Buying a used car? Here’s what to watch out for.

Quick Notes

– Used car scams tend to target creditworthiness challenged individuals.

– You can protect yourself from used car scams.

Used car scams

Since the dawn of time, used car dealerships have been known for their shady sales tactics. What are these scams and how can you avoid them?

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  1. Yo-Yo sale – Once the buyer has chosen the car they want, they put down a deposit and leave the dealership. The dealership will later call and claim that the buyer will need to place a further deposit to buy the car. Naturally, the buyer fears they will lose their downpayment and not be able to purchase the car. The buyer then struggles to come up with additional funds to make a further down payment. The dealership will then indicate that they are looking for further financing and the yo-yo back and forth may continue several more times. The seller may even indicate that now they can get financing but it will be at a much higher rate, possibly connected to the seller.
  2. Cut and shut – While not targeting those with less creditworthiness the cut and shut often targets those looking for used luxury vehicles and deals. The cut and shut involves welding together the ruins of two cars. The vehicle identification number (VIN) of one of the previously damaged cars is used for this new ‘hybrid’ car. The nature of the welded car is often left out of the sales pitch.
  3. Cars sold with debt owing – A used car scam most often seen in private sales, the car is sold and the title changed hands with funds still owing to the financier or to a mechanic on a mechanic’s lien.
  4. The bait and switch – You find your dream car online, when you arrive at the dealership it’s not there.  But they do make sure to get you test driving a car shortly after arrival. They may continue to find cars for you to test drive hoping something else will interest you. The car that tempted you there never existed.
  5. The virtual car – The virtual car scam is an online advertisement copy of another advertisement.  There really is no car. But the ad placer will take a deposit or full payment if they can convince you to part with it.
  6. Clocking – Clocking is the modification of a car’s mileage. This type of used car scam is very hard to spot as meter tampering is hard to spot in newer cars. If nothing shows for concern in the reported mileage over the years, also look at the general condition of the car. If the car looks older than expected or has experienced more wear that could be considered reasonable for its age, the meter may have been clocked.
  7. Cloning – A stolen vehicle takes the VIN of a similar car that has been written off but hasn’t been reported. The person with the original VIN doesn’t know their car has been cloned until they receive a notice about a traffic violation they never committed on the other side of the country.
  8. Ringed cars – This car scam is similar to cloning except it’s a stolen car assuming the VIN of a written-off car.
  9. Emotional upsell – Purchasing a new car is a huge decision, most buyers become emotionally invested in the process. That they can walk away at any moment tends to be forgotten. Car salesmen may claim to have to get the car from an offsite lot, or are detailing the car you want to see. These may be delay tactics if the car needs repairs or other. The more time spent at the dealership, the buyer gets tired and word down. They may say yes to anything in order to finalize the sale.
  10. Surprise contract provisions – Surprises can show up when the buyer or lessee is ready to finalize details. The hidden issues can relate to low mileage allotments on leases, larger down payments being required, or adding large or excessive ‘administrative fees’.
  11. Hidden damage – Review the Carfax report for any past accident damage or large repairs. It will also show the past state registrations and any notations of flood damage, or indicators that you may want to inspect for flood and water-related damage. The seller is supposed to disclose all known issues with the car, but sometimes this does not happen.
  12. Dirty oil trick – This is a two-man con job carried out in private sales. Two people will engage a seller. While one has the seller distracted, the other pours engine oil in the coolant compartment. The resulting smoke leads the buyers to ask for a further discount. The seller, now having concern for the ability to sell the vehicle with a smoking engine is more likely to engage with the two con men and lowering the price to ensure the sale.

Tips to avoid being scammed

  1. Check the VIN and the CarFax to see the history of the car, repairs and recalls. If there is anything of concern found, ask the dealer or seller before committing to a purchase.
  2. Ensure that the car is being sold free of liens and any other debts. You can check the status with the Department of Motor Vehicles.
  3. Ask for a copy of the service book.
  4. Don’t send money to someone you don’t know.
  5. Don’t pay large amounts of money in cash, for any reason
  6. Inspection – Make sure that all VIN’s matchup on the car. Check for visible damage and leaks.
  7. Check the market value online.
  8. If it’s too good to be true then it probably is.

A deeper dive — Related reading from the 101:

How to buy a dependable used car: Autos101

Avoiding used car scams and finding a dependable used automobile.

Wanna get the best new car price? Shop for the loan, then the ride: Autos101

Don’t be the target of used car financing scams, secure the auto loan before committing to the car.