Easy tips to buying a used car with confidence
By John Cane and Leah Copeland
633rd Air Base Wing Judge Advocate
LANGLEY AIR FORCE BASE, Va., June 26, 2012 —
Tom Peterson thought he was getting a bargain when he bought a used Mazda RX-7. For the price of $6,000, he was able to leave a used car dealership with a fairly new sports car.
However, within a few days, Tom noticed several problems: the thermostat was missing, the radiator was filled with rust and the car was prone to overheating. In short, what originally looked like the perfect deal turned into a used car dealership horror story. Unfortunately, these stories are common, and instances of auto dealer fraud are on the rise in Virginia.
Scams can be difficult to identify, here are six tips to purchasing a used vehicle while identifying and avoiding auto dealer fraud:
Research the dealership and the vehicle ahead of time.
Always research potential dealerships for reported scams or deceptive dealings. Previous buyers will typically alert other consumers, and an online search should only take a few minutes. They should be cautious when approaching any dealership, but especially vigilant when approaching smaller, lesser known ones.
While researching dealers, buyers should also obtain information about the car they wish to purchase. By using an online database, such as "Kelly Blue Book" or a credit union's car buying database, a buyer can quickly identify the typical price for their vehicle and reduce the risk of being overcharged. They can also use services such as "Carfax" or "Autocheck" to ensure there aren't undisclosed defects that may arise after purchasing the vehicle.
Be skeptical of "as is."
Purchasing a vehicle "as is" means the buyer agree to purchase the vehicle in its current condition, regardless of any defects. If a dealership is selling a used car "as is," they likely bought the car at auction and cannot warranty against defects. Therefore, while buyers may be saving money upfront, they may face significant repair costs later. If a buyer must purchase a car "as is," it should be through a private sale where the individual wouldn't be able to offer them a warranty anyway.
Never agree to additional, unwanted services or warranties.
Extended warranties can be useful, but these warranties aren't required when purchasing a used car. Dealerships sometimes claim extended warranties are mandatory to qualify for a loan, especially when the buyer has a low credit score. Be cautious of statements by car salesman that require buyers to buy additional services that are ordinarily optional, and never agree to additional services or fees unless they believe they are necessary to enjoy the use of the new vehicle.
Beware of GAP Insurance.
Guaranteed Auto Protection (GAP) insurance covers the excess amount on a loan when an insurance company won't cover the entire loan if a buyer were to total their car. However, GAP insurance is completely voluntary and it's illegal for a dealership to force a buyer to purchase GAP insurance.
Ensure documents of title are signed over to the buyer when purchasing a car and keep copies of all signed sales and financing documents.
Buyers should never purchase a car without first reviewing the vehicle's title. Title is essential to maintaining legal ownership of the vehicle, and a dealer will never have a good reason for withholding title documents from a buyer. In some instances, buyers have discovered the dealership didn't have true title and later lost the vehicle to its rightful owner.
Dealerships have also reportedly changed financing terms in a contract by increasing the interest rate or the down payment amount between the purchase and the time the buyer received title documents. If a buyer doesn't agree to the new terms, the dealership may illegally attempt to report the vehicle stolen. Therefore, make sure to properly verify the authenticity of the vehicle's title and watch the dealership sign the title over to the buyer before leaving the dealership with their vehicle. Further, no matter how long it takes, it's extremely important to complete all sales and financing paperwork before leaving the dealership with a vehicle. Buyers shouldn't let a dealer's slow-rolling the paperwork, or pressure them into making bad decisions. Finally, make sure to request copies of all paperwork signed at the dealership and keep copies of all paperwork in case it's needed later.
Minimize disclosing sensitive financial information to car dealerships.
Credit checks can be essential to purchasing a vehicle if a buyer decides to finance through a dealership. However, a salesman has no right to run a credit check if they decide to finance through another lender. By allowing a car dealership to run a credit check, buyers increase the chances that someone may steal their identity or take an additional loan out in their name. They should only divulge sensitive financial information when it is necessary to complete the purchase.
Further, there are very few times when a dealership can offer a buyer a better rate than a credit union or bank. Depending on their credit, interest rates start at 1.99 percent for vehicle loans. The average interest rate for used cars is less than 8 percent. Keep that in mind if the dealership attempts to sell a car at 20 percent interest. Buyers should talk to friends, and more than one lending institution before signing up for a loan.
Don't be afraid to say "No" and to leave the dealership.
Remember, buyers always have the right to say "no" and walk away--or say, "maybe" and walk away. By using this simple tactic, a salesman may drop the price or include incentives to close the deal rather than watch them leave. Regardless of the salesman's pitch, be wary of "today only," specials. The deal will probably still be there when they return after having a night to research whether the deal is a good one. If the vehicle has been sold to someone else before the buyer returns, there are plenty of other vehicles out there.
Buyers can find more tips as well as common dealer ploys, with a simple web search. Between these, and using a wingman, buying a used car need not be a stressful ordeal.