Auto Fraud is more common that you might imagine. Dealers may take advantage of you by selling you a previously wrecked car, hiding defects or car history, disclaiming the warranty, or in financing the vehicle. We offer an initial consultation to see if we can help you. A few things to beware of when purchasing a car:
BEWARE OF YO-YO SALES
A yo-yo sale, or spot delivery, is one of the most widespread abuses in the automobile industry today. A typical yo-yo sale goes something like this: You decide on a car, get financed by the dealer, sign all the paperwork, and drive away believing you now own the car. Then the dealers calls and says the financing was denied and that you must come back and sign a new contract. Of course now the contract has a higher interest rate or requires a larger down payment. If you object, the dealer may say the trade-in car has been sold, threaten to repossess the new car, or report the new car as stolen unless it’s returned. Don’t fall for this trap. If you get yo-yo treatment, seek legal advice before signing a new sales contract. We do not charge a fee for a consultation.
TRUTH ABOUT DEALER FINANCING
Dealers will often tell you that they can provide the best auto financing. However, their offer is not the best deal for which you would qualify because of kickbacks that they receive from certain lenders for arranging financing with you, or by padding the interest rate to make more profit. Basically, the dealer offers you a rate of 8%, and sells the financing to bank for 5%. The dealer keeps the 3% as profit. Before you shop for a car, get pre-qualified for a loan at a credit union or bank. Take the dealer’s financing only after careful comparison and if it offers the best final terms.
DAMAGED CAR FRAUD
About 25 million cars are wrecked each year, including salvage cars. Most of these have structural damage. Insurers may declare these wrecks “totaled”. Still, many end up in auto auctions and re-built, looking like nothing happened. Many of these repairs on superficial and the cars may be unsafe to drive. Get the car inspected by a mechanic and body shop before you buy it. A body shop has expertise to spot structural damage to a car that a mechanic may not. Don’t simply rely on carfax or autocheck, their information is limited and may not show all prior wrecks.
Many dealers will sell you an extended warranty, breakdown insurance, service contracts, etc. All of these are basically the same. You pay for protection and future repairs. However, there a couple of problems that arise. The first is when you take the vehicle to the dealer for repairs under the warranty agreement. The dealer contacts the administrator and tells you that the repair is denied. You may be surprised that the repair is denied, but the warranty is generally written to exclude most repairs, though this be at odds with what the dealer represented to you previously. The second common problem consumers have is when they purchase a warranty while at the dealership, go home and have a change of heart, and call the dealership in an effort to cancel shortly thereafter. Often consumers are told that the sale is final, or there is no refund, or something to that effect. Generally, it is best to place this cancellation in writing and send it via certified mail. If you experience problems with your warranty or service contract, please contact us for help. We will review your situation for free to see if we can help.
Lemon Laundering involves a manufacturer buying a a lemon car back from a consumer, then selling that same car to a new consumer without disclosing its history. Typically, the lemon car has had many attempted, but unsuccessful repairs. The manufacturer will buy the car back, attempt another repair, and sell the car to a dealer disclosing the defect, but claiming that the defect has been corrected. Alternatively, the dealer may sell the car at auction without disclosing all of the prior lemon history and defects.
Odometer fraud is nothing new, the first case was reported in 1923. Fairly early considering the Ford model T first became available in 1908. Currently, the most common type of auto fraud occurs after business fleet leases expire. The vehicles typically have about 30,000 miles per year, but once sold to the wholesaler are rolled back to reflect 10,000- 15,000 miles per year. Because the mileage was not previously reported to the state or carfax, the wholesaler can then report this lower mileage on the title. In 1984, the National Highway Traffic Safety Administration administrator testified that for leased cars, 9 out 10 odometers were altered before being sold to consumers. Rollbacks can appear in cars from dealers, auctions, or even individual seller. One dealer even tried to defend based on custom of the trade in defense of a lawsuit alleging that it rolled the odometer back. Many rollbacks go undiscovered and are only recognized by a mechanic during a repair or check-up. You should be especially careful of cars that are just over 10 years old. These cars have seen an increasing number of rollbacks as they are just outside the 10 year limitation on If you believe that your car has a rolled back odometer, please contact us for help.