How To Avoid a Used Car Scam: Put The Brakes On!

Buying the newest car isn’t always the best option, especially if it’s your first one. There’s a car model out there for each driver, based on how you want to use it.

Sleek? Economic? Reliable? Your dream car could be waiting for you for a much lower price on a private owner deal. The question is: are used cars so different from the super-new?

It depends on the way you drive, and what model you buy. Some high-mileage vehicles look just like new while others require renovation. 

Now, the price can also change depending on who sells it. It’s not rare to find sellers hiding car problems to sell for better prices. If you fall for used-car scams, it may cost you something more than money.

Red Flags Of A Used Car Scammer

Deals always look better on the listing than they do in the dealership. What you expect to find on the lot may not be what they described to you. Sometimes, the seller who gave you the car didn’t even own it!

Problems start the moment you drive away with it. Extra charges, unknown problems, fake documents, and so on. Before they rush you with their super-offer, look for these warning signs.

#1 The Seller Doesn’t Own The Car

Everything looks right with the car, but the person who sells it doesn’t appear in the documents. Instead, you find a name you never heard before.

“Oh, it’s my good old friend. I’m selling the car for him.”

“That is my mechanic teammate.”

You may trust him, just like his hypothetical friends trusted him to sell the car. If they’re into it, why can’t you meet them instead?

Perhaps you’re dealing with a bogus middleman. He went to the real owner as a client, requested the documents, and showed them to you. 

Later, he may sell you a car he doesn’t own for a lower price.

#2 Only Online

You can ask for pictures and find videos, but the seller isn’t available to meet up. He can show everything you need, but you’ll have to buy a car you haven’t seen or tested.

Here’s when you start hearing: “Meeting? Hmm… I don’t know If I can…” If they really want to sell the car, the best way to close a sale is to let the client drive the car themselves.

Like the middleman example, a seller who doesn’t show you the car may not own it.

#3 Upfront Payments

They need you to pay before you get the car, and they want you to use an unsafe payment method. Should you trust the scammer?

Even a legit deal can turn into a scam with confusing payment terms, especially online. For an expensive car, using escrow will show you’re serious, also giving you a chance to test-drive and inspect the car.

Generally, you don’t meet with the dealer in an advance fee scam. You pay the amount, and they promise to deliver the car to your address. Sketchy.

#4 Drive Away First, Finance Later

You may also find the opposite case: the dealer lets you take the car before financing it. You may think the deal is almost done, BUT as long as the seller owns the signed papers, that car isn’t yours.

Later, the dealer may call you to complete the financing and retake possession of the car after you paid. Think about it: why would a dealer run the risk of letting you drive away with a car? Too good to be true for a test drive? Probably.

#5 Prices Are Too Low

You find what’s literally the perfect car deal. Great value, low prices, easy process. The car looks awesome for the price, although you barely had time to inspect it.

Does the seller want to sell it fast? Does he pressure you with time, like a 20% discount if you buy before leaving the lot? Time pressure leads to mistakes. The expensive ones.

For example, the dealer does some tiny upgrades that have a great visible impact on the car. He tweaks the accessories and looks to boost its price or make it look like new, but the real damages still exist. A high mileage, a worn-out suspension, or engine problems.

Should you buy used cars from Craiglist?

Types Of Used Car Scams

Should you buy from a dealership or a private owner? Dealerships look more reliable due to their sales history. But private owners could offer better prices because they reach fewer potential buyers.

When it comes to fraud, none is better than the other. Both can sell you vehicles with washed titles, odometer roll-backs, or forged documents. Here we list them from least to most expensive:

#1 Selling Like New

For car scammers, vehicle problems may not matter that much. If you can make an old car look like new, it’s easier to negotiate for higher prices later. Does the client get the value? Not really.

Scammers strategically invest the minimum and increase the perceived value as much as possible. Thus, you may drive away with a nice looking car with countless mechanical issues.

Not only you overpaid for the car. There’s still a lot to spend on those repairs! The dealer fixed everything except what was important. 

Estimated Loss: Hundreds of dollars.

#2 Selling With Extras

You want to buy a used car. But the seller also wants to get rid of his accessories, so he includes them in the deal. The dealer pre-installs the extras and promotes the offer, excluding DAO (dealer added options).

What you paid for the car wasn’t its final price. Without knowing it, you’ve got into a contract for some extra you never wanted to buy.

Estimated Loss: Hundreds of dollars.

#3 Fake Car Salesman

A con man browses on car websites and finds some listings. Then, he creates a cheaper listing selling the same car on another site. The catch? There’s no car.

A buyer contacts the con man because he sells it in better condition for cheaper. He shows the (forged) documents and images, and the buyer takes the deal. 

Now, no buyer is stupid enough to 100% finance a car they didn’t test. But because the offer is so good, they may put 1-5% as a prepayment. That’s enough for the advance fee fraudster to win.

And the real owner? He never found the fake listing nor that client.

Estimated Loss: Thousands of dollars.

#4 Odometer Scam

The dealer needs to get rid of some old vehicles in his lot. A quick hack— clocking— can quickly raise the car price by a couple thousand. 

Now, not all clients care about it. As long as the car works well, who does?

All you need is clocking an old reliable car. Some models are so durable than 100,000mi cars look the same as others with over 200,000 mi. If you roll back a hundred thousand miles, that makes almost ten thousand dollars. 

For the dealer, it only took three minutes to change the vehicle numbers. If they do it with an unreliable car, you may mistakenly buy a dangerous vehicle.

Estimated Loss: Thousands of dollars.

Learn more about Odometer scams here

#5 Curbstoning

Curbstoners may offer better prices at the cost of losing your buyer protection. These dealers can sell without respecting licenses or regulations, meaning they can offer you damaged/salvaged cars without you knowing it.

Curbstoners don’t have a single place to do business. They sell as private owners, so once they’ve sold the car, they’ll vanish with no chance of contacting them.

Here’s what’s ironic. You call the seller about “the car,” to which they reply “Which car?” assuming they own more than one. Many cars linked to the same number.

Estimated Cost: Thousands of dollars.

Also, read our Guide to Auto Insurance Fraud

#6 Rental Car Scam

The con man offers the client the best offer for the car they want, anyone. Again, he’s talking about a car he doesn’t own. How will he prove his identity?

Once he has an interested buyer, he visits a car rental and gets the exact same car the client asked. When the client asks for documents, the con man askes the car rental for them. When the client wants to test drive, the con man asks the car rental for a test drive.

Thus, the client completes the process, not knowing he’s filling up a rental contract.

  1. The buyer buys the car from the con man (middleman)
  2. The con man goes to the dealership, pays the rental price, and drives off the parking lot. He’s registered under the buyer’s name.
  3. The con man gives the car to the buyer and vanishes. 

After the rental period ends, the victim finds out the expensive scam. The con man pocketed the difference between the price and the rental costs.

Estimated Loss: Tens of thousands of dollars.

Also: Car Rental Scams & How To Avoid Them

#7 Cut And Shut

Sometimes, curbstoners sell cars at their standard price after getting them almost for free. How? They find it in a junkyard/car graveyard.

Damaged cars may not work, but some parts may still work. In an accident, for example, there are two different crashes: the front of the first car, and the back of the stricken one.

In a damaged car, the illegal dealer cuts the working part and joins it with the working rear of the same car model. Find the missing pieces, join both parts, and that’s it: a DIY car ready for sale!

Needless to say, the risk is maximum. Once a small accident could be enough to split the car back in half. Arguably the most dangerous car scam.

Estimated Loss: Tens of thousands of dollars.

How To Prevent Used Car Scams

Sellers want to get rid of them as soon as possible. That’s why you may find them using multiple pressure tactics:

  • They set time-limited discounts and urge you to buy now
  • They hide the vehicle defects so that it sells faster
  • They create classified ads with offers that don’t show the final price

They move fast so that you miss facts you should be aware of. What can you expect from the car? How long have they been using it? Have there been any other owners? Do all documents make sense?

Fast deals prevent scammers from getting caught. Good preparation, on the other hand, protects you from those tricks.

#1 If You Can’t Test Drive, Don’t Buy It

Anybody can show images, forge documents, or list a car on a website. Yet, that doesn’t mean they own the car.

When we look at such a great offer, we want to believe that it’s real, so we contact the owner. But a car they can’t show is a car that may not exist. Don’t buy; they made the offer too good to be true for a reason.

Also, read our Confidence Tricks Guide

#2 Do Documents Make Sense?

You met with the dealer, you tested the car, you loved it, and want to buy. The papers, however, show you a different story from what the owner told you. Perhaps he lost some documents, or he forged all of them. Is it still worth it?

You don’t want to pay the full price for a car they may not own. If it belongs to someone else, the real owner may ask for a higher price after the con man vanishes. If you bought a rental car, it gets even worse.

You have got far, but that still doesn’t link the dealer as the owner of the car.

#3 Contact Many Sellers At Once

Don’t fall into the trap: this seller is NOT your only chance to get the car. Talking to a single dealer makes you lose perspective on what market prices should look like.

Instead, find multiple owners selling the same car model and negotiate, even if the asking price goes beyond your budget. Pick some big trusted car websites, and it won’t take long before you find them.

#4 Inspect The Car

Have a trusted mechanic to inspect the car before you buy it. Do they think the asking price makes sense with its condition? Why? You may negotiate once you know what’s really going on with the vehicle.

Also, the dealer may try to dissuade you. “This car has already passed all the inspections.” Ask your mechanic anyway. Trust, but verify.

#5 Choose The Best Payment Methods

Whatever you buy, have an impartial, trusted 3rd party monitor payments, like Escrow.com. Buyer protection adds up a small fee to your price but is less expensive losing money on a scam.

Avoid paying upfront without buyer protection. If they ask for a wire transfer, only wire all the funds once you’re ready to drive away with the car. 

The dealer may insist on using a particular method or some specific escrow brand. First, make sure you’re not working with a bogus payments company.

Here’s how to recognize fake brands and stop escrow fraud.

#6 Keep Your Information Safe

Unless you’re about to buy the car, you shouldn’t share all your information. When buying online, the same seller can pose as the car website to steal your identity and bank accounts. Keep your credentials private until the negotiation gets to a Yes.

Learn more in the Complete Identity Theft Guide

The Bottom Line

It’s possible to find a used car that looks like new. New cars devalue quickly, so if you know how and where to find the best-used cars, you’ll save a lot of money.

Before buying a used car it’s helpful to take a look at a checklist such as this one from popular mechanics.

Check the car before you buy and use a secure payment method, and you’ll find the right model while preventing rip-offs.

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