Below is a list of the most common dealership scams.
Dangerous and Rebuilt-Wrecked Vehicle Fraud
Dangerous and damaged car fraud is where a car dealer sells a dangerous rebuilt-wrecked used car or truck without disclosing the vehicle's crash history to the consumer and telling the truth about the vehicle's history. The vehicle may have been in a serious accident, in a flood, or have an open recall that has not been addressed. Dangerous cars may look and drive great but are no longer crashworthy and will not do what they were originally designed to do in the event of an accident. They may have a bent and weakened frame, be missing airbags or worse. These dangerous vehicles not only pose a danger to the unsuspecting driver but to everyone else on the road. No one would pay good money for a car if they knew the truth that it had once been totaled in a car accident.
Formal Rental Car
We all know what people do to rental cars. The fact that a car was a formal rental car is a material fact that you deserve to know when making a car buying decision. Car dealers will hide this material fact because they know you will not want to buy the car.
After spending hours at the dealership you are hurried and rushed through signing a stack of paperwork that is not explained you are told your loan was approved and you are given what you think is the final loan approval. You drive away believing you own the car. Then the dealer calls you back and says there was a problem with the financing or that the financing was denied and you need to come back and sign a new contract. The new loan is at a higher interest rate or different terms or now you need a bigger down payment. The dealer may tell you to lie to the financing company about your income, employment history, or about the car itself. They tell you they have already sold your trade-in, may threaten to repossess the car you just purchased or call the police and report the car as stolen unless the car is returned or you agree to the new loan terms.
Spot Delivery Fraud
"Spot Delivery" Fraud is a variation of Yo-Yo fraud. Spot Delivery Fraud occurs when the car dealer tells you that although your car loan hasn't been approved by the finance company, you can drive the car home. Then the dealer will call and tell you that your loan was not approved on the same terms you agreed to, your trade-in has already been sold and you must now accept a higher interest rate loan or bring the car back and pay penalties for your use of the car.
High-pressure sales tactics
High-pressure sales tactics are designed to short-circuit consumer choice using sales psychology, trickery, and deceit. They are employed to obtain agreement to terribly unfair terms for which a consumer would not otherwise agree. These tactics include employing sales psychology strategies of misrepresentation, half-truths, peer pressure, manipulation, intimidation, coercion, manufactured delays and process, and limiting the time for the consumer to consider a decision and its consequences.
Failure to Provide a Title
It is a violation of Missouri law to fail to provide a valid title at the time of the sale of a motor vehicle.
Dealers will tell you that they can provide you with the best financing. What they fail to tell you is that they put in a higher interest loan than you are entitled to receive based upon your credit score because they receive a kickback from the lender to put you in a higher interest loan. Their financing "deal" is not the best deal for you. By padding the interest rate, by putting you in a higher interest rate loan, they make more money on the deal and you end up paying more in financing costs in the long run.
Hiding Negative Equity
Many times the car your trading in is worth less than what is owed. This difference is called "negative equity," and will be always added to your new car loan. Watch out for dealers that offer more for your car than it is worth as they are adding the debt you own on the old car to the price of the new car and hiding the negative equity.
Failure to Pay-Off Existing Loans
This is when a car dealer breaks its promise to pay off the loan on your trade-in. This may hurt your credit rating and cause you to be harassed by the finance company or even make you liable for taxes on the vehicle after the trade-in.
This involved the dealer representing that you must add-on items to the sale because it is required for financing. These include things like theft-etching, rust proofing, upholstery protection, GAP insurance, extended service contracts, lifetime oil changes, life insurance, or job loss protection.
Failure to purchase service warranty or GAP insurance
You pay good money for a service warranty or GAP insurance and then the car dealer simply pockets the money you paid for these products and does not obtain the warranty or insurance. Many times the consumer does not find out until well after the sale.
Missouri law requires that car dealers and finance companies follow a very specific process before repossessing a motor vehicle. Many buy-here-pay-here car lots operate as repossession mills selling and then illegally repossessing the same car over and over many times harvesting the consumer's down-payment.
Misrepresenting the true mileage of a motor vehicle is fraudulent and illegal.