Auto Theft: From A Penny-Ante Game To A Big-Stakes Business

Here today. Gone today. To a car thief, time is money, and we mean big money. The old saying is that crime doesn’t pay, but that doesn’t seem the case when it comes to car theft. It’s a big business. So big, in fact, that if it were legalized and incorporated, it would rank 56th among Fortune 500 companies.

That statistic, though staggering, just takes into account the direct value of the vehicles stolen. Actually, car theft costs us as a society much more. Consider all the indirect costs associated with this crime epidemic.

Because car theft is so prevalent, it increases the cost of law enforcement. The price of tracking down, prosecuting and jailing auto thieves takes a sizable bite out of local and state government budgets each year. Auto thefts also are a key factor in bumping up insurance premiums, and the cost is compounded when theft is accompanied by insurance fraud, as it very often is these days. If we could eliminate or severely curtail these two crimes, it would go a long way toward keeping everybody’s car insurance costs down.

Of course, there are the costs of other related crimes. Car thefts almost always result in the theft of personal property left in the vehicles. Not only does this engender a cost in and of itself, it also creates opportunities for other crimes. Many auto thieves emerge with items like checkbooks, bank deposit slips, credit cards and credit card receipts that can enable criminals to commit credit card and bank fraud.

The human price paid to car thieves is also large. Each year scores of car thefts result in murder and kidnapping. The evening news is filled with tales of car thieves driving off with their victims’ small children still strapped into baby seats.

Recent efforts of law enforcement working in tandem with insurance companies in states like Pennsylvania, which created a governmental authority to deal with the problem, have put a dent in car theft, but the problem is still a gigantic one that has the potential to strike anyone of us who drive at any moment.

Car thieves have a variety of motivations. The most common ploy of the professional criminal is to steal vehicles in order to obtain the parts. Selling the parts of a car individually may bring a criminal two or three times what he could get selling the vehicle intact. Most often thieves collude with other criminals to set up "chop shops" that can strip a car down to its component parts in a matter of minutes. These parts go into the legendary, clandestine "Midnight Auto Parts" network that services shady repair shops and individual mechanics who are eager to purchase the stolen parts at a discount.

Another common motivation to steal a car is simply to sell it again, in the same way that any stolen property is "fenced" illegally. Often thieves will hustle the vehicle across state lines, where its identification numbers are altered to match forged or fraudulently obtained titles and registration papers. Another common ploy is to ship the stolen vehicles overseas. Often a vehicle stolen in a port city will be in a shipping container ready to be sent overseas within hours of its theft.

A frightening new trend in car theft often is referred to as "cars for crack." The typical scenario goes like this: a drug buyer will lend his vehicle to a crack dealer in exchange for drugs. The drug dealer, in turn, uses the vehicle to transport drugs or commit other crimes with no threat of having to forfeit his own car if he’s caught. If the drug dealer does not return the car or the car is seized by law enforcement, the drug buyer who lent the car reports the car as stolen to his insurance company. The insurance company then settles the claim, putting more potential drug money in the hands of the buyer. If the car is returned, the process simply repeats itself.

Another type of car theft was spawned by the increasing prevalence of automobile leasing. In this scenario, usually referred to as a "give up," the owner or lessee actually is quite willing to have the vehicle stolen. Why? Because it typically involves either leased vehicles with excess mileage whose turn-in costs are high or purchased vehicles whose owners no longer desire to make the monthly payments.

In these instances, the owner actually arranges to have the vehicle stolen or simply abandons it in a known high-crime area. In some cases, the owner/lessee simply may hide the vehicle and report it stolen to the police and insurance company. Sometimes, to ensure that the car is a write-off, the owner actually may burn the vehicle to make certain it is a total loss. These cases begin as car theft, but also involve another felony — insurance fraud.

Back in the 1950s and 1960s, many juveniles would steal cars just to have wheels. These joyriders often abandoned the cars soon after the theft, without doing much damage to the vehicle. With the growth of juvenile gangs in many areas in the last couple of decades, joyriding has taken a sinister turn. Today many cars stolen by teens are "fenced" or "chopped" by others associated with the gang. They also may become part of the "cars for crack" scenario or be used in the commission of other crimes.

A final motivation for car theft is truly a product of our Information Age. Your car can be "stolen," while you continue to drive it. Here’s how it works:

Just like you have an established identity, so does your car. You establish and verify your ID by your Social Security number and your Driver’s License number. A car establishes and verifies its ID by its unique Vehicle Identification Number (VIN). If a thief gets hold of your vehicle registration and insurance card, items typically stowed in the glove compartment, a criminal can use that information to obtain a license plate. The thief can then steal a similar vehicle, alter its VIN to match your vehicle’s VIN, and feel confident in his ability to sell the vehicle without detection. The result is a big payday for the criminal and a huge headache for you, especially if the cloned vehicle is used in a crime or involved in an accident.

Despite the installation of alarm, theft-prevention and theft-recovery systems, no vehicle is immune to theft. But there are many steps you can take to encourage a thief to "steal elsewhere" rather than trying to pinpoint your car.
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Written by Erasmus Ipswitch

Auto Theft Scam Uses Consumer Protection to Get Keys

Car thieves are taking advantage of a service that was meant to protect car buyers. Police say thieves in Ontario are legally getting reports on used vehicles to acquire keys for cars they’ve pre-selected.

Police say thieves have had to adapt as car companies install more sophisticated anti-theft devices in their new cars. Many cars now won’t start without new keys that come with a special chip called an immobilizer.

Thieves are going after older cars or driving off with your car after getting at the keys.

It happened to Howard Lerner of Toronto. It took him months to figure out how his Audi was driven out of his regular parking spot in an underground garage.

All the thieves needed was his license plate number. They then headed to a self-serve kiosk set up by the Ontario government. For a fee, they were able to pick up a used vehicle registration package, even though Lerner’s car wasn’t for sale.

The package is designed to protect buyers of used cars. It’s meant to allow people to check on the history of a car, to avoid liens or even to know if the car they’re thinking of buying has ever been reported stolen.

Armed with Lerner’s data, the thief got an original copy of his car ownership, then got a real driver’s license, with the thief’s picture and Lerner’s name on it. With that, the thief walked into an Audi dealership. He said he had lost his key and needed a new one. The dealership provided the key and the thief drove off with the car.

York Region police detective Bill Goetz says the thieves ran the scam like a business, the most sophisticated he’s seen.

"We found 123 different sets of keys," Goetz said. "Our approximate value on it was between four and six million dollars."

One of the cars stolen was Lerner’s. The police eventually arrested two men and laid 55 fraud-related charges. One of the men served 18 months in jail. The other was deported.

When CBC News told the Ontario Ministry of Transport how the information has been used to steal dozens of cars, they said they’d check into it.

In Toronto, four out of ten car thefts last year were cases where the thieves simply took the keys – either through fake ID or by breaking into houses and grabbing them.
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Written by Howard Learner

Wheel ‘n’ Deal

Auto salespeople have lots of tricks up their sleeves to get you to pay more, but you can beat them at their own game.

PRECEDENT-SETTING ZERO-percent financing, or single-digit interest rates, plus almost flat sticker prices are making it less expensive than ever to supply your company with vehicles, whether you decide to buy or lease. To make sure you’re aware of all the available deals, do your homework online or by telephone (see "The Search Is On" on page 50 for a comprehensive listing of manufacturer URLs), and consult with your accountant. Arming yourself with printouts of evaluations, reviews, prices and the market value of any trade-ins gives you an advantage. Then, visit several dealerships with a compilation of your target vehicles to compare prices, rebates and incentives.

When it comes to cost, don’t always make a decision based on low payments. Salespeople are adept at inflating interest rates, subtracting rebates and extending terms to accommodate your desired monthly payment figure, which means you’ll end up paying more over a longer period of time. When possible, arrange pre-approved financing at your bank, credit union or other lending institutions so you can easily nail down a better deal. If you have already secured financing, you can tell the salesperson you plan on paying cash so that monthly payment negotiations do not apply. That way, you can take one of the tools the dealership uses to add to its total tab off the table.

Once you have collected offers from several dealerships, decide which one is the fairest deal. In some cases, it may be better to work with a dealership you trust at slightly higher prices than to risk going with another that may have a poor reputation for servicing vehicles once they have been sold or leased. Slow service can keep your vehicles off the road unnecessarily, costing your business money.

While it is smarter to sell your old vehicles privately to get a higher price, a trade-in can provide savings on your new vehicles if you have taken the time to find out what the old vehicles are currently worth. Check out car values at the Kelly Blue Book Web site (http://www.kbb.com) and other automotive sites. Don’t forget that dealers can make a nice profit off your trade-ins, if only for parts.
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Written by Jill Amadio

What is the Best Day to Purchase a Car?

Finally — The Truth About What Day (and Month) Are the Best Times to Purchase a Car

When — exactly — should you purchase a car?

To get the real answer to this question on when to purchase a car, we asked Peter Humleker, consumer advocate, consultant and author of the excellent book "Car Buying Scams, Auto Dealer Executive "Breaks Code of Silence!" to write an exclusive article for us on the topic.

Here’s Peter’s article on the very best time to purchase a car:
If I had a nickel for every time someone asked me this question, "What is the best day or month to buy a car?" I would be a very rich man!

This is without a doubt the single most frequent question I get asked.

If you have done any surfing on the Net about this question, you would think someone did a top-secret poll… and only they have the correct answer.

If you give them your blood type, finger prints, and social security number, then maybe they will give you the answer. <g>

Let me set the record straight once and for all about this most asked and misunderstood question:

It all boils down to bonuses and rebates.

Notice that I said bonuses and not dealer cash.

I can hear your brain already thinking, "What is the difference between bonus money and dealer cash?"

Dealer cash is money that the factory gives to the dealership for every car sold.

For example, they might have $500 dealer cash on a certain make of car for the month of March. So for every car sold of that particular make, the dealer receives $500 extra per car.

This is not to be confused with rebate money that is given to the consumer from the factory. Dealer cash goes to the dealer… and rebates go to the customer.

Now as far as bonus money from the factory goes, that is extra incentive money to entice the dealership to sell more of a certain model of car.

For example a manufacture may put out a bonus to its dealer network that says if they sell 100 XYZ cars (or more) in the month of October they will receive $200 per car.

That means if they sell only 90 cars, they don’t get the bonus. If they sell 100, then that is an extra $20,000 to the dealership.

A bonus can also be in the form of a paid vacation to the dealership owner or whoever he may want to give it to — such as his General Manager or General Sales Manager.

The point is that the bonus is not going to show up on one of the Internet sites… and therefore you are not going to know about it.

Bonuses always run to the end of a month though.

Therefore, common sense says that if a dealership is trying to hit their bonus and they only have a couple more cars to sell in order to get it, they are literally going to give those cars away at cost to make that bonus.

So the answer to the question of when is the best day to purchase a car:
It is always the second to the last day of the month… or the last day of the month.

Even if there is not a bonus happening during the month that you plan to buy a car, the sales people are still trying to make quotas for cars sold and last minute sales goals.

Therefore, it always benefits the buyer to purchase a car at the very end of the month.

Now let’s answer the question:

"What is the best time of year to purchase a car?"
It is always at the end of year because that is when manufacturers have the highest rebates going to the consumer — because manufacturers are trying to move the last bit of inventory to make room for the new year’s makes and models.

That means that you usually start to see really big rebates on the cars in September, October and November.

So if you combine all this knowledge, you’ll save the most money when you purchase a car at the end of September, October or November.

Peter has a lot more interesting information to share. If you’re interested in auto financing, click here.

Or click here to read about Peter’s book on car buying tips and secrets — with lots more information on how to avoid scams when you purchase a car.
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Written by Peter Humleker

What Dealers Won’t Tell You

Dealers would prefer consumers didn’t know two things in particular:

[list:3ijabtm2]1. How they are evaluated.
2. How they are rewarded.[/list:u:3ijabtm2]
1. Evaluations are based on:

[list:3ijabtm2]- Sales goals based on the number of cars sold
– CSI (Customer Satisfaction Index) ratings [/list:u:3ijabtm2]
Sales Goals
Dealerships are given monthly, quarterly, and annual sales goals to meet. This alone can make a difference in the price you receive on a new car. At the end of each month, there will be some dealers that are scrambling to meet their sales goal and some dealers that have blown past their sales goal. With multiple car quotes like the ones on Automotive.com and Edmunds.com , it is much easier to tell which dealers are desperate to meet their sales goal and willing to sell you a car at or below invoice price.

Customer Satisfaction Index (CSI)

After purchasing a car, customers typically receive a letter or a phone call asking for their opinion of their overall experience with a dealership. Did you receive something in the mail after you bought your last new car?? J.D. Power & Associates is a well-known company that frequently conducts this research. J.D. Power & Associates has been known to send out a survey after a car sale that includes a $1 bill to elicit your participation. Low and behold, the results of these surveys determine the direction of dealerships’ business in the future.

Salespeople have even been known to bribe customers in exchange for “excellent” responses on C.S.I. surveys. This tidbit of information may come in handy when you negotiate the price of your next car. However, it isn’t necessary to tell the dealer that you are aware of this information though. Car Buyers that follow our tips typically have a easy car buying experience anyway.

2. Dealers are rewarded based on reaching these goals and good CSI ratings.

The results of these CSI ratings impact which cars a dealership receives, which auctions (used cars) dealers are invited to, the incentives paid to dealers, AND whether a dealership is allowed to expand its business. A low rating on overall CSI can be very costly to a dealership.

Auctions are big money for many dealerships. They buy used cars cheap and sell them for a profit. In July 2007, Chrysler banned 463 dealers from participating in auctions (12.5% of all Chrysler dealerships) as a result of relying too much on used-car sales and not reaching their new car sales goals.

To reward dealerships for reaching their sales goals, manufacturers offer some hefty incentives (manufacturer-to-dealer incentives). These incentives are typically not public knowledge and are not always available on the internet. Edmunds.com provides a list of incentives, but not all of manufacturer-to-dealer or local incentives always appear on this site. These manufacturer-to-dealer incentives can amount to $100,000’s for each dealership. So, dealers keep a pretty tight lid on what they are getting paid by manufacturers.

Therefore, the lowest price quote won’t always come from the same dealer. Each month a different dealer may be desperate to reach their sales goal. If a dealer is desperate to meet a sales goal – your negotiating power will increase. Dealer participation varies with manufacturer – to – dealer incentives. The only way to weed out the dealers that are very motivated to sell a car is to use the multiple car quote approach.

The automotive industry is a volume based business and these incentives can play a major part in the price you receive on your car. “Turn and earn” is the term used to describe how many cars a dealer sells (turn) in a given period and how many vehicles the dealer will receive (earn) for the next period as a result of those sales. High Sales = More Vehicles in the Future. Unfortunately, there is no way to know which dealers are participating in a manufacturer – to – dealer incentive or how close they are to reaching their sales goals. Due to these manufacturer – to – dealer incentives, it is also impossible to know how much a dealer really paid for a vehicle. By using sites like Automotive.com and Edmunds.com to get multiple car quotes, you increase the competition among dealers. Those dealers that are aggressively participating in the manufacturer – to – dealer incentives will compete. And When Dealers Compete You Save!
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Written by tips4carbuying.com

Ways to Buy a Car when Your Financing Falls Through

Almost everybody wants to own a car. For some, it is a necessity, it is something used for going to and from work. Some find it a good investment, it can be considered as a useful and re-saleable piece of property. For others, it is a source of enjoyment and comfort. But whatever its use is, buying a car requires money.

Sometimes we are presented with an unavoidable need to purchase an automobile. But how do you go about this when your finances are in bad shape? Here are 10 ways to buy a car when your dealer financing falls through.

1. If you’ve been dealing with one for a while, get a car loan from your bank or credit union. Even if you’re in a financial bind as of the moment, make sure that you have a decent credit history, otherwise you won’t get that loan.

2. If you really need a car, just for transportation purposes, try getting a second hand car. It would be better if you could buy from someone you know and trust, so you’ll know you’re not buying a piece of junk.

3. You can go and scout around second hand or used car lots, but be very careful. Many of these cars might have problems. Make sure you know how to look at a car, or take someone who knows how to inspect a car. Canvas several dealer lots, look at the cars that you are considering, then negotiate.

4. Try to buy something strictly for utilitarian purposes only. Get a decent looking vehicle which has a good engine and is low on gas consumption. You’ll probably need it only for work, so stay away from anything fancy like sports cars and convertibles as these kinds of cars will cost you more than the value they provide you, as well as cause higher insurance rates.

5. If you’re really desperate for a car, why not join a contest if you have the time. This way, you have a chance to get a car totally for free.

6. Get a company car. Some companies provide their employees with service cars which they can buy from the company eventually. This way, you get to use the car while still paying for it.

7. You can also get good car deals from automobile auctions. These cars are often better in quality than those at used car sales. But here, you have to bid for what you want instead of just paying, so you can’t really negotiate for the price. This is where a lot of the used car dealers get their inventory, and then they mark up the price.

8. Try to avoid major repairs. You may get a really cheap car, but sometimes the repairs will make your finances suffer even more.

9. Japanese and Korean made cars are often cheaper than European and American manufactured ones. They are also more gas efficient, in many cases. That doesn’t mean that the quality suffers. If you’re looking for something just for transportation, these cars will do just fine.

10. Let your friends and relatives know that you are in need of a car, and specify what kind and what you’re price range is. They can ask around for you which is even easier than looking for a car yourself.

Basically, it will be hard for you to acquire a car when experiencing financial difficulty. You have to pay not only for the price of the car, but also for the papers, the repairs and check up’s and the gas. It would be best if you could just wait for your finances to recover before purchasing an automobile, you’ll not only have a car that you can use but you’ll also have to capability to buy a car you’ll enjoy.

Also, whatever you do, if you’re buying a used car, don’t spend your last dollar on it. Chances are it will soon need some repairs. Look at the situation as if transportation costs money, you either spend money on a new car that includes a warranty, or you spend less money on a used car, and then add more for repairs. In the end, it might just come out even. Buying used will help you get the transportation without spending all the money up front.
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Written by Dennis Becker

Top 10 Car Dealer Scams of 2008

We’ve been reporting car buying scams since 1996. This is our 8th annual list of the "Top 10 Car Dealer Scams" you’ll likely encounter, based on our research from 10,000+ visitors daily. We receive complaints and compile this list based on currently running scams at some car dealers. Most dealers are honest, so this Top 10 list deals is about dishonest car dealers. You’re an ostrich with your head buried in the sand if you think there are no bad salespeople out there. We are not picking on car dealers, there are bad furniture salespeople, advertising salespeople, bad priests, bad judges, real estate agents, police, but we cover cars here. These scams are real, they happen to people every day. Some salespeople flame us, claiming these scams are no longer used, If scams are on our list, I can assure you they are still in use. People with bad credit are easy prey, likely to see most of these financing related scams. Read our chapter for people with bad credit: Bad Credit Auto Loans, Tips and Scams To Avoid. The nastiest scams occur in the finance office, where the foolish let down their guard after the sale. Some scams haunt you weeks later, when you though you had a signed contract and find they still have their tentacles in your wallet. Car buyers who see the fewest scams followed our advice, arriving with their own financing, no trade, and The Folder full of research. PLEASE also read our investigative report CarBuyingTips.com Guide To Check Fraud, Escrow Internet Fraud, Auto Fraud, and Nigerian Scams.

New Car Buying Tip: If you hate haggling, try sites such as Cars.com, InvoiceDealers, Yahoo!Autos, Autos.com, Edmunds.com, MyRide.com and CarsDirect because you bypass the commissioned sales people, dealing with the fleet manager or internet sales manager, who usually ends up giving you a better deal, and with no scams.

Funny one liners salespeople like to use on you. Did they take the same sales training course?

"You’re stealing food from my baby’s mouth"
"Everybody pays this fee"
"We’re losing our shirt on this deal"
"The web sites you got the prices from are wrong."
"This car won’t be here tomorrow"
"The bank requires you to buy the extended warranty to get loan approval"
"Do you want the car? What will it take to make you sign today?"
Attention members of the press: You may quote this page provided you give appropriate credit. Click here: Press Information.

Is it a loan or not a loan?
Quite often the "car loan" you’re applying for at the dealer is not really a car loan. They are known in the car business as Retail Installment Sales Contracts, or RISCs. (an appropriate acronym). The dealer signs the RISC with you, then sells it to a bank, or other lender, hopefully at a good markup on the contract. Sometimes they also participate in the interest rate. So the higher APR they charge you, the more money they make. Car dealer financing is not a service they provide for you, it is a product they sell to you, explaining why some scams listed below exist. If they can get you a better APR, fine. But if not, have your own financing ready to fall back on.

Abuse of the Patriot Act?
We are getting complaints from car buyers who have their own car financing from a credit union or an online lender, and the car dealer forces them to sign a credit application anyway, falsely claiming "it’s required by the Patriot Act". There is no verse in the Patriot Act that I can find requiring you fill out a credit application, or allowing dealers to run credit checks on you when you bring your own car financing. Their bogus claim sounds believable, but armed with verbiage of the law, you can stop them. Here’s a link to the Patriot Act: http://www.lifeandliberty.gov/highlights.htm. Ask the car dealer to tell you which exact section of the Patriot Act requires them to make you fill out a credit application when you have your own financing, and collect your Social Security number, and run your credit report. Since they claim it’s required, they should be able to show you the verbiage (HINT: They can’t). The Patriot Act (H.R. 3162), Section 326 "Verification of identification" requires banks and financial institutions to verify your ID before you open an account. Since you are not opening an account with the dealer and they are not a bank, they don’t need you to fill out a credit application or a Patriot Act form. The Patriot Act form I filled out for my mortgage only asks for your loan number and driver’s license number, not your SS#, and it does not say "Credit Application" on it. The Patriot Act specifically calls out driver’s licenses or passports for ID verification. Nothing more. Dealers fool you into filling out the credit app, so then can run your credit through a half dozen local banks in an attempt to lead you into the dealer’s financing so they can get more commission. But why all the lies?

Top 10 Car Dealer Scams:

1) The Financing Fell Through Scam (Spot Delivery Scam)
2) The Straw Purchase Scam
3) The "Forget To Pay Off Your Trade In" Scam (New For 2006)
4) The "Lie To The Customer About Their Credit Score" Scam
5) The "Your Online Lender Bounces Checks" Scam
6) The "Forced Warranty" Scam
7) The "Dealer Prep" Scam (Excessive Fee)
8) "We’ll Payoff Your Loan No Matter How Much You Still Owe!!!"
9) The Previously Wrecked Used Car, Sold "As Is" Scam
10) The Fake Vehicle Escrow Service Scam (New For 2006)

Scam #1: The Financing Fell Through Scam (Spot Delivery Scam)
How the scam works: This is the oldest trick in the scam book, increasing in 2005. Lots of people complain about to us about this scam. You buy a new car, the "LieNance" manager says you got a low APR, hands you the keys, and you drive home. (Not all finance managers are LieNance managers, just the ones who lie, so salespeople stop whining to me about this name I made up for the few bad apples). Two weeks and 500 miles later, the dealer calls you saying "Sorry, you didn’t qualify for that low interest". This is where "subject to financing" clauses on contracts bite you in the butt. Everyone thinks that you sign papers it’s a done deal. The dealer knew exactly what you qualified for before you signed, unless you lied about your income.

They knew your credit score. If it’s above 680, you’ll get a low APR. If it’s below 680, expect a higher APR. Your credit union will print your credit history and approve you in 10 minutes. I got approved instantly online with Capital One Auto Finance. So why the problems with the dealer’s Retail Installment Sales Contract? There usually is no problem, it’s a scam. There is a phrase on most sales contracts stating "subject to loan approval". This Jedi mind trick means: "The deal is not final, even though you signed this contract." They’ll tell you that you must produce an additional $1000 AND your payments would go up. They pull this scam on people with bad credit, because it’s believable. They get the least resistance from this crowd, and figure you’ll just pay up somehow.

How to avoid the scam: DON’T FINANCE AT THE DEALER if you have bad credit. Line up your own financing and compare to dealer’s financing. Read our chapter on How to finance your car or use online car financing or your credit union instead. By using your own financing, you won’t endure monthly payment scams, and the deal will be based on the selling price of the car, not monthly payments. If they start negotiating the car by monthly payment, it’s time to leave. If they keep trying to shift your APR up or down depending on whether you buy a warranty or VIN etching, it’s time to leave. But if you do finance through a car dealer, leave a deposit on your credit card, and do not take delivery of the car until the loan has been approved in writing a few days later. Then you know the lender has approved your loan. The dealer hands you the keys and say it’s all right to drive off right now with the car, but don’t do it. For buyers who lease, dealers sometimes call you a week later and claim they "made a mistake and you need to come back and sign a new contract." WRONG. Your lease is a contract, and the dealer cannot make you undo a contract. Just think, if you tried to get out of a lease, they would come after you in court right?

What to do if this scam happens to you: If you you got a good price on the car, your best solution is to preserve your deal so get your own instant financing online. If you have a credit score over 650, go online right now to Capital One Auto Finance or HSBC Auto Finance and apply online, and get approved within the hour. They will FedEx you a check the next day, you’ll take it to the dealer to pay for your car, now you have a car loan, no "financing fell through!" If your score is below 650, then apply through AutoCreditFinders instead. If the dealer refuses your online check, you should try to get out of that deal. File a complaint with the Better Business Bureau at BBB.com, and file a complaint through your state’s Attorney General Web site. They are all aware of Spot Delivery Scams.

Scam #2:The Straw Purchase Scam
How the scam works: We saw a resurgence of this scam in 2005 and 2006. It typically increases when interest rates go up, and fewer people qualify for loans as lenders tighten their belts. A straw purchase traditionally refers to handgun sales. When one person buys a handgun for a person who is ineligible to own one, it’s called a Straw Purchase, carrying stiff penalties. That’s how the Columbine High School student shooters got their guns. With car buying, the dealer tells you that with your horrible credit score, you can’t qualify for a car loan so you need to get a co-signer, plus they tell you that it will help build your credit again. No problem, Grandma will co-sign the papers for you. The dealer knows your horrific credit score could not possible ever qualify for a loan, even with a co-signer. Grandma is easily duped by the dealer during the paperwork shuffle, tricked into signing as the primary borrower, and 2 weeks later you find the dealer did not process a co-sign loan, the entire loan is in Grandma’s name! This does not help your credit, even though you are paying the monthly payments, because the loan is in grandma’s name, and the car dealer lied to you. State laws are vague but I hear some states like Texas have laws against Straw Purchases on cars.

How To Avoid The Scam: Have both signers there at the same time. You should have both signatures on the same contract, NEVER sign separate contracts. There should be a separate line item for co-signer. A notice to the cosigner is required by the Federal Trade Commission’s Trade Regulation Rule on Credit Practices. The cosigner should ask for a copy of that before they sign it. But another problem also surfaces here. If your credit is so bad that you need a co-signer, then the last thing in the world you should be doing right now is buying a new car. Try a used reliable Honda Accord if you really must buy a car.

Scam #3: "Forget To Pay Off Your Trade In" Scam
How the scam works: We saw an increase in complaints of this scam in 2005. You trade in your old car which you still owe money on, and the dealer is supposed to obtain a payoff figure and payoff the loan for you and add that payoff amount to your new car purchase. But something horrible happens. Two months later your are shocked to hear the new car dealer did not pay off your old car loan as promised. With this scam dealers effectively pay you less for your trade than they promised or steal it altogether. When the bank calls, YOU are responsible for the loan, not the dealer. The car loan is still in your name, until the dealer pays it off. As far as the bank is concerned, they have a loan with YOU, not a dealer and it’s in your name until paid off. Now your credit gets dinged with late payment alerts from your bank. Sue the dealer, the judge will ask to see your contract with the dealer obligating them to pay off your old car loan. Of course there is none.

How to avoid the scam: We always recommend against buying a new car when you still owe money on your current car. Pay it off yourself first, get your title from the bank, THEN trade it in or sell it privately, paying off your loan with sales proceeds. When buying new cars, if you trade in a used car which you still owe money on, make the dealer put in writing that he will pay off your car loan in 10 days, or no deal. Then he is liable in court. You don’t want to end up in court without proof that the dealer was supposed to payoff your trade-in. If the dealer refuses to put these promises in writing, it means they will pull this scam on you, and you need to leave immediately, taking your business to a more reputable dealer. It’s the same with houses and cars, if you call for a payoff figure, you typically have 10 days to pay off that loan or interest will accrue. Most dealers are good, but a dealer who pulls this scam should know better.

Scam #4: The "Lie To The Customer About Their Credit Score" Scam
How the scam works: This is one of my favorite Jedi Mind Tricks. The Lie-nance manager (not all finance managers are Lie-nance managers, most are nice guys) lies to you about your credit score, telling you it was really low, so you now have to pay a much higher car loan interest rate than you thought. This scam is pulled on people with good credit too, as it works well because most people do not know their own credit score. It’s funny, most people know their own cholesterol levels, but they don’t know their credit score. One buyer told us his score was 780 (Excellent) from 3 credit bureaus. At the car dealer four finance people came out after reviewing his loan application with "concerned looks" and a paper that said "credit score" on it with the number 580 circled in red. They stated they could only get him financed at 10.9% APR, not the special 0% interest rate. He pulled out his own credit score with 780 and asked why the dealer was different from his Equifax credit report. Three sales guys scattered, the last guy lied, saying that "credit agencies display better credit scores to consumers than to businesses". Our friend bought his car elsewhere with the low 0% advertised APR.

How To Avoid The Scam: No salesperson should know more about your credit history than you. If they pull this scam, pull out your credit score and put a stop to it. This is why we stress that you should have your financing 100% lined up before you buy your new car, never as an afterthought in the business office. Give them a chance to beat your car loan quote. If they pull any funny business, pay with your bank draft from your lined up car lender, or just leave. Read our chapter on Auto Loans Tips & Scams for tips on getting your credit score and online car loans.

Scam #5: The "Your Online Lender Bounces Checks" Scam
How the scam works: The dealer sees your bank draft from a credit union, or online car finance sites such as Capital One Auto Finance, HSBC Auto Finance or AutoCreditFinders. Not wanting to lose the extra gravy of selling you the car dealer’s RISC financing, they refuse your bank draft, lying to you that "online lenders bounce checks." They will say "their checks always bounce, so we don’t take them". But gee, the dealer is willing to provide you financing, at higher APR. CapitalOne and HSBC are household names and many car buyers already doubt the salesperson’s lies. So they may also tell you "well, they take too long to pay us".

Some salespeople stop at nothing. If your lender was bouncing checks, we’d hear about it via federal investigations. I get daily emails from people who financed with Capital One Auto Finance, HSBC Auto Finance with no problem. I used Capital One Auto Financeto finance my new 2004 Lexus GX470 SUV. Lexus had no problems accepting my CapitalOne check. My friend financed 2 used cars with Capital One Auto Finance. There’s nothing wrong with dealer financing if they can beat your best APR. If not, use your online financing. Unless you qualify for a manufacturer’s 2.9% financing, online banks will beat the local banks used by dealers most of the time, and online lenders often beat credit union rates. If a dealer spews out this scam and refuses your online financing, you the customer need to retain control and refuse to buy from that unethical and slanderous dealer. There are plenty of ethical dealers who eagerly accept online loans without the lies.

How To Avoid The Scam: Tell the finance manager you’re onto their scam, online lenders have been in business for years and fund loans without bouncing checks. Then get up to leave. You should also file a complaint with your state Attorney General’s Office, because we need to make this scam illegal for dealers who force you into higher APR financing. I get emails on this scam often, and if the state attorneys do not know this is going on, they can’t help us consumers. The federal government should wrap this into the Truth In Lending Act. Here’s our link to all 50 Attorney General’s Offices.

Scam #6: The "Forced Warranty" Scam
How the scam works: An old one that’s still in use. You’re ready to sign papers when the LieNance manager says you MUST buy a $2000 extended warranty "because the bank requires it, or you won’t get the loan". Let’s analyze the stupidity factor. The lender is worried about your ability to pay back a $25,000 car loan, so they want you to add another $2000 to the loan to qualify? Please! Many suckers fall for this and the credit life scam. Some dealers who quote monthly payments don’t even tell you that you’re buying a warranty. We get complaints that they tell you "it’s included" to make it sound like it’s free. The warranty is included, but you’re paying for it. It’s amazing how many people tell me they did not see it on the paperwork until they got home! I guess during the 20 minute drive from the car dealer to their house is when they mastered reading. If I live to be 100 I’ll never figure out why they don’t look before they sign. People will spend more time analyzing a $2.00 watermelon in the grocery store than contracts for a $20,000 car! This scam often accompanies the Spot Delivery Scam. Some finance managers start playing games with the APR if you buy the extended warranty, some claim the APR goes up if you don’t buy the warranty. Since when does the interest rate have anything to do with a stupid warranty? They lie to you about this because they know that you know nothing about it. The only thing that determines the APR you will pay is your very own personal FICO credit score. Nothing else whatsoever, not the cost of the car, not buying a warranty.

How to avoid the scam: Have them to put it in writing that the warranty "is required to be approved for your loan", so you can show it to your State Attorney, and the Better Business Bureau. Watch how quick they back off. Read our Tips For Getting A Good Car Loan and avoiding scams. Also read our Extended Warranty Scams & Buying Tips. This scam works on people with bad credit and they also "require" you to buy credit life insurance, or "your APR will go up". One of our visitors sent us her Ford paperwork with extended warranty, credit life, and disability for $3385! Do they want to sell you a car or insurance? If they refuse to remove the extended warranty, remove yourself from that devilship immediately. (Oops, I meant to say dealership). Many dealers sell you mechanical breakdown warranties, which are lame compared to some of the wear and tear warranties offered online. Also, dealers typically charge $500-$700 for Gap Insurance, which you can get online directly from companies like Gapinsurancequotes.com for half the price that car dealers sell it for. So if the dealer tells you the bank requires gap insurance, tell them you will go get it yourself. Most states have laws giving you a Warranty refund in 30 days if you have not used it.

Another way to avoid the scam: DON’T FINANCE AT THE DEALER if you have bad credit. Finance your car online or at a credit union. Now they can’t force you to buy a warranty, you eliminated their excuse to force a warranty down your throat. Credit unions and online lenders don’t force a warranty or credit life on you, so why would a car dealer? Why does APR go up if you don’t buy the dealer’s warranty? Cash flow shell games folks, remove their shells, and no more games.

Don’t fall into the gap!
If you owe more on your car than it is worth, if you lease, or if you put down less than 20%, you should get Gap Coverage from your insurance agent. Most people refer to it commonly as gap insurance". Dealers charge double what you can get it for, they charge $500-$700 when you can get it online directly from the source for less than 1/2 the car dealers price, check out Gap Insurance online. If you owe $20,000 on your car, but it’s only worth $16,000, you’re upside down. You total the car, or it’s stolen, your insurance company gives you $16,000. You must still come up with $4000 to pay off the bank, plus your $500 deductible! Gap coverage protects you against this. The better ones cover up to $500 of your deductible.

Scam #7: The "Dealer Prep" Scam (Excessive Fee)
About This Fee: A better definition here is "Excessive Charge", since this is not really a fraud, nor is it illegal. Most dealers do adequately disclose this fee on their paperwork. Many dealers even admit that its a way for them to recover some of their "losses" when discounting the car off MSRP retail price. But our position is that it is too excessive, and since it is printed permanently on their buyers form, what about the case when you pay full price on the car, now you have to pay $600 more in fees? Salespeople try to convince you that a team of NASA experts performed a 3 day 15,000 point check of your car. Dealer prep "covers their cost" of removing plastic from the seats, vacuuming, adding fluids, and preparing it for sale. Total time: 2 hours max. I’ve been there when picking up my new cars and know how long it really takes. Tons of our visitors report back that they convinced their dealer to drop this fee. MSRP stickers show these costs are covered by the car maker, so why does the dealer still charge you? Here’s the MSRP sticker from my Lexus:

See What I mean? It very clearly states that pre delivery service is included.

The factory pays the dealer for this pre delivery service. The day my Lexus SC300 arrived, it took the dealer 2 hours to peel film and cardboard, install fuses, check the liquids, perform a 10 mile test drive, and hand me the keys. I got out of paying it. If a dealer charges a $600 dealer prep, you’re paying them $300/hour for just 2 hours of work! Do YOU get paid $300 per hour?

How to avoid the fee: Often it’s permanently printed on the buyer’s order to make you think it’s mandatory, but many people make the dealer remove it by adding a credit on the next line. So if you see a $600 dealer prep on the form, have them add a $600 credit. If they won’t budge you need to decide how bad you want that car. I have no problem walking out of a dealer over a $600 fee. Go to the next dealer on your list, and tell them "Here’s the deal. Drop the dealer prep, and the deal is yours". Remember, Dealer Prep is not illegal, but it gives you zero intrinsic value. Either you agree with the fee, or you don’t.

Scam #8: "We’ll Payoff Your Loan OR Lease No Matter How Much You Still Owe!"
How the scam works: These are common ads on the radio and newspaper all the time. They rely on your brain to trick you, as if the obligations of your current lease or loan just magically vanish. You can’t just dump a lease, it’s a contract. By breaking the contract, penalties are stiff, in the thousands. They do get you out of your current lease, but these payoff penalties must be paid to your leasing company to end the contract. The dealer is not doing any favors at all for you, they just want your trade in so they can give you far below market value for it, while selling you a new car at a high profit. Then they resell your trade in for a high price, while you are stuck paying off the debt load of 2 cars. With this scam, if you are upside down on your car loan and you still owe $10,000 for it, the dealer pays off your loan, then you owe that $10,000 to the dealer. This gets financed along with the $15,000 car you are buying, now you are financing 2 cars for $25,000! Did you know that? Your payments are spread out over 60 or 72 months so you don’t notice what just happened. The more months they add to the loan, the lower the payments so you don’t notice. In fact, it’s possible that the payments could be less than your current loan, so you think you’re saving money when you just got shafted! Their ad made you think that trading in a car relieves you of your obligation to that car. It does not! This gets many, many, many people deeper into financial trouble. You are actually taking on double your current debt, when you thought you were dropping one debt for another and buying a new car. They misled you in their ad. Sure they did get you out of the lease or loan, but you are not really out of it. They dipped you out of it and then dipped you right back into it under their umbrella of debt. Very clever trick, but now you’re onto them. Next time you hear those ads, you’ll know what they’re up to. Here’s how ads would be worded if they were truthful:

"We’ll Get You Out Of Your Current Lease, then we’ll roll what you still owe plus penalties into your new purchase, so you can payoff 2 cars!"

How to avoid the scam: If you are in a lease now, it’s best to stay in it until the end. Ride it out baby, you slaughtered the cow, now you have to eat it. If you are upside down on a loan, now is not the time to trade in the car. You need to wait until the car is worth more than what you still owe on it. Try selling it privately. By mixing a trade-in with a new car purchase, you will lose the maximum amount of money possible. Don’t ever think you walked away ahead on a trade in. No one ever has. No one ever will. If you really need to get our of your lease, shift your strategy from terminating a lease early to a strategy of transferring your lease to another buyer via an auto lease trade. Use sites like Swapalease.com and LeaseTrader.com to transfer your car lease.

Scam #9: The Previously Wrecked Used Car, Sold "As Is" Scam.
How the scam works: The dealer tries to sell you a car that has previously been wrecked, only they tell you it’s in great shape, or lie about the wreck, or in some cases, they were honestly unaware the car was wrecked. The car has the federally required Buyers Guide sticker with the words "As Is, No Warranty" on it, which means you are buying this used car and assuming all risks, and cannot return the car, because you agreed to all accept any damages that accompany your "As Is, No Warranty". We sometimes hear from burnt car buyers who were not given this guide as required by Federal law.

Even "Certified Used Cars" can be previous wrecks, as we were surprised to find once after running the VIN on a certified used Lexus. We get emails all the time from people who believe the dealer when they are told the car was never wrecked, then they find out a few weeks later when they bring it in for service, or they run an AutoCheck Vehicle History Report showing that it was wrecked. When the scammed customers confront the dealer, they are reminded that they signed an "AS IS" paper, and have no recourse, because they can’t prove anything. The As Is paper is the best alibi the dealer has to fall back on. You however, have nothing to fall back on.

How to avoid the scam: Never ever buy a used car from a dealer "AS IS" with no warranty. When you buy a used car from a private person you have no choice, it’s "As Is". But from car dealers, try to get at least a 30 day warranty. If the car really is the cream puff they make it out to be, let them back that up with a 3 month warranty, otherwise they are just blowing smoke. You should always run an AutoCheck report on any used car before you buy, and get it inspected by a mechanic. That’s how we found that a Lexus dealer’s Certified Used Lexus had been in a wreck. Always have a mechanic put the car on a lift BEFORE you buy. They can tell you in 30 seconds if the car was wrecked. Many people fail to perform these crucial 2 steps. If you don’t do these steps, then DO NOT buy that car.

Scam #10: The Fake Vehicle Escrow Service Scam
How the scam works: This is actually not a car dealer scam, but it is a huge epidemic. I have been FIGHTING THIS FRAUD FOR YEARS, and it’s a growing eBay scam too, so it warrants inclusion in our list. Sometimes the scammers steal images from a car dealer and pose online as the car dealer. But mostly, these internet scams appear online as the seller of a used car. They place ads on Yahoo Motors, AutoTrader, Craigs List, eBay Auctions, eBay Motors, every known vehicle and motorcycle classifieds site on the internet has been hit. The scam begins with you buying a used car (or other product) online and you see a hot BMW or Mini Cooper, or Camry, or Mercedes, or Harley Davidson whose selling price is much lower than other listings for the same item. So you ask the seller a question. The seller replies with a "Dear Sir" form letter, rarely do they mention your name, it’s all scripted. It usually has poor grammar and spelling too, and the seller claims to be in Europe and cannot keep the car. Via email, they have you outside the eBay safe harbor, or whatever site you are using. He wants you to use a particular 3rd party escrow site, "he’s used them many times already." Unknown to you, he just created that fake escrow site only a few days ago and he’s lying. He is offering to pay shipping for the car! Do you know how much shipping is on a car across the U.S.? It’s usually about $900. That’s a big Red Flag. The "seller" has setup that fake escrow web site that looks better than most bank web sites and is about to steal your money. They convince you to register on the "escrow" site, and you get payment instructions to Western Union or MoneyGram the funds to the escrow company, then you never see your money again. No undo on the Western Union either, once your cash is wired, they can pick it up anywhere in the world in minutes, usually in UK, Spain, Romania, Russia, Netherlands, Europe. There are many twists to this scam, they often trick you by telling you they are signed up for escrow with Yahoo Motors, or eBay or Square Trade, none of which in reality do escrow or collect money for cars. You then receive official looking spoof phishing emails that appear to be from Yahoo, Square Trade, eBay, etc., with instructions on how to pay their "payment agents" via Western Union. The scams have the same goal, to trick you into thinking you are sending thousands of dollars to a trusted escrow company. This scam is so prevalent that from 2003 to 2004, I personally shut down over 600 fake escrow web sites through working with web hosting companies, police, eBay, and victims themselves. These sites pop up at the rate of at least a dozen per day, with thousands of scam listings and auctions running all over the internet at any time. Now that you know what to look for, they are easy to spot.

How to avoid the scam: NEVER EVER use cash wiring services such

Top 10 (New) Car Buying Mistakes

Here are a few of the mistakes that people (unknowingly) make when they buy a car. If you have purchased a car in the past, maybe you’ve made a couple of these mistakes.

1. Making an offer to a salesperson
A common way for car salespeople to get negotiating started is to ask you what monthly payment you can afford. Sounds fair enough – right? Wrong! Monthly payments are loaded with several factors: vehicle price, financing, and your trade-in are just a few of those factors. If you "offer" up the payment that you can afford, you’ve given them your bottomline and they no longer have to work to earn your business. This mistake can cost you thousands of dollars if you haven’t done your homework and do not know what other buyers have paid for the same vehicle.
Read More Negotiating Tips

2. Negotiating the purchase price, trade-in, and financing
With a monthly payment, a salesperson can structure things to appear as if you are getting a great price, financing, or trade-in – which ever appears to be your focus. NEVER negotiate the vehicle price, financing, and a trade-in all at one time. Do your research ahead of time, know what is a competitive price for the vehicle, know what your current vehicle is worth, and shop around for a low interest rate. This is the only way to know whether you are getting the best deal for all factors.

3. “Shopping” less than 5 dealerships
Throughout this site, you’ll find a common theme. COMPETITION = SAVINGS FOR YOU. By "shopping" 5 dealers, you increase the competitiveness of the negotiating and you will receive lower car quotes as a result. "Shopping" does not mean "visiting 5 dealers". "Shopping" means getting quotes from at least 5 dealers. This can be completed right at home on your computer by applying for FREE dealer quotes on websites like Automotive.com and Edmunds.com . You simply fill out a short form and you will receive quotes from up to 4 dealers.
Read More About Car Quotes

4. “Visiting” more than one dealership
Using the internet, you should only need to "visit" 1 dealership. (You will visit 2 dealerships if you test drive the vehicle beforehand and end up purchasing the car at another dealership.) You can receive car quotes from multiple dealers right at your computer and save yourself hours of negotiating inside a dealership.
Read More About Car Quotes

5. “Paying "sticker price" for an extended warranty
As you complete the final paperwork for a new car, the finance manager will offer up several add-ons. One of those add-ons being an Extended Warranty. Unknowingly, many car buyers buy the Extended Warranty without realizing that they could have saved 30-50% by shopping around. The markup on these warranties is considerable. Companies, like Warranty Direct, make shopping for an extended warranty easy by offering free, no obligation quotes right on their website.
Read More About Extended Warranties

6. Buying without price-comparing interest rates
It’s easy to see how many people may fall for this trap. When many car buyers see commercials and advertisements for 2.9%, 3.9%, and 4.9% financing, they think that it is the "best deal". This isn’t always the case. If there is a cash back incentive offered on the same vehicle, you need to run the numbers NO MATTER HOW LOW the rate is. Yes, that’s right – even if you are offered 1.9% financing! Many manufacturers offer considerable cash back incentives and you may save more money by accepting the cash and financing your vehicle through another bank, like <Capital One Auto> or <HSBC Auto Finance>.

If you have bad credit, it is even more important for you to price compare interest rates! Since your credit score is low, you will be paying a higher interest rate. This is a gold-mine for dealerships. If you feel embarrassed about your credit and are afraid to look at your credit report, this is the time to tackle it head on. Whether you can correct blemishes on your credit report or not, you DON’T have to accept a higher interest rate from a dealership. There are companies, like RoadLoans and Harbor Credit Auto Finance , that offer competitive interest rates for people just like you. Price compare – it will save you money.

7. Buying without comparing insurance quotes
Buying a new vehicle or even a used vehicle can and will likely adjust your insurance premium. Whether you have been with an insurance company for 10 years or if this is your first time to get auto insurance, you may be able to lower your annual insurance premium. Insurance is calculated on more than your driving record. Your credit scores, where you live, and features on the vehicle may lower your insurance rates. With the internet, it’s easy to show around. Companies, like Esurance and 21st Century Insurance , offer fast online quotes and compare rates with several other companies as well.
Read More about Insurance

8. Buying a car on impulse
Yes, we get it. Car buying can be fun and exciting. However, it is still likely to be the 2nd largest purchase that you make in your lifetime. If you walk into a dealership and let the salesperson educate you, YOU WILL GET TAKEN FOR A RIDE. It’s just that simple. Do your homework. Research the price of the vehicle and understand the MSRP (sticker price), the invoice price, the holdback; know your credit scores/credit history, shop around for financing, insurance, an extended warranty, and most importantly have several dealers compete for your business!
Read More About Car Buying Steps

9. Buying without having dealers compete for their business
The number one way to overpay for a new vehicle is to buy from the first dealer that comes along. We aren’t suggesting that you spend countless hours driving from dealer to dealer. You can get 4+ quotes with just a couple of clicks of a button. Websites like, Automotive.com and Edmunds.com offer FREE online dealer quotes. Just fill out a short form and they have up to 4 local dealerships send you a quote. The more dealers you include in the competition – the more likely you are to be quoted at or below the invoice price.

10. Financing a vehicle without knowing their credit scores
If you are about to finance a vehicle and are considering a dealer financing offer, you need to know your credit scores and what is on your credit report. Car Buyers with "bad credit" are particularly at risk with this mistake. If you do not know what is on your credit report, you will be taking the Finance Manager’s word for it when they tell you if they are unable to finance your new vehicle or offer you a higher rate due to your credit score. You should not be learning what is on your credit report from the dealer’s Finance Manager. Order your credit reports and scores beforehand, you can correct inaccurate information on the report and shop around for back-up financing before you visit the dealer. There are three credit bureaus (Experian, Equifax, and Transunion). They each maintain their own report on you and their own score for you. A Finance Manager typically pulls 2 of the 3 reports before offering financing. You can order free credit reports annually, BUT they do not include your credit scores. The best deal we found is through FreeCreditReport.com . They offer all three reports and all three scores as a package. Read More About Credit Reports
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Written by tips4carbuying.com

The Used-Car Salesman’s Training Manual

The Used-Car Salesman’s Training Manual: 25 Tricks They Use to Charge You More

There is a reason the words "used-car salesman" conjure up an image of a greasy, no-good trickster. While this isn’t necessarily a fair stereotype — some salespeople are just decent hardworking people — it is a stereotype for a reason: It’s true more often than not. When buying a used car, it can be hard to separate the facts from the sales pitch. Here are a few tricks of the trade to watch out for the next time you are in the market for a used car.

1. Loss-Leader Advertising:
Have you ever see those ads in the paper for cars that are listed for well below what you’d expect to pay? Well, it’s usually because they’re undesirable colors, have no options or generally have problems. But car dealers aren’t trying to sell you these cars, they just use them to lure you in with low prices. Then, once they’ve explained to you why these cars are undesirable, they try to trade you up to a better car that you’ll gladly pay more money for because it seems so much nicer in comparison.

2. Lowballing:
This is an exasperating technique used by salespeople to wear you down. A salesperson will give you an absurdly low quote for a car, then encourage you to shop around to see if you can find a better price. Buyers will visit with many other dealers — which of course won’t be able to match the low price — and will spend hours shopping around before returning to the original dealer. The salesperson then has to confirm the price with their manager, who undoubtedly will say that they can’t sell it for that little. This process can be repeated several times until you’re so exhausted, you’ll just pay what they’re asking to be done with the whole ordeal.

3. "Free" Extras:
By throwing in extras, the salesperson is hoping to help stall negotiations. After all, if you’re getting more thrown in, you’re going to be much less likely to ask for a considerably lower price. The problem is, even with loads of "free" extras, you will likely end up paying more than what a car is worth, and that’s just what the salesperson wants.

4. Making Friends:
Any salesperson worth his or her salt will make a huge effort to find common ground and interests with a potential buyer in an attempt to cultivate a sort of friendship. This helps the customer to identify and relate to the salesperson, which in turns makes it much harder to say "no." After all, you don’t want to let your friend down by not buying from them.

5. "My Wife/Husband/Mother Drives One":
If the car is good enough for the salesperson’s family, then what excuse do you have for it not being good enough for you? This trick is meant to convince you of the value of the car and make you feel guilty for not wanting it. Even if this line is true, it’s likely that the salesperson gets a substantial discount on the car by working for a dealership, making it much more of a bargain for him or her.

6. Limited-Time Offers:
This is one of the most common sales tricks, by far, as commercials and ads play on this heavily. This is meant to put pressure on the customer by creating a sense of urgency that the deal is only available right now. This forces the customer to make up his or her mind on the spot, rather than take the time to shop around and make an informed choice.

7. Hot Property:
No matter what you’re looking into buying, an enterprising salesperson will try to convince you that it’s a highly sought-after car or one that customers have been asking for frequently. This may or may not be true, but you should be wary of claims like this.

8. The Lapdog Trick:
This trick is meant to get the customer to feel obligated to come back to the dealership. When a customer tells the dealer that he or she is going to shop around, the dealer tells the customer to come back and they’ll match the lowest price. That way, instead of buying from the place with the lowest price, you’ll feel like you have to return to the original dealer.

9. Highballing:
If you’re bringing in a trade-in, beware of this trick. Many customers are drawn to dealerships that offer them an overly high amount for their trade-in. And it seems like a great deal at the time, so why not? But rest assured, that you’ll pay for it in the long run in the price of the new vehicle you’re buying.

10. Stalling:
This tactic is meant to tire you out when you’re car shopping and can make it hard for you to shop around, as well as impatient just to get the process over with. Common tactics include salespeople who misplace keys, take a long time to access a trade-in or make lengthy consultations with the manager.

11. Sucking Back:
This method of selling involves offering you less for your trade-in that it is actually worth, then selling you a new car at an unrealistically low price. It is meant to conceal the actual profit from the customer, as he or she will often feel that they have gotten a steal.

12. Bouncing the Trade-In:
This is an especially dirty trick salespeople will use even after you’ve left the lot. Someone will call you before you’ve gotten your new car and tell you that there was an issue with your trade- in, usually something along the lines of it being worth considerably less than what you were originally quoted. If you fall for this trick, the salesperson gets to profit from the difference, and you’ll lose out because of it.

13. Repayment Quotes:
This is a sneaky way to increase the total amount you pay for a car. Dealers will make slight increases to your monthly repayment quotes, which won’t seem like much but will add up to quite a bit after you’ve been paying them for a few years. Make sure to do the math yourself when getting these kinds of quotes to double-check that you’re getting the best deal.

14. Spraying:
You’ll want to do whatever you can to avoid being the victim of this sales method. This is when a salesperson pursues a customer relentlessly until a sale is made. Even if you do end up buying from another dealer, the salesperson will call you and attempt to make you feel bad about how much you paid or that you were disloyal to him or her. Don’t let these kinds of sales tactics get to you; you deserve to get the best deal possible, regardless of who you buy from.

15. Timing:
No matter when you walk into a dealership, it will always be a "lucky" time to buy. Either the salesperson will be trying to meet an end-of-the-month quota or make up for missing one last month, and they just have to sell you the car more cheaply. While there are quotas that dealers have to meet, you have no way of knowing whether this is truth or just a fib to get you to buy.

16. Puppy Dogging:
While it might seem like it’s nice of the salesperson to let you take your new car home overnight, you should realize that sometimes this is a bit of a sales trick. First, the salesperson is hoping you’ll "fall in love" with the car while you have it. Secondly, this is often a ruse accompanied by a lengthy overnight trade-in assessment.

17. Cheap Financing:
Sometimes a dealer will tell you that he or she has reached the bottom of what they can offer you in terms of a deal on the car, but that they can offer you some special financing terms. The dealer will tell you that you will only have to pay a slightly lower amount than the normal rate. Make sure you know what current interest rates are, because otherwise, you can end up paying a higher rate than you should be, even if the salesperson tells you it’s a good deal.

18. Referred by a Friend:
Beware of telling a salesperson you’ve been referred to by a friend. While your friend may in fact have gotten a good deal, you are more likely to be trusting of a salesperson that a friend has recommended, and you may not be on the lookout for tricks and scams.

19. 100-Point Inspection:
Most car dealerships will try to sell you a car based on inspections made by their on-site mechanics, usually a 100-point inspection that sounds particularly comprehensive. They may or may not be trustworthy, but it’s best to be safe and have your own mechanic check out the car before you buy it.

20. Dressing Up:
Watch out for cars that have been cosmetically polished and gussied up to hide flaws. Rust spots, dings and scratches are often hidden under a coat of new paint or wax. Keep a watchful eye out for things that may be cosmetic but can greatly reduce the value of the car.

21. Making Lemonade Out of a Lemon:
Don’t get stuck with a lemon, a car that simply cannot reasonably be fixed. Car dealers will often do just about anything to get you to walk off the lot with this dud of a car, so make sure you’ve done your research and know what kind of cars to avoid before you go shopping.

22. Getting You Behind the Wheel:
If you are serious about buying a car, you will eventually have to take a test drive, but if a salesperson is pushing you into taking a drive, he or she may be trying to make a hard sell. This can work especially well if you have kids with you, who will always be excited to take a test drive and can do a lot of the sales work for the salesperson.

23. Selling Up:
If you’re not specific enough about your sales needs, you may get swindled into purchasing a car that is much more expensive or fancy than you need. After all, this is a salesperson’s job. So be very specific about the year, miles, models and colors you are interested in so you won’t feel motivated to buy something that wasn’t what you really wanted.

24. Leaving Out the Details:
Sometimes it isn’t so much that a salesperson will lie to you directly but that he or she will simply forget to mention some key details that might drive you away from the deal. Of course, you’ll find out eventually, but by then it will be too late. Make sure to ask plenty of questions up front to make sure you’re really getting a bargain and not just getting fleeced.

25. Not Telling You the "Drive-Out Price":
Often dealers will just tell you the actual sale price, not the total cost of the car after fees and taxes. These kind of fees can add up quickly and can make what seemed like a good deal on a car considerably more expensive.

It isn’t fair to say that all salespeople are trying to pull the wool over your eyes and rip you off, but the truth is that some are. After all, their job is to make the sale, and some will do that at any cost. So long as you shop smart and look out for these common sales tactics, you can often avoid getting swindled and get the best deal possible on a car you’ll love driving off the lot.

The Truth About "Factory Invoice" Car Prices

We’ve all heard the term "factory invoice," but what does it really mean? Car dealers would love for you to think that the "factory invoice" price is the price they paid the manufacturer for the car they’re trying to sell you. In reality, that’s probably not the case. From Bankrate.com:

The invoice that most dealers are happy to show you represents a theoretical price the manufacturer would charge the dealer if the dealership sold just that one vehicle. Of course most dealers sell hundreds or thousands of vehicles a year and manufacturers offer all manner of incentives to encourage dealers to sell even more.

There’s no way to know what the dealer incentives are, so how will you know if you got a good deal?

It depends on the vehicle — cars and trucks that are in demand will always carry a lot of dealer profit, while slow-selling vehicles usually come with deep factory discounts and dealer incentives. But as a general rule, you’ve gotten a good deal if you’re final number is within $250 or so of the publicly available invoice price.

Somehow, we just knew they weren’t selling those cars at a loss.
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Written by Meghann Marco