6 Car Buying Scams To Watch Out For
On Oct. 5, 2002, I saw a 1965 Cadillac De Ville advertised by an eBay seller in Inverness, Fla. The ad said the car had 74,463 miles, eight cylinders, four doors and one owner. The rest of the write-up -- if grammatically flawed -- only made the car seem more perfect:
"... next to flawless orig one owner low milage, never hit garaged kept fly in drive anywhere always serviced by dealer orig tires from 1975 pictures speek for themselves dad cant drive anymore, can be taken to local showes as is , front seat inserts redone in 1980, everything works, windshield just starting to cloud near bottom corner from sun no rust. ...near flawless origional."
And it looked great. The photos in the ad showed a beige car with no rust. In one photo, a little old man in shorts holds onto one of the door handles. A day or so later, I e-mailed the seller. He pretty much repeated what appeared in the ad: His dad bought it new, but at 80-something, he could no longer drive it -- a plausible scenario. The seller said the car needed new brakes and tires but nothing else. It was rust free, he asserted, and it purred.
If the car was everything he said it was, it would be worth at least twice the $3,500 that I paid for it. But I didn’t have the car checked out and I didn’t check out the seller, who at that point had been arrested for assault, reckless driving, contempt of court and failure to pay child support, and had lost at least nine civil lawsuits.
Shame on the seller? Maybe. Shame on me? Definitely.
I eventually sued him and won, but his money was so well sheltered – he didn’t have a job and lived with his parents -- that I never collected a dime. I fell victim to a dishonest car scammer, but if I was smart, it never would have happened. Unfortunately, there are lots of scammers and scams out there. If you know about them, you have a better chance of avoiding them, so here are a few of the most common ones.
The Too-Good-To-Be-True Scam
This one cost me $3,500. In this scam, a buyer sees a great-looking car priced well below market value. The buyer contacts the seller, and if the seller is lucky, the buyer takes the seller at his word and agrees to buy the car “as is.” Another scenario is the buyer learns that the car is far away – maybe even outside the country -- and the seller will ship it after the buyer agrees to wire money for delivery. After the money is transferred and collected, the “seller” is never heard from again and the “buyer” is out the money.
The Overpayment Scam
A legitimate seller advertises a car for sale and is contacted by a buyer who really is a scammer The scammer offers to send a cashier’s check immediately plus additional money to ship the car overseas. The seller is instructed to deposit the check after it arrives and wire the extra money to the company that will ship it. After this is done, the “buyer” disappears and the seller not only loses out on the money he wired, but he has to pay the bank a fee because, of course, the check he deposited bounced.
The Escrow Scam
A lot of people don’t like to send large amounts of money to someone they’ve never met. Makes sense, right? Scammers know this, so they sometimes suggest that buyers use non-existent escrow services which will hold money until both parties are satisfied with the sale. What often happens is a legitimate buyer is told by a scammer that the scammer will ship the car and the buyer can transfer the money to an escrow service. After the “escrow company” receives the money, the buyer can no longer reach the seller and the buyer’s money has been stolen.
The next few scams involve dishonest car dealers.
The Financing-Fell-Through Scam
When you buy a car, the dealership’s finance director tells you that you qualified for a low-interest loan. A couple of weeks later, he calls you with some bad news: You don’t qualify for the low-interest loan after all. This is a lie because with your permission, he can know your credit score in a few minutes, and he knows what type of interest rate to offer. At that point, the finance director may ask for an additional lump sum – maybe $1,000 – and he may inform you that your new interest rate means your monthly payment is higher. This scam works particularly well with people who have low credit scores. They don’t expect to be offered low-interest loans anyway, so they just do whatever the finance director says.
The Credit-Score Scam
A dishonest finance director tells you that your credit score is lower than it really is and that your interest rate will be higher than it really should be. This scam works against people who don’t know their credit scores, even if they happen to be very high. Play it safe and bring a copy of your credit score to the dealership with you in case someone lies to you about your score.
The Dealer-Prep Scam
This happens more often at new car dealerships, where you learn that you must pay anywhere from $600 to $900 for prep work that usually takes about an hour. The work involves removing plastic from the seats and other places, checking fluid levels and vacuuming. Very often the manufacturer does these things, so there is no reason to check fluids or vacuum. Refuse to pay this fee, and 99 times out of 100 the dealer will give in and sell you the car.
The vast majority of car sellers – whether they are private sellers or dealership employees – are not involved in scams. But a lot of people are and you should be aware of the scams that they employ. Keep these scams in mind the next time you are on the market for a new car or you are planning to sell your car. You can report scams to the National Consumers League Fraud Center at Fraud.org. Another good place to learn about scams is at CarBuyingTips.com.