How to Avoid Car Dealership Scams

There are many elements involved in purchasing a car, which is why car dealership scams are so common: price, interest, fees, leasing, buying, and value just to name a few. Below are some steps you can take to avoid being scammed and to avoid paying more than you have to for a car.

Do Research Before You Go to a Car Dealership
To avoid paying more than the reasonable value of a car, learn about the type of car you would like to purchase. When purchasing a new car, it’s easy to learn how much the car is worth and how much the car is generally being sold for in your area. Also, for new cars, some online research will also tell you how much upgrades are worth. Learning this information in advance will give you an advantage when negotiating price. Here, you will know if the price that is being offered is a reasonable price.

When purchasing a used car, learning the value of the car isn’t as easy, but there are resources online that will allow you to learn, generally, the value of a used car based on how much the car has been used. Certified inspections and warranties are also valuable when it comes to used cars, as you can never know, even based on a test drive or looking under the hood, if the car has some type of mechanical issue that you are not expecting.

Get Pre-Approved for a Car Loan
Car dealerships often make a significant amount of profit on charging an interest rate that is higher than what you may qualify for. Before you go to a dealership, you can get pre-approved for an auto loan by a bank based on your budget. If you are pre-approved for an auto loan, the car dealership cannot charge you more in interest than you would qualify for at a bank. Also, note that some banks may charge lower interest rates for auto loans than other banks. Either way, if you get pre-approved for an auto loan by a bank, the car dealership will not be able to apply an exorbitant interest rate, which the car dealership can make money on.

To avoid high interest scams, it is also good to know what your credit score is in advance, as your credit score will likely impact the interest rate that will be applied. Generally, whether your credit score is high or low will impact the amount of interest on a loan you may need to pay.

Do Not Negotiate Based on Monthly Payments
Negotiating based on monthly payments is probably one of the most common car dealership scams. Though many car manufacturers and dealerships will advertise the price of a car, most often a car salesperson’s first question will NOT be, “How much do you want to spend on a car?” The salesperson’s first question will likely be, “What can you afford in terms of a monthly payment?” Just because you can afford to pay $400 per month, for example, does not mean that the car you want to purchase is worth $400 a month.

Here, a salesperson will want to move a car purchase along as quickly as possible based on your monthly payment budget. However, take the time to calculate your monthly payment over the term. For example, if you pay $400 each month for five years (60 months), that means you will be paying $24,000 for the car. A quick calculation like this will allow you to determine if the car is worth the total cost, or if you will be paying more than what you want to spend or more than the advertised cost.

Be Ready to Walk Away
Car salespeople have a reputation for being aggressive, and this can make it hard to avoid a deal that you will later regret. Before you go to a car dealership, make a promise to yourself (or someone else) that if the deal doesn’t seem quite right at any point or if you are not 100% comfortable and satisfied, you will walk away from the purchase.

Buying a car can be a big deal, a commitment of many years, and people are often anxious about going to a dealership. Car salespeople are also really good at making the process hard to stop once you start a conversation with a salesperson at a dealership. However, at any time prior to signing documents, you can just walk away from the transaction if things feel weird, if you feel pressured, or if you feel like something isn’t right.

Compare Prices at a Different Dealership
Another way to ensure that you are not getting scammed by a car dealership is to shop around and let multiple dealerships compete for your business. Presuming you know the precise car you want to purchase, getting offers from multiple dealerships on the same year, make, and model of a car could prove to be valuable, as some dealerships may be more competitive, or you may see a drastic price difference between dealerships, thereby avoiding a potential scam.


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