10 Common Questions About Car Dealer Fraud
How do I recognize false advertising? Take any ads with you to the dealer. Check the window sticker and the VIN. The window sticker lists standard features of the car, add-on accessories and an itemization of price. A motorcycle will have “hanger tags” with price information. The sticker should tell you what you are getting. But occasionally, it is false, such as listing phantom airbags, inflated towing capacity, ABS brakes or hidden items. Always keep the sticker with your purchase documents for reference. If the salesman can’t find the vehicle you saw advertised, or tries to bump up the price or terms, you may be the victim of a “bait & switch.”- What is “odometer fraud?” It is illegal to change the odometer or to falsify the odometer disclosure, which should accurately reflect the miles driven since leaving the factory. Before the days of car computer systems, the odometer was a simple mechanical device that was quite easy to tamper with. Nowadays it’s harder to rollback the odometer, but not impossible. More commonly, the dealer will simply misstate the number on the contract and/or odometer forms. Make sure the paperwork matches the dashboard figures.
What are finance terms? Unless you are paying cash for the car, the dealer is selling two separate things: (1) the wheels & steel, and (2) the means to pay for it. Remember that each of these is a separate profit maker for the seller and their profit comes out of your pocket. To avoid “sticker shock” dealers often hide the finance terms. Too many car buyers pay more attention to the color of the vehicle than they do to the interest rate. This is a big mistake. Finance terms include interest, fees, late charges and other costs of credit. Ask what range of interest rates the lender is offering. It may not be enough to ask for the “best rate” you can get. Sometimes the dealer will get a small kickback for getting you to accept a higher interest rate than the bank’s lowest terms. Never sign a contract with finance terms left blank.
What should I focus on more, the amount of the monthly payment or the price? You need to look at both. You must be able to comfortably afford the monthly payments for the entire term of the loan but you must also compare the price to the MSRP. Know what you are actually paying for this car. Dealers like to lower the monthly payment by stretching out the term of the loan. Think about it. If you don’t intend to be driving the car in 6 years, do not enter into a 6 year loan. Avoid this common trick and do your own math.
What about leasing? Early termination charges can be an unpleasant surprise if you find you want to trade-in the car before your lease is up. It is not as simple as a daily car rental. Consumers frequently complain about hidden excess mileage or wear and tear charges, when they get a whopping bill at the end of the lease. Our advice is: Look before you lease! Check out my lease list for the best lease deals.
What is GA's Lemon Law? Georgia's Lemon Law protects new car buyers against defective cars, known as lemons. Georgia's lemon law does not cover used cars. Georgia law says people have a right to a vehicle that is safe and works. If there is a substantial defect, the car maker or dealer must fix (or, if necessary, replace) the car. According to the Georgia Governor’s Office of Consumer Affairs website, a substantial defect is one that makes the car “unreliable or unsafe for ordinary use, or it diminishes the resale value of your vehicle” significantly more than normal. The law covers all new motor vehicles that are: Bought or leased in Georgia or Registered by the original buyer in Georgia.
Can they make me come in later and re-sign documents at a different price? The small print in your contract might say that the deal is “conditional” upon approval by a lender. However, that doesn’t mean you have to agree to new terms they dictate to you, if you are willing to just give the car back then and there. If you left them a trade-in vehicle you may be entitled to get that back as well. But this is where it gets messy. You might be caught in what is known as a “yo-yo.” Don’t be forced into new terms you cannot afford.
What if I bought a car “as is” and find out later it’s a wreck? “As is” used car sales do impose an extra burden of “buyer beware.” You should have an “as is” car checked out by an independent mechanic before you buy. However, that doesn’t mean the dealer can outright lie to you. Even an “as-is” sale can sometimes be rescinded for fraud.
What’s a certified used car? Manufacturers and their dealers increasingly sell cars as “certified”. Programs vary somewhat between manufacturers. The concept is that the manufacturer has trained its dealers to go through a list of items to be checked out, possibly repaired and warranted for resale. A lot of complaints about so-called “certified” cars, are about cars that have in fact not been properly checked out or repaired, or have even been in previous accidents. Certified used cars almost always carry a premium price. When it is not a premium product, there may be fraud involved.
How do I know if I am good deal or being scammed in the advertising? Many new car dealers advertise unusually low interest rates and other special promotions. Ads promising high trade-in allowances and free or low-cost options may help you shop, but finding the best deal requires careful comparisons. Many factors determine whether a special offer provides genuine savings. The interest rate, for example, is only part of the car dealer’s financing package. Terms like the size of the down payment also affect the total financing cost. Once you decide which dealer offers the car and financing you want, read the invoice and the installment contract carefully. Check to see that all the terms of the contract reflect the agreement you made with the dealer. If they don’t, get a written explanation before you sign. Careful shopping will help you decide what car, options, and financing are best for you.
Got questions about false advertising? Email them to me at Adam.goldfein@adamgoldfein.com
