Archive for April, 2009
Many Auto dealers employ unfair and deceptive practices in order to persuade you during the negotiating process to purchase a vehicle from them. While it would be nearly impossible to list all of the tricks employed in new and used car sales, the following tips will help give you a better understanding of some of the most prevalent tricks certain dealers are using.
Hidden Damage / Title Washing
Every year vehicles which have been totaled in an accident and thereafter rebuilt are sold as if they had not sustained any damage. Consumer advocacy groups have stated that as many as twelve percent (12%) of used vehicles sold have hidden defects that could lead to major problems. Vehicle’s that have had evidence of flood, fire or accidental damage so severe as to be reported to an insurance company have their titles branded as such in many states. Sometimes the title is “re-branded” and then resold to an unsuspecting consumer. Many dishonest dealers will deny knowledge of the vehicle’s history, despite the availability of vehicle history reports. Be wary, many states require title branding, however, in those that don’t, a vehicle’s prior history can be wiped clean of any negative marks against it.In addition, new vehicles can be damaged as well, either in a mishap on the lot, or even in transport to the dealership. Although some states have specific statutes requiring disclosure of damage, it normally has many loopholes, even if it is being followed at all.
When a manufacturer repurchases a lemon car or truck from a consumer, the vehicle often ends up sold through dealerships and back on the road. The vehicle becomes a laundered lemon when an unsuspecting consumer purchases one of these vehicles and the dealership fails to inform them that it had been repurchased under the Lemon Law. Most states require that the manufacturer, through their dealers, inform buyers that the vehicle has a repurchase history and offer a limited warranty.Sometimes the title is “re-branded” and then resold to an unsuspecting consumer or no disclosure is given at all. Many dishonest dealers will deny knowledge of the vehicle’s history, despite the availability of vehicle history reports.
An old trick is to “rollback” a vehicle’s odometer to hide its true mileage and make the vehicle more appealing to a would-be buyer. Odometer fraud is illegal on the federal, as well as the state level.
Sale of Rental Vehicles (and other heavily used vehicles)
Rental car companies regularly turn over their vehicles prior to the warranty expiring and sell them at various auto auctions. Dishonest dealers buy these vehicles and resell them on their used car lots without disclosing their prior rental car history. Most people do not want a prior rental car due to the abuse it’s been put through or would only purchase one at a substantial discount. Other types of unwanted vehicles could be police cars, demos, taxis, etc.
Spot Delivery/Yo-Yo Sales
A spot delivery or yo-yo sale occurs when the dealer places a consumer in a vehicle on the spot before securing financing or pretending to have secured financing. The consumer is told that everything is complete and drives the vehicle home to show off to friends and family. Once the consumer is “attached” to their new car, the dealer calls to tell them the lender has refused financing at the price they were expecting. Usually the price is now more than they had agreed to and sometimes the trade-in vehicle has already been “sold.” This unethical practice can provide thousands of dollars of unearned gain to the dealership. To avoid this, ensure that your trade in is not sold until the financial institution has approved your loan!
How to Avoid these Problems
Despite the existence of these fraudulent practices, a knowledgeable consumer can protect themselves from falling victim to these scams. It is good practice to have any used vehicle inspected by an independent mechanic not associated with the dealership prior to purchase to receive an honest evaluation of the vehicle. You can also use Carfax or do a title search to help ensure your vehicle does not have one of the above problems.