Our world is full of scammers and con artists. And, in 2018, they managed to take Canadians to the tune of $100 million. While a lot of that money came from romance schemes, part of it came from used car scams. With the average Canadian paying nearly $20,000 for a used car, it’s no wonder criminals want their piece of the pie.
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Private Party and Craigslist Scams
When buying a used car from a stranger, you introduce an element of risk. Whether or not you should take on this level of uncertainty is, of course, a personal decision, but it is important that you realize that buying a used car from a private party could end in you being taken to the cleaners. While the below list isn’t exhaustive, it covers the most common car buying scams:
The “Out of the Country” Scam
The price of the car is so low that the buyer can’t help but hand the money over. However, the seller says that the car is currently out of the country. He says that he’ll ship the car over after you wire him the money. Of course, after receiving the money, the seller disappears, and the car never arrives. This Craigslist scam is usually easy to spot.
The Escrow Used Car Scam
The seller says that he will ship the car, but he would like to use an escrow service. This escrow service turns out to be fake. The seller then vanishes, and the car never arrives.
The Damaged Car Scam
An independent party sells a car that has been in an accident or totaled under a clean title. This used car scam is also known as title washing. In this case, the car may be both dangerous to drive and impossible to insure.
The Stolen Car Scam
Sellers often try to sell cars that are stolen vehicles. If the police find the car, they can take it from you, and you will be left with nothing but an empty bank account.
Sometimes a verified dealer will masquerade as a private seller. While this seems harmless enough, it’s often done to avoid local or federal regulations. To avoid becoming a victim, make sure the name on the seller’s license matches the one on the vehicle’s title. If it doesn’t, give the vehicle a pass.
Most people would choose a car with low miles over a car with higher ones. For that reason, some sellers will roll back the odometer. Asking for vehicle maintenance records is a safe way to verify a car’s actual mileage.
“Just Needs Freon” Scam
It won’t take long for you to stumble across a Craigslist advertisement saying a car just needs its air conditioner recharged. But freon doesn’t get low without there being a leak in the system. So, any money you spend on recharging the system is wasted. In most cases, “just needs freon” translates to “the AC is broken.” And, getting it fixed isn’t cheap.
The “It Ran When Parked” Scam
This phrase is often tacked onto the end of ads with things like ‘needs an alternator.’ The price of the car will then be far below the normal asking price. Since the posted problem is usually something easy to fix, most people are willing to ignore the fact that the car doesn’t run. Usually, the seller has no idea what’s wrong with the car and just wants to unload it on somebody else.
While this Craigslist scam usually happens with cashier’s checks, you shouldn’t trust personal checks either. In this scam, a potential buyer will give you a check in exchange for the car. This check is often fake or linked to an account with no funds. To keep yourself from becoming a victim, keep the title in your name until the funds have been deposited in your account. If the buyer has a problem with that, don’t give them the car.
The Overpayment Trick
Preying on our moral compass, this scam starts when a buyer writes you a check for an amount higher than the agreed upon price. Before you get a chance to cash it, the buyer will call up and ask you to refund the difference. Being a decent human being, you do so. Shortly after, you find out the original check never cleared. If the stars align against you, this scam could leave you both carless and penniless.
Shortly after listing your car, you receive a call from somebody claiming to be a reseller. In exchange for an upfront fee, they offer to put you in touch with an interested buyer. After you send the money, the reseller ghosts you. While you still have your car, you’ll end up out whatever you paid them.
Multiple Test Drivers
While most test drives are uneventful, this isn’t always the case. In cases where more than one person arrives to test drive a car, be cautious. Though the request might be honest, they could use the extra muscle to steal the car or threaten you into giving up your valuables. For this reason, you should always let someone know when you’re going to be going out on a test drive.
The Trade Scam
Instead of money, scammers might offer a trade. In most cases, the other car is worth way more than what you’re selling. Once you trade keys, however, you’ll find out your new car is either stolen or totaled,
The “Expert” Scam
A buyer may bring an ‘expert’ to help inspect your car. This individual will pose as a mechanic and, after a lengthy inspection, value your car below asking price. This scam relies on you taking the lowball offer and allowing the buyer to make a tidy profit in the interim. To avoid falling victim to this scam have your car inspected
Car Dealership Scams
With all those scams to worry about, many of you might decide to give private selling a hard pass. But there’s a reason used car salespeople are stereotyped as money-hungry slimeballs. Though the law offers some protection, there are plenty of loopholes between here and the car of your dreams. There’s a reason 61-percent of people felt taken advantage of on their last visit to a dealership.
If you do decide to chance Uncle Jim’s Auto Emporium, keep an eye out for the following used car scams:
Yo-Yo Financing Scam
Also known as a spot delivery scam, this scam happens when a dealer lets you drive off without approved financing. While you think the car is yours, your loan application is still sitting on someone’s desk. Then, a couple of weeks later, you receive a call from the dealership saying your financing fell through. But, since you’re attached to the car, you’re willing to pay whatever interest rate the dealership throws at you.
The Falsified Credit Score Scam
Some dealerships will make your credit score appear lower than it is to demand a higher interest rate. So, make sure that you know your credit score before you walk into the showroom.
The Dealer Prep Scam
Most car dealerships charge you a fee to help cover the costs of getting a vehicle ready for sale. While this is fine, some dealers grossly overcharge for this service. If you’re being charged more than a couple of hundred dollars for this work, bring it up to your salesman.
The Vanishing Trade-In Scheme
With the stroke of a pen, a dealer can make your trade-in disappear. All they must do is remove the “capitalized cost reduction” line from your contract. Verify that your invoice includes a discount for your trade-in. If it doesn’t, confront your salesman.
The Forced Car Warranty Scam
In this scam, a car dealer either tells you a warranty is required for financing or automatically rolls the warranty into your monthly payment. Warranties make big money for used car dealerships, so it’s little wonder they push them so hard. To avoid falling victim to this car warranty scam, keep a close eye on your invoice.
“We’ll Pay Off Your Car No Matter What You Owe!” Scam
In this scam, a dealership will promise to pay off your loan to get you in a nicer, newer car. Though the ads imply otherwise, your debt doesn’t just vanish. Instead, it’s rolled into your new monthly payment. So, instead of saving money, you’re left even more under water.
“Guaranteed Credit Approval” Scam
The above slogan is designed to reel in buyers with bad or no credit. The dealership will then rake through would-be customers to find a few good leads. Unwanted customers will be offered an undesirable vehicle or ridiculous payment options. This lets them use the above slogan with no fear of retribution. After all, they never said you’d be approved for something you wanted.
Bait and Switch
This is one of the oldest tricks in the book. The dealership will advertise a great deal on a vehicle they don’t actually have. When you call in, the salespeople will tell you that they might have a couple left on the lot. Once you show up, they’ll do whatever they can to get you in another vehicle.
The Lost Keys Scam
Maybe you gave your salesman your keys so he or she could take a test drive. Or, you wrote a check to hold the car until you made a final decision. To keep you from driving off without making a purchase, some dealerships may “lose” these items. They will then hold them ransom until you finish signing the paperwork. For this reason, you should always bring a spare key with you to the dealership. Furthermore, no checks should be written until the ink dries on the contract.
Focusing Too Much on Monthly Payments
Many dealerships will avoid telling you the price of the car you’re buying, and only focus on telling you what your monthly payments will be. For all you know, the monthly payments are low because they’ll be spread over the next twenty years! Be sure that you know the exact price of the car you’re buying before you sign the dotted line.
Key Mailer Scam
We’ve all gotten those scratch-off sheets in the mail. They offer you a free prize or chance at a car just for coming in the dealership. But, the point of these ads is to get you on the lot and into the claws of ready salesmen. Most of the time, the prize in question doesn’t even exist.
Misrepresenting Vehicle Condition
Unscrupulous dealers will cover up rust spots with paint, use diesel fuel to keep a broken engine running, turn up the radio to hide rattling, and sell cars with known issues to make a dollar. You should always do a vigorous inspection on a used vehicle before you drive it off the lot.
Falsely Certified Cars
True certified cars are only available through manufacturer-backed dealers. A certified vehicle will go through a rigorous multi-point inspection and usually be accompanied by a warranty. Because of this, these cars come at a premium. Some dealers will just slap a ‘certified’ sticker on the car without any sort of inspection. To stop yourself from falling prey to this, ask for a company of the paperwork.
Don’t Be Scared of Car Buying Scams! Your New Ride is Waiting.
Nine times out of ten, you won’t have to worry about used car scams. But there are some nasty people out there looking to piggyback on your success. While we’ll go into more detail on combatting scams later, you should know that getting pre-approved is one of the best ways to avoid them.