Warning! Look out for these red flags when buying a car
There are many things you should watch out for when buying a car. Apart from the jargon you may need to know and use, you have to beware of the many dealership scams and know what to offer the buyer as a price.
Here's a quick car buying guide...
1. The VIN# window etching scam
Basically a dealer will charge you $300-$900 for window etching and they
will tell you that you have to pay the money to get the loan because the
banks insists on it.
2. The Financing Scam
Every new purchase has a clause in the contract that usually states that
the deal is "subject to loan approval." This gives the dealer's
finance manager a loop hole to get more money from you.
3. The Credit Score Scam
Is a ridiculous scam when the finance manager tells you that your credit
score is lower than it really is so that they can get you for higher interest
rates.
4. The Forced Warranty Scam
This is when the finance manager tells you that you are not eligible for
the loan by the bank unless you pay an extra $2000 for a 2-3 year extended
warranty.
5. The Dealer Prep Scam
Basically the dealer will tell you have to an extra $500 to cover the
labor costs of the dealership's 5-point inspection. You are paying for
the time it took for the dealership to make sure that the car wouldn't
explode on you in the first week of owning it.
6. The Dealer Mark up Scam
An unnecessary fee that the dealer charges for no reason other than greed!
This fee can be seen on the orange sticker marked on the Manufacturer's
Suggested Retail Price (MSRP).
7. The Payoff Your Loan Scam
When the dealer offers to pay off the balance of your current car loan
no matter how much money you still owe. It is a common sales strategy.
8. The Used Car Sold "As Is" Scam
This is when a dealership will sell you a car that has been in a car wreck,
but they will tell you that the car has been completely renovated.
9. The Bounced Check Scam
This is when you walk into a dealership with a bank draft and the dealership
charges that they can't accept your draft because your bank bounces checks
often so they now refuse checks from that bank.
10. The Forced Credit Application
If you are hoping to pay for a car outright or in cash with a bank draft
or check that is what you should do. Some dealerships will not let you
and get you into paying monthly terms for more money.
To make a fair offer to a dealership, you need to learn to read a factory's
invoice.
You can expect to find the following on the factory invoice:
. Car's base model
. All options packages
. Destination charge
. Holdback and dealer flooring help
NB: DO NOT confuse the invoice with the MRSP window sticker because they
are not the same.
Do dealers have to show the invoice to you? No! That's what gives them
leverage over you.
You should know that there are hidden factory incentives in the invoice
price that lowers the cost of the car for the dealership. It's no bargain
for you if they offer you one dollar over the invoice.