Used Car Scams

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Buying a used car has many benefits: reduced cost, less chance of absorbing the majority of the depreciation, a proven track record, etc. However, there can be significant drawbacks as well. These can include hidden damage, “cleared” trouble codes and higher interest rates. Fortunately, learning what to look for and what to avoid is fairly simple.

One of the best used vehicle buying tools to surface recently is the vehicle history report. Reports such as these will typically show any major accidents, recalls, major repairs, etc., and can help uncover anything a dealer or private party is trying to “hide” from potential buyers. The cost of one of these reports (typically under $20) can save you thousands of dollars in repairs bills and other hassles down the road.

Another useful tool is to check the vehicle for any “trouble codes”. Trouble codes are the computer's way of communicating to the vehicle owner or service technician any current and/or potential problems. Use a Code Reader or Scan Tool to retrieve these codes. Once retrieved, you can use these codes as a guide review any areas of concern that the computer has logged.

You can also have a qualified service technician "look the vehicle over" to ensure there are no major areas of concern. Again, a small investment up front can save thousands of dollars in the long run. Once you are satisfied with the issues described above, it’s time to move on to the next step: physical inspection of the vehicle.

Physical signs to look for

Carefully inspect the vehicle for any signs of repair. Although a common magnet may tell you if there is body filler (commonly referred to as “Bondo" due to the popularity of the brand) underneath the paint, this has become increasingly inaccurate due to the materials being used in today’s automobiles. With the use of non-magnetic materials such as aluminum and composites on the rise, one of the best ways to check for filler is to use a stud sensor. Stud sensors work because they measure the density of a given material. Once the density changes, the lights on the sensor illuminate. The good news is that a stud sensor will work on both magnetic and non-magnetic surfaces, and can be purchased from most hardware stores.

Buying a “Clone"

This involves someone switching the license and Vehicle Identification Number (VIN) plates from a clear vehicle with those of a stolen, flood damaged, salvage titled, or other questionable vehicle. Check the VIN plate for any signs of tampering or discoloration. Check the engine compartment for any obvious signs of damage to inner fenders, replaced engine, etc. If you suspect anything out of the ordinary, you can either get the vehicle inspected by the police or Highway Patrol, or just move on to another vehicle.

Flood vehicles

Obviously, vehicles from areas prone to flooding, such as Louisiana, Mississippi, Texas, etc., have a much higher probability of being permanently damaged by water than vehicles that come from areas where flooding is infrequent or non-existent. Unfortunately, many vehicles damaged by flood may not show obvious physical signs of damage. Typically, a history report can help in this area, however you still want to closely inspect the vehicle.

Areas to check include:

• Under the dash – search for any mud and/or rust accumulation.
• Interior - Any strange smells, discoloration of carpet, seats, etc.
• Under the hood, in the door jambs, etc. – search for unusual signs of rust, water staining, etc.

Once you are satisfied with the condition and history of the vehicle, it’s time to purchase. This is where most buyers are likely to spend too much, be persuaded into purchasing unnecessary items (useless warranties, non-existent paint protectant, etc.), or get “tricked” into higher interest rates after the agreement is made. Having pre-approved financing through a trusted bank, credit card company, credit union, etc. can be instrumental in making the purchase a pleasant experience.

Unfortunately, when dealing with dealer financing, all too often a written agreement has a higher annual percentage rate (APR) than what was agreed upon, and can easily go unnoticed by the buyer. Worse yet is a common practice in which the buyer is sold a vehicle at an agreed upon purchase price and APR, and allowed to take ownership of the vehicle. Several days later the dealership informs the buyer that the loan was rejected by the bank, and the vehicle must be returned or "refinanced" at a higher purchase price and interest rate. This is commonly referred to as “Bait and Switch” or "rolling".

In most of these cases, the dealer knows all along the original agreement will not be accepted, and uses this tactic as a way to “sell” the vehicle with little time spent negotiating. Again, having pre-approved financing avoids this and can make the time spent at the dealership much shorter and more enjoyable.

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