How to Buy a Used Car While Avoiding Scams

Buying a used car can be a very wise decision. A high-quality used car doesn’t have the same depreciation rate as a new car. You may be able to afford a better car if you choose to buy used instead of new, but there are also some risks involved with buying a car that’s not new.

Our members often ask us how to buy a used car. They want to make sure they avoid scams and get the best possible car (and price) for their money. Here are some tips that can help you.

Be Aware of the Most Common Scams

First, let’s review some of the most common used car scams so you know the ways that a seller or dealer might try to take advantage of you.

Odometer fraud occurs when someone changes the mileage to make it appear that a car has less wear and tear than it does. Digital odometers don’t really protect against this type of fraud since scammers have figured out ways to alter the mileage anyway.
Curbstone fraud occurs when someone pretends not to be a dealer to get around state and national regulations that govern the sale of used cars. They may do it because there’s a problem with the car.
Misdirection or outright lying about a problem is another common scam. For example, if someone tells you that a car “just needs Freon,” that is most likely code for “the air conditioner is broken.” Adding Freon is an easy fix and there’s no excuse for the seller not to do it.
Title washing is a common scam that happens when a car has a salvage title that indicates it has been seriously damaged in some way. Cars that are damaged in floods, fires or accidents require a salvage title that lets any prospective owners get a clear picture of the car’s condition. Some unscrupulous sellers may register a car in a different state where the DMV agents may issue a clean title with no indication of the car’s history.
The phrase, “It ran when parked” is almost a punchline in the world of used cars. If someone says this to you, it usually means that the car doesn’t run, and they don’t know why. They’re hoping that you’ll assume they’re telling the truth and buy the car.
Fake certifications are also an issue. People are accustomed to pay more for a car that has a “Certified Pre-Owned” sticker on it. Some sketchy dealers will make up phony certifications to put on cars.
Interest rate and price scams are common as well. Dealers may scare you into applying for a loan through them by implying you’ll get a higher rate from a bank or credit union based on your credit score. They may also leave you waiting as they discuss your deal with a manager in the hope of wearing you down.
Finally, you should be wary of fake escrow accounts. In this scam, the buyer puts the money into escrow and the seller, car and money all vanish.

There are other potential scams, but these are the most common.

How to Avoid Being Scammed

Now, let’s talk about some common-sense steps you can take to avoid being scammed as you shop for a used car.

First, research dealerships in your area. Know who has a franchise to sell certified, pre-owned cars and who doesn’t. You should do research on the car you want and know which dealerships sell them. At Addition Financial, we partner with many great dealerships across Central Florida that can help get you behind the wheel of a new or used car. You can find a list of these partners here.

Speaking of research, if you plan on trading in your current vehicle make sure you know its Kelley Blue Book value. It’s not a good idea to rely on anybody else to tell you.

You should also know your credit score before heading to a dealership. That way, you can’t be scared into thinking you won’t be able to get a bank loan. You’ll be in the best possible position if you go in with a car loan pre-approval from your bank or credit union. Then, you can negotiate as a cash buyer.

Before you test drive any vehicle, ask questions. You should be able to review the information about any car. Be on the lookout for sketchy statements (like the example about Freon in the previous section). Ask follow-up questions and be as persistent as possible.

Always test drive a vehicle before buying it and make sure to check that everything works. You want a car that’s in good shape. Don’t accept shady explanations if something doesn’t function.

Always run a CarFax report using the VIN of the vehicle you’re considering buying. Even if the seller presents you with a report, you should run another report for yourself. While it’s not common for people to present phony reports, you want to be sure that you’re getting accurate information.

Before you move forward with a purchase, ask to see the title of the car and make sure that it matches the name of the person or company you’re negotiating with. Curbstone fraud always involves a discrepancy in ownership.

Finally, make sure you conduct all business in person and through reputable financial institutions. Get everything in writing. Sometimes, used car dealers will promise service and not deliver on it. If you have it in writing, they won’t be able to renege.

Buying a used car doesn’t need to be scary. Armed with the information we’ve provided here, you’ll be able to avoid scams and get the best possible vehicle for your money.

To learn about Addition Financial’s flexible car loan options for members, please click here.