Used Auto Dealership Swindles To Watch For

In a recent article, I described a few common pitfalls that regularly entrap unwary car buyers. Those pitfalls are normally found at new car dealerships. Today, we’ll switch gears and focus our attention on independent dealerships that specialize in selling used vehicles. There are a number of potential traps (some are illegal) that can turn an automotive bargain into a nightmare. Below, I’ll describe two of them and explain how you can avoid them when buying your next automobile.

Improper Title Ownership

Auto dealers who are struggling with cash flow issues are occasionally tempted to sell vehicles off their lots without actually having the associated titles. Here’s how it works: the dealer may borrow a large sum (potentially in the millions of dollars) from a “flooring agent” in order to stock his lot with inventory. When a car is sold, the flooring agent is paid and the title is transferred to the dealer. Then, the title is given to the buyer.

Sometimes, the dealer fails to pay the flooring agent, even after an automobile has been sold. As a result, the title is not transferred. Eventually, the buyer visits the lot in order to pick up the title only to discover the dealer has pulled the same scam on others and closed up shop.

When you purchase a used vehicle, ask to see the title before driving off the lot.

Salvaging Totaled Automobiles

This happens often at independent lots. A wrecked vehicle is made to appear in good condition in order to sell it. For example, the exterior may get a new coat of paint, minor body work (to fix dents, dings, and scratches) is performed, and new tires are put on. Meanwhile, major problems caused by a past flooding incident or severe accident are lurking beneath the shiny surface. When the automobile is purchased (“as is,” of course), the buyer is in for a world of heartache down the road.

Before purchasing a used model, take it for a thorough test drive. Also, have a trusted mechanic perform an inspection of the parts and systems under the hood. He’ll be able to identify hidden problems quickly. If the car has been in an accident, the mechanic will be able to see the repair work.

Moving Forward Carefully

In many ways, purchasing a used car from an independent dealership carries the same risks as buying it from a private party. You want to be sure that the vehicle hasn’t been in a major accident in the past. You also want access to the title after you make your purchase. By knowing what pitfalls to watch for, you can easily sidestep them on your way to finding a great bargain on a used vehicle.

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Pros And Cons For Trading In Your Car

After spending a few years driving your vehicle, it’s normal to want a change. The excitement you felt as you drove it off the dealership lot has dissipated. Now, each time you see a new model on the road, you might feel an urge to go car shopping again. If you decide to buy a new car, you’ll need to figure out how to offload your current vehicle. Your choices are limited to selling it yourself or trading it in. Below, I’ll explain the pros and cons of using your current car as a trade-in for a new model.

Pro: Tax Advantages

Whenever you buy a new or used car, truck, or SUV from a dealer, you’ll have to pay sales tax. Depending on the price of the vehicle, the sales tax can climb to hundreds – even thousands – of dollars. If you sell your current vehicle to a private party and purchase another model from the dealership, you’ll have to pay sales tax on the entire amount. On the other hand, if you use your current ride as a trade-in, its value will be deducted from the price of the new model. That lowers the amount of sales tax you’ll need to pay.

Con: Less Money

In nearly every case, you will be able to sell your vehicle to a private party for more money than you would get from trading it in to a dealer. The reason is partially due to the motivation behind the purchase. For example, a dealership wants to sell it to another customer in order to make a profit. To do that, they offer a lower trade-in value; the less they offer, the more profit they can make. By contrast, a private party isn’t interested in making a profit. They just need a reliable source of transportation.

Pro: Less Effort

Even though you stand to make more money by selling to a private party, doing so requires work. You’ll need to place an ad, field phone calls, and make yourself available to show your car to prospective buyers. Along with that, some people will request to have a mechanic test your vehicle. When you trade it in to a dealership, it’s as easy as haggling over the value, signing the paperwork, and handing over the keys. Less time and less effort.

Con: Ongoing Monthly Payments

As long as you’re maintaining your car properly, keeping it for a few more years is usually less expensive than trading it in for a new one. Most people don’t purchase a new vehicle outright, even when they use their current one as a trade-in. Instead, they negotiate the price and choose monthly payments. That’s expensive.

Long-time readers of my column will know that I’m a proponent of keeping your vehicle and replacing parts when necessary. Changing the oil every 5,000 miles and periodically replacing spark plugs, air filters, and other parts can keep your ride running smoothly over the long haul. Even if you need to rebuild the transmission or replace a head gasket down the road, you’ll still come out ahead.

Trading in your car offers advantages and drawbacks. If keeping it for a few more years isn’t an option, at least you’ll have the right expectations.

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Ways To Throw Money Away On Your Car

Most of us love our vehicles, especially if they’re relatively new. The upside is that we’re more likely to keep them clean, well-maintained, and in good running condition. The downside is that we’re also more likely to spend money on accessories and other things that aren’t necessary. If you don’t know much about cars and how they work, you’ll be vulnerable to the advice of your dealership’s auto technicians. The truth is, they’re often willing to place your best interests in line behind their own.

Today, I’ll give you a short list of 4 common ways that car lovers throw money away on their vehicles. There’s a good chance a few of them will be familiar to you.

#1 – Dealership Oil Changes

I’m always surprised when I hear drivers explain why they choose to have their oil changed at their dealership rather than a local shop. They often think their vehicle will be treated better or they’ll receive a higher quality oil. Neither is true. Not only is a local shop less expensive, they’ll use the same quality oil.

#2 – Dealership Repairs

This is related to the first item above. A lot of drivers feel uncomfortable about having major work performed on their vehicle at the local repair garage. Sometimes, it’s because they believe the work will be less reliable. Other times, the dealership has led them to believe doing so will invalidate their warranty (not true, by the way). So, they end up taking their car to their dealer to have work done.

It shouldn’t surprise you that they’ll charge much more than a local garage. Plus, their work is not likely to be better than what you’d receive at an independent repair shop.

#3 – Oil Changes Every 3,000 Miles

I admit, there’s something about visiting a mechanic that makes you think you’re treating your car properly. And one of the best excuses to visit is for an oil change. But, you don’t need to have the oil replaced more often than every 5,000 miles. Some vehicles only require an oil change every 10,000 miles.

#4 – Following The Dealer’s Schedule

When you purchase a car, the salesperson will give you a maintenance schedule. It will include details regarding when to have your radiator flushed, tires rotated, filters replaced, and other preventative items. Do yourself a favor. Open your owners manual and compare the maintenance schedule inside with the one given to you by the dealer. Notice the differences? The dealer wants you to have your vehicle serviced more often than it needs to be. After all, the more frequently you visit, the more opportunities they have to sell you something. Always defer to your owners manual.

Treating your car right doesn’t mean having to waste time and money on unnecessary maintenance items. The next time you’re about to visit your dealership, review the 4 items above. Then, ask yourself whether the trip is worth the time and money. In most cases, I’d be willing to bet that it’s not.

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