Buying a used car can be a smart and cost-effective way of getting your hands on that dream car youâ€™ve been aching for. But if you donâ€™t do your research, educate yourself and buy smart, you run the risk of getting scammed and losing money. A LOT of money.
Weâ€™ve got your back at Aceable, though! Here are some common used car scams to watch out for.
General tips to protect yourself against scams
The most important thing you can do is to learn about the car you plan on buying. Know what to ask and the answers you want to hear. Donâ€™t be afraid to do some internet stalking on the seller or dealer, either – Google their information and see if there are any scam alerts for them.
Most serious sellers will post multiple pictures of the vehicle and be as thorough as possible with details. Finally, know this: if a car looks too good to be true…it probably is.
Spot Financing (also called the Yo-Yo Scam)
How it works: The seller gives you a financing offer and lets you take the car home. After a few days, they tell you that the financing fell through, and that you need to sign new paperwork. The new offer will be more expensive.
How to avoid it: Read the fine print before you sign ANYTHING. If this situation happens to you, WALK AWAY, even if youâ€™ve already fallen in love with the car. Youâ€™ll find another car, we promise.
â€śJust needs Xâ€ť
How it works: This one occurs quite regularly on Craigslist. The seller will include something about the A/C not working, and that it â€śjust needs a recharge.â€ť Unfortunately, this usually means that the A/C system has a leak, which is a whole different, more expensive beast to take care of. Â
How to avoid it: Be wary of any descriptions about the A/C needing a recharge, being low on refrigerant or just needing Freon.
â€śRan when parkedâ€ť
How it works: This is just another way of saying that the car doesnâ€™t run. The seller will likely hedge by saying that it only needs an alternator or some other part.
How to avoid it: If all thatâ€™s needed to fix a vehicle is one measly part, why isnâ€™t the seller doing it themselves and getting more money from selling of a working car? A more likely answer is that the seller canâ€™t figure out whatâ€™s wrong with the car.
How it works: Nothing matters more than your carâ€™s mileage, which unfortunately means the scammer will tamper with it to make it look like it has less miles.
How to avoid it: Use your own eyes and judgment. Assess the wear and tear of the car by checking the rubber of the brake pedal, steering wheel and seats. You can also do some research yourself by checking the carâ€™s Carfax report, title transfers, and any other service records.
How it works: If the dealer senses that you only care about the monthly payment, theyâ€™ll likely try to inflate the price of the car by asking for a larger down payment, then extending the length of the loan or lease to make the payment fit your requirements.
How to avoid it: Look at the bigger picture outside of the monthly payment: focus on the price of the car, the down payment youâ€™re making the interest rate youâ€™re paying and the term of the loan.
How it works: If a vehicle has been destroyed by a disaster but is returned to drivable condition, itâ€™s called a â€śsalvage title.â€ť These vehicles will be quicker to wear out and are all-around more risky. Scammers know this, so theyâ€™ll try to hide the history of the car and â€śwashâ€ť it.
How to avoid it: Do your research beforehand:
- Check the Carfax report
- Check for a history of title transfers
- Get a vehicle history report from a reputable source
The Fake Escrow Account
How it works: The seller asks you to deposit funds in an escrow account or wire transfer a deposit, then walks away.
How to avoid it: Be wary of any â€śsob storiesâ€ť for why the seller needs money. If the seller refuses to use an established and verified escrow service, thatâ€™s a red flag!
â€śOne Day Onlyâ€ť
How it works: The dealer tells you that the price is good only for one day.
How to avoid it: Donâ€™t believe the hype. This is a sales tactic meant to speed up your decision-making and make you think that youâ€™re running out of time for getting this one-time only deal. Youâ€™ll likely find a similar or better deal elsewhere.
How it works: This is usually a common practice of dealers who donâ€™t want to register for a dealer license. Theyâ€™ll alter the bill of sale so that their name isnâ€™t identified as the â€śseller,â€ť thus keeping them from being noticed.
How to avoid it: While curbstoning doesnâ€™t really affect you as a consumer, it is a pretty shady practice. Check that the sellerâ€™s drivers license matches the name on the car title.
The Negative Equity
How it works: If you have a negative equity with your current car, the dealer may suggest rolling the money you owe on your old car into the new contract. While this may sound like a good deal, youâ€™ll actually be paying for two cars.
How to avoid it: Donâ€™t believe a dealer if they tell you theyâ€™ll pay off your trade.