Since the used car industry is such a competitive place, many dealers have developed a penchant to resorting to various tricks in order to convince a customer to buy their cars instead of going to a competitor.
If you fall prey to one of these tricks, you may be left with a low quality car and an empty wallet. Watch out for these dangers when shopping for used car sales.
1. Yo-Yo Financing
Have you heard about yo-yo loans? If not, you’re likely to fall prey to this trick. With used car sales, many dealerships are willing to do just about anything to get you to buy a car. They’re even willing to let you drive the car off the lot without settling the final details about the payment plan. Sounds great, right? Wrong! This is a trick that could end up costing you dearly.
The way it works is that you agree to go with in-house financing. In-house financing can often be a great option, but it’s important to finalize your loan and payment plan before you take your car off the lot. Once you start driving that bad boy, the dealer will inevitably call you to inform you that your financing has fallen through and you’ll have to pay a higher interest rate and a bigger down payment or risk having your car repossessed.
It’s quite simple to avoid falling into this trap. All you have to do is make sure that all of your finances are set in stone before you drive away in your new used car.
2. Misleading Sticker Prices
Used car sales often promote prices that are either too high or too low. Be wary of the price listed on the sticker! In some cases, the price is the “MSRP,” which means the manufacturer’s suggested retail price. This price will inevitably be much higher than what the dealership paid for the car. Ask about the invoice price in order to reach a better starting point.
The prices you see on the windows might also seem way too low because they don’t actually include all of the fees. In this case, the dealer will suck you in with the promise of these super-low prices, but your final cost will suddenly be much higher.
3. Zero-Percent Interest Rates
Although getting a zero-percent interest rate on the auto loan that accompanies used car sales may sound incredibly tempting, this is one deal that usually comes with strings attached. For instance, you likely need to have an awesome credit score, and the rate may only last for a very short period of time before switching over to a high interest rate. Make sure the loan you are getting is at a reasonable, fixed rate throughout the entire term of the loan.
4. Improper Titles
Be very careful about this one! Low quality dealers may try to sell you a car with a questionable title – don’t fall for this trick! This ruse means that the dealer is struggling financially and has been unable to pay off the liens on the title. Most likely, this trick will get you a car, but you’ll have a ton of trouble getting the correct title and license. An AutoCheck History report can confirm the status of the title and make sure it is clean and free of accidents.
Have you run into any “red flags” while shopping at a used car dealer? What’s your best story?