Top 10 Dealership Scams

by / ⠀Blog / October 13, 2022
car dealership scams

There are lots of great people out there ready to help you out with your car buying process, but that doesn’t mean there aren’t also plenty of people out there looking to take advantage of unsuspecting buyers and utilize dealership scams.

From “bait and switch” offers to phantom extended warranties, there are all sorts of scams that can cost you time, money, and stress. In this blog post, we’ll run through 9 of the most common dealership scams so you can be prepared the next time you’re in the market for a new vehicle.

1. The Extended Warranty Scam

An extended warranty is basically insurance for your new car; if something goes wrong with it, you’re covered. Many dealerships will try to sell you an extended warranty when you’re buying a new car, often saying it’s required by the manufacturer or offering it at a discount if you buy it right then and there.

In reality, however, dealership extended warranties are almost always a waste of money since most new cars come with a factory warranty that lasts for several years anyway. And if something does go wrong with your car outside of the warranty period, you can invest in a third-party warranty to protect your car. Just be sure to read Endurance Warranty reviews to make sure you know what you’re looking for.

2. The Bait and Switch

This is perhaps the oldest trick in the car salesman playbook. You walk into a dealership intending to buy a particular car, only to be told that it’s just been sold, but they have another car on the lot that’s very similar and would be perfect for you.

The bait-and-switch is an attempt to get you to buy a more expensive car than you had originally intended. If you find yourself being steered towards a different car than the one you came in to buy, politely excuse yourself and walk away.

3. The Low Ball Offer

When you’re trading in your old car as part of the deal for your new one, the dealership will usually give you a lowball offer—that is, an offer that’s significantly lower than what your car is actually worth. They do this in the hopes that you won’t bother doing your research and will simply accept their offer.

Don’t fall for it! Use sites like Kelley Blue Book or Edmunds to get an estimate of what your car is really worth before heading to the dealership so you know what kind of offer to expect.

4. The Phantom Extended Warranty Scam

This one is similar to the regular extended warranty scam. Except here, instead of trying to sell you an actual extended warranty, the dealership will add the cost of an imaginary warranty into your financing agreement without telling you.

Once again, unless you’re buying a used car without a factory warranty, there’s no need to pay for an extended warranty—so be sure to read over your financing agreement carefully before signing anything.

5. The Yo-Yo Financing Scam

This is yet another financing-related trick. With this one, the dealership will tell you that you’ve been approved for a loan at a certain interest rate. But then, after you’ve already taken delivery of the car, they’ll call you back. Then say there’s been a mistake. The interest rate on your loan is actually higher than they originally told you.

To fix the problem, they say, you’ll need to bring the car back and sign a new financing agreement at a higher rate. If this happens to you, don’t fall for it! Insist on speaking to a manager. If they can’t give you a satisfactory explanation, threaten to take your business elsewhere.

6. The False Promise Trade-In Scam

This one is another common bait-and-switch tactic. With this one, the dealership will tell you they’re willing to give you a great trade-in value for your old car. But when it comes time to sign the paperwork, they’ll lowball you on the trade-in value, saying the offer was only good if you bought a new car from them.

This is yet another reason why it’s so important to get an estimate of your trade-in value before heading to the dealership. That way, you’ll know exactly how much your old car is worth and won’t be taken advantage of when it comes time to trade it in.

7. The High-Pressure Sale Scam

This one is a common tactic used by pushy salespeople to try to get you to buy a car before you’re ready. They’ll use a variety of high-pressure tactics. These include saying the car you want is about to be sold to someone else. Or that the price is going up if you don’t buy it right then and there. Don’t fall for it! If you’re not ready to buy, simply say so and walk away. The salesperson may try to tell you that you won’t get a better deal anywhere else. But that’s not true.

8. The Credit Repair Scam

This scam is a trap that’s often used on people with bad credit. The dealership will run your credit report and tell you that you won’t be able to get financing unless you pay for costly credit repair services. They may even offer to do the repairs themselves for an additional fee.

9. The Add-Ons Scam

This is another common tactic used to inflate the cost of a car. With this one, the dealership will try to sell you a bunch of unnecessary add-ons. These include extended warranties, paint protection plans, and gap insurance. Often they say the lender requires these add-ons. Or that they’ll lower your interest rate if you buy them.

Buying a new car should be an exciting experience. But all too often, unscrupulous dealerships turn it into a stressful nightmare by trying to scam unsuspecting buyers out of their hard-earned money. By being aware of these common scams ahead of time, you can arm yourself with knowledge and avoid becoming a victim yourself.

Remember: knowledge is power! Now that you know about some of the most common dealership scams out there, you can enter into negotiations with confidence. And hopefully, drive away in your new dream car without them taking you for a ride.

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Editorial Team