who won't lie to you.
And so, these are a few of the most common auto financing scams utilized by some car dealers. Remember these when you're looking to buy a car. If you've been treated fairly by a dealer in the past or you have friends who recommend a particular deal, consider buying from this dealership. Thier reputation is the best indication they do care about their customers and aren’t just looking for a “fast buck.”
Finally, think very carefully when out looking for a new car and never buy on impulse.
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