Car Dealer Fraud

There are many types of car dealer fraud used in selling cars to the public. A dealer may misrepresent the actual price of a car in advertising. A dealer may sell a car that was a prior rental without informing the buyer. A common fraud is selling a car that has been in an accident with significant damage and not informing the buyer. The car may have significant defects in the engine, transmission or suspension which the dealer hides from the customer. Worse, yet, a rebuilt wreck may be unsae to drive. A common dealer trick is to erase the error codes from the on board computer or ECM. The codes will come back within a few days of driving the vehicle. The vehicle may have improperly installed airbags which is a significant safety concern. A newer car may have been sold before, but now is being sold as new. the dealer may misrepresent your credit standing in order to get financing on the car.

You may find that you bought a Certified Used Car, but that it has significant mechanical problems. The fact that the car is certified with false or misleading information may be helpful in getting your money back. Also, if the car came with a warranty it may help in getting a refund if it has significant mechanical problems.

The bottom line is that you need to be very careful when buying a used car. You should always check the car history reports such as Carfax prior to signing a contract for a used car. But, be aware, that Car Fax may not be complete. The dealer is mandated to let you have an independent mechanic inspect the car before buying. We realize that very few buyers insist on getting the car inspected but there are many buyers out there stuck with a problematic car that wished they had gotten it inspected. If the dealer refuses to let you get an inspection, just walk away.

You may think that if you buy an extended warranty for the car, you don’t have to worry about what condition it is in. The extended warranty company may not honor repairs on existing defects from the time of purchase. If you are considering buying an extended warranty, you should research the warranty company to make sure it has a good reputation for honoring the warranty. You also should look carefully at the terms of the warranty. Read the fine print. Sometimes the dealer doesn’t provide detailed terms for an extended warranty. That is an indication that something is wrong. Buyers often pay too much for extended warranties. If you insist on buying one, negotiate a lower price than the dealer originally offers.

Buyers who have poor credit ratings often pay too much for cars out of desperation to get some transportation. If you can get a loan ahead of time instead of with the dealer it may help you in getting a better price and lower interest rate. There are some dealers that aren’t interested in selling their cars for cash. You may have to look carefully to find a dealer that will offer a fair price for a car. You can get an estimate of a car’s value online at Kelly Blue Book or Edmunds.

Always be practical with respect to the monthly payments you will have to make for a car with the idea of paying the car off as fast as possible. If you are short on money one month you could get your car repossessed. Look at the sticker price and compare it to the actual price you will pay after financing. These figures should be in the box at the top of the contract. Based on a promise of financing, some people pay $15,000 for a used car with significant mileage that is really worth $8,000. They would have been better off buying a more economical new car for $15,000.

Treat buying a used car as a serious process and look carefully at all of the details of the deal. Don’t be swept up with the dealer’s positive spin on the deal. He is there to make a profit and you are there to look out for your own interests. The Edmunds site has an excellent article titled Confessions of a Finance Manager ( This article should be mandatory reading for anyone buying a car.

If you find that you bought a car and there was fraud committed by the dealer , seek legal advice. Our firm does not charge for a consultation and when we accept a case, it is on contingency basis, meaning that we must get our fees from the defendants in the case.

For further information regarding Auto Dealer Fraud, visit our "Frequently Asked Questions" page.