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How to identify common car dealer scams

Buying a new car is often stressful, but it becomes even more so when dealerships behave fraudulently. Accordingly, consumers should be aware of common scams that can accompany the sales process.

The following schemes can cost you a significant amount of money and lead to frustrating outcomes.

The bait and switch

The “bait and switch” tactic entails advertising a vehicle for an unbelievably low price, and then claiming the car is no longer available when a customer asks about it. The dealer will then recommend another, more expensive option. You can avoid this scam by confirming the availability and price of the car in advance.

Hidden fees

Dealerships frequently include hidden fees in the purchase price of the car. These fees may relate to documentation, delivery or vehicle add-ons. Additionally, most consumers do not become privy to extra fees until deep in the negotiation process. When purchasing a vehicle, always ask for a breakdown of all costs associated with the purchase, including taxes, fees and extras.

Extended warranty deception

Another common scam involves extended warranties. Salespeople may pressure you into buying an extended warranty by claiming it is necessary to maintain your vehicle’s maintenance and repair agreement. Before signing the contract, do some research on the manufacturer’s warranty coverage to confirm the information provided by the dealer.

The yo-yo financing trick

This deceptive tactic involves “yo-yoing” you back to the dealership after you have already taken your new car home. The dealer will claim that your financing fell through and that you need to sign a new contract, usually with less favorable terms and interest rates. In this case, arriving at the dealer with independent financing in place can spare you lots of headaches.

As reported by CNBC, car buyers purchased approximately 13.9 million new vehicles in 2022. While many of these buyers likely had positive experiences, consumers must be aware of common dealership frauds so they can take the proper action should they occur.