Most of us are pretty much aware of the many potential pitfalls of buying a used car. After all, you could find a low-mileage diamond or get stuck with a lemon that squeezes your bank account dry. But, did you know you could also be the victim of what has become known as trade-in auto fraud?
In case you’re unfamiliar with the terminology, now might be a good time to learn what trade-in auto fraud is, if you’re in the market for a new car, and how you can avoid having it happen to you.
Trading in your old car to help pay for the new one is common practice in the everyday car buying world. Besides, who wants to go through the hassle of unloading a car you don’t want any more on a private party who may end up haunting you day and night for selling him a defective vehicle?
Typically, the dealership will throw some numbers at you and because you’ve probably been sitting and negotiating for several hours, you’re biting at the bit to just start signing the paperwork. Unfortunately, trade-in auto fraud is more prevalent than car buyers realize and by rushing through the transaction, you could be costing yourself money.
What exactly is Trade-In Auto Fraud?
When you trade in your vehicle to buy a new set of wheels, the dealer will normally give you a quote for what they will give you for the old one. Here’s where you can get in trouble. Often, dealers will offer you an amount that is higher than what your trade-in is actually worth as an enticement to get your signature on the dotted line.
The problem is – while the offer may appear attractive on the surface, the dealership can tack on the increase in trade-in value to the total cost of your new car. This results in you paying more for the new vehicle although you got more for your trade.
Furthermore, if you have an unpaid loan on your trade-in, the dealer will offer to take your old car in trade, and then add the remaining balance of that loan on to the cost of your new car. If the dealership doesn’t advise you in advance of what they’re doing, they will have committed a fraudulent act.
Avoiding a Trade-in Scam
An educated buyer is less likely to become the victim of a trade-in scam. In other words, before you step onto the dealership lot, knowing the trade-in value of your car as well as researching the cost of the particular type and model you’re interested in buying can greatly reduce your chances of being taken for a ride by an unscrupulous dealer.
One of the best resources to help you estimate the value of your trade-in is Kelly Bluebook. If there’s a big difference between the pricing you came up with and what the dealership presents – something is probably up. Don’t hesitate to ask the dealer how he came up with his numbers.
Laws to prohibit illegal behavior
Most states have laws prohibiting a dealer from participating in this type of illegal behavior. If you suspect you may have been the victim of trade-in fraud after recently buying a vehicle, you may want to check with an attorney to see what recourse you have.
Whether you’re trading in your old car and buying a new one or you plan on keeping your vehicle until the wheels fall off – you need car insurance. You can’t drive in New York State without it, so make sure you’ve got the auto insurance coverage that meets the minimum requirements. And, if you don’t currently have coverage, find out how affordable it can be by getting a free New York auto insurance quote online?