top ten car scams

Top Ten Car Scams - Keep These Scams in Mind When Buying Or Selling Your Car

Top Ten Car Scams - Keep These Scams in Mind When Buying Or Selling Your Car

Whether buying your first car or selling your old one, you always hope to get your money’s worth. The bitter truth is that car scams abound – whether you’re buying or selling from a dealer, a private owner, or even from someone you thought you knew well. 

To make it even more confusing, these scams have gone digital as well with unscrupulous folks targeting online consumers, too.

Finding an honest and professional car dealer is like finding a gem.  Because most car salespeople or car sales managers get their income on a commission basis, it’s quite common for them to give in to the temptation of scamming an unaware customer in hopes of getting a higher paycheck.

After all, the more cars they sell, the more money they earn, even if it means using underhanded methods.

Nobody likes being a statistic, especially among those who fall prey to car-buying or selling scams.  In the US alone, more than $30 billion each year is lost by consumers when buying or selling a car from scam artists.

The good news is that these scams can be avoided when you arm yourself with the right information. Identifying the scams that are most common these days and knowing how you can avoid and protect yourself from them is key to getting the best experience whether buying or selling a car.

Here, we list the top ten car scams today and what you should do to avoid them.

Scam #1: The Fake Escrow Account

This scam involves luring a customer into buying a used car and depositing the payment using a fake escrow account. What happens is that the seller lists a car for sale – a very desirable model, at that – through an online classifieds website, usually at a price that is way too good to be true.

The seller will make up a story behind the unbelievable selling price, so that the customer won’t suspect anything. It may be because the seller needs money immediately or that they are relocating abroad and want to get rid of the car quickly.

Once a customer clicks the bait and strikes a deal, they will be asked to send the payment through an escrow account that will hold the funds until the car is delivered to the buyer.  What the buyer doesn’t know is that this escrow account is fake, and the scam artist gets away with the money, as the buyer waits for a vehicle that will never show up.

How to avoid: Don’t strike a deal with sellers that ask you to deposit payments through an unknown escrow service or via wire transfers like Western Union or MoneyGram.  Always make sure that the seller is using a verified escrow service that you also approve of. 


Scam #2: The Title Wash

Under this scam, the car dealer sells a salvage vehicle but gets rid of its salvage status by “washing” the title.  A vehicle gets the salvage status on its title when it has been damaged by a natural disaster (e.g., a flood or a tornado), when it is wrecked and subsequently repaired, or when it has been stolen and recovered.

A scam artist may hide the car’s history by taking it to another state where the salvage tag won’t be recognized, or sell the used vehicle “as is,” which means the buyer agrees to take on the responsibility when problems arise after the purchase.

How to avoid: Make sure to check the history of the vehicle, especially if you are buying a used car.  Vehicle history reports may be bought from reputable sources like AutoCheck or CarFax, or you can secure a free report from VIN Check of the National Insurance Crime Bureau.

Scam #3: The Trade-in

Top Ten Car Scams People Discussing car, top ten car scams

There are a lot of scams involving trade-ins. These may include quoting a very low price for your vehicle and when you disagree, the dealer will increase the offer but you still get ripped off in the process since the offer started out so low.

There are also those that give a very good deal when you were negotiating with them on the phone, but once you bring your vehicle in, they will change the offer to a lower price after inspecting the vehicle, giving you a number of ridiculous reasons why they were no longer keen on giving you the agreed upon price.

How to avoid: Never settle for one dealer. Bring your trade-in to multiple dealers for better appraisal. Avoid negotiating with dealers on the phone. Always have your vehicle inspected in person. 

Scam #4: The Stolen Rebates

Buyers of new cars are often offered multiple rebates and incentives by manufacturers. Unfortunately, not all consumers may be aware of them and scam artists will take advantage of this. Most of them may keep the rebates and incentives for themselves and do so without getting caught simply because manufacturers don’t conduct an audit of every car sale.

How to avoid: When buying a particular car model, make sure to go to two or three different dealers. Have them list all the rebates and incentives that come with the car.

Scam #5: The Dropping of a Deposit to “Hold” or Reserve the Car for You

This scam involves a dealer requiring you to leave a deposit to reserve the vehicle for you.  The customer doesn’t think twice before doing so, especially if a preferred car model is in high demand.

Scam artists will claim that your particular model is very hard to find or under a low supply and will ask for a deposit that you feel you have other choice than to give.

How to avoid: Asking for a deposit is only legitimate when the dealer is conducting a dealer trade on your behalf.  If this is not the case, do not agree to this arrangement. If you do, make sure that any deposit you make is refundable. 


Scam #6: The Paying Off of Any Remaining Loan on Your Trade-in

So you’re eyeing a new car but you still have a few more months until your current car is fully paid off.  Enter a seemingly good-hearted dealer promising to pay off whatever remaining amount you owe on your trade-in.  This seems like a win-win solution, right?  Wrong.

Scam artists will take advantage of your situation by including the amount they paid for your remaining trade-in loan into the loan you will get for the new car.

How to avoid: Don’t agree to this arrangement. If you want a new car but still have an existing loan on a trade-in, just sell it and pay off the loan with the payment you get from the sale.

Should you find yourself a dealer who seems to be keen on paying off the loan, make sure to have a contract ready that stipulates that the dealer will pay off the loan in the amount of time you both agreed on, and make sure to check that they have indeed fulfilled their end of the bargain.

Scam #7: The Buyer Doesn’t Want to View the Car You’re Selling Online

These days, the internet has made it easier to sell just about anything you can imagine, including cars. This, however, has opened doors for scam artists to trick sellers and get away with it without the slightest idea that they’ve been ripped off.

A common tip-off of an online scam is a buyer who’s not too keen on viewing the car you’re selling in person. This makes it possible for the buyer to purchase the car, get into an accident or damage the car on purpose, and come back to you claiming that the vehicle you sold was already damaged and they demand to be paid for it.

How to avoid: When listing your car on any online sites, make sure to describe the vehicle in detail.  Don’t leave out any information, including any faults or damage on the car, if there’s any. Once sold, have the buyer sign a receipt stating that they have bought it as seen on the ad and in person.


Scam #8: The Buyer Pays via PayPal

Top Ten Car Scams Paypal on Phone, top ten car scams

Another warning sign of an online scam is a “potential buyer” offering to pay for the vehicle via PayPal without needing to see it in person, claiming they are located abroad or buying the car for a friend or a loved one.

What happens is you send your PayPal account for the buyer to send the payment.  The buyer may even go the extra mile by claiming they will send an extra amount for shipping and other fees.

A few days later, you receive an email from an email address claiming to be from PayPal, saying that payment is pending for your account and won’t get released until you’ve paid the shipping costs.

What you don’t know is that this email is fake and the scam artist gets away with whatever amount you sent for the supposed shipping cost.

How to avoid: When dealing with online buyers, make sure to talk to them over the phone or in person.  Be suspicious when the buyer isn’t at all interested in seeing the vehicle in person but is rather more interested in the payment process.  If you can avoid it, don’t agree to getting paid via online payment channels.  


Scam #9: The Low Payment to fit Your Monthly Budget

If you can’t afford to pay for a new car in full, of course a monthly payment to fit your budget sounds wonderful.  Scam artists take advantage of this by claiming they offer low monthly payments and a longer lease to fit your budget requirements.  What you don’t know is that you will pay for a car with a marked up original price.

How to avoid: When buying a car under a monthly payment scheme, make sure you know the original price of the vehicle.  Know the down payment as well as the interest rate you have to pay and the loan terms.  Make sure that the amount you will pay every month is reasonable given the length of time you will have to make the payments. 


Scam #10: The Warranty

If you’re buying a late model car, particularly from a private party, they may falsely advertise that the vehicle still has an existing factory warranty.  What you don’t know is that factory warranties may be void due to a number of reasons like abuse, accidents, or modifications.

You will be left forking over money for repairs when you thought you could still use the vehicle’s factory warranty, as claimed by the seller.

How to avoid: Ask for the vehicle’s ID number and check with a local dealer to know that there really is a factory warranty remaining. 


Taking note of these car scams and what you can do to avoid getting ripped off can help save you loads of money and trouble.

Of course, there are other scams to watch out for, too, so be attentive and thorough when making large transactions like selling vehicles. If it doesn’t feel right, it probably isn’t.

Top Ten Car Scams - Call American Auto Care for All Your Car-Related Concerns

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Having a professional auto repair services like American Auto Care in reach ensures that you know your vehicles will always be serviced by certified automotive technicians. Additionally, our competitive rates mean your auto care needs won’t put a large dent in your wallet.

Proper vehicle maintenance ensures that your car is always in tip-top, reliable shape. When selling a car, a properly maintained vehicle will earn you more money back on your investment.

For more information about the top ten car scams or about our automotive services, call us at (951) 461-2507.