Many consumers tell us that they purchased a vehicle because the car dealership told them that they were approved to buy only that car. This is a particularly nasty type of auto dealer fraud that we call "Passing the Trash".
A car dealer passes the trash when it claims that a consumer can be approved only for certain cars because of their credit or income. When dealerships steer consumers to a specific vehicle, that vehicle may have some serious baggage.
For example, the car may have been previously wrecked and might have some unrepaired damage, paint defects, or even structural issues that make it unsafe to drive. Or, perhaps the car has some undisclosed history, such as a salvage title or odometer roll-back, that could substantially impair its value. Sometimes the vehicle has a serious mechanical issue such as a blown head gasket or a defective transmission.
Some dealerships steer consumers to former rental cars bought at low prices at an auction. These low-value cars are then sold at inflated prices - and sometimes the dealerships will get banks to approve the deals by lying about how the cars are equipped.
Consumers who are nervous about getting their credit approved are especially vulnerable to this scam. When dealerships senses that a consumer is desperate, they know that they have an opportunity to unload a problem car.
Many car dealerships insistent that a consumer can purchase only a particular car even if the consumer does not want that type of vehicle. Some dealerships tell consumers that they can trade in the unwanted car after six months because their credit will improve after they make some payments. This is almost always a lie. Most cars sold under these circumstances will be underwater, or worth much less than the loan amount, for years.
How to Protect Yourself: Consumers can avoid being victimized by the Pass the Trash scam by being prepared to walk away from the dealership and shopping elsewhere. Insist upon a Carfax or Autocheck report to make certain you know something about a vehicle's history. And always insist upon having someone you know and trust inspect the car before you buy. It is always a good idea check your credit report before going to a car dealership. And, consumers should consider applying for car loan directly from a credit union or bank before shopping at a dealership.
For more tips on how to avoid being scammed before buying a used car, be sure to watch our video How to Buy a Used Car Without Losing Your Shirt