A Wisconsin couple has sued an auto dealership for promising them that a used Mazda 5 station wagon could tow a trailer. The couple wanted to tow a trailer in order to transport an electric wheelchair. The lawsuit alleges that the dealership repeatedly assured them that the vehicle could tow the trailer, and it even installed a hitch for that purpose.
Many of our clients tell us about conduct by auto dealers that is quite clearly criminal. Many dealerships regularly engage in forgery, fraud, and outright theft of money.
We are approaching the busiest time of the year for car sales. If you are considering buying a car in the next couple of months, here is a checklist of things to do BEFORE your first visit a car dealership.
Industry insiders know that some auto dealerships regularly engage in criminal activity. For example, one employee of a large Connecticut dealership recently confirmed to me that dealership employees routinely forge signatures; he said that forging a signature was "like smoking a cigarette," something done many times a day.
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Incidents of fraud by auto dealers are higher for lower priced cars, according to a recent study. The study, which was conducted by iSeeCars.com, evaluated millions of advertised vehicles and determined that the lower the price, the greater the likelihood that there was fraud relating to the vehicle's history or condition.
Car rental companies owned nearly 2 million in 2013, and most of those rentals will be resold on the consumer market. Some rental companies have retail divisions that sell former rentals directly to consumers. Many of those cars can be a good deal, and many rental companies offer a decent warranty.
One of the biggest tricks in the car business is the "dealer conveyance fee," which is supposed to compensate the dealership for its costs in processing the paperwork, taking care of the registration, and closing the deal. About 20 years ago, dealer conveyance fees were modest, with most dealerships charging less than $100. But, starting around the late 1990's, a few dealerships started to charge more. Others followed, and before long, many were charging $299 or more. The dealerships that kept their rates reasonable suffered from unfair competition, because other dealerships advertised cars at lower prices, only to make up the difference by charging a higher conveyance fee. So, more dealerships increased their fees to match their competitors. Soon, other dealerships raised their prices even higher. Today, we have some dealerships charging as much as $799, or about 10X the amount charged by many dealerships as recently as 15 years ago!
One trick played by auto dealers to boost their profits is to charge customers to etch the vehicle identification number (VIN) onto the windows of a car. The VIN is a 17 digit number that is unique to a specific motor vehicle. There is some evidence that car thieves are less likely to take a car with the VIN etched on the windows, and some insurance companies offer discounts for comprehensive insurance premiums if a car has VIN etching. So, this service may have some value.
Many consumers decide to trade-in their cars before they have paid off the old loan. When things go right, the dealership will obtain a pay-off amount from the bank or finance company and will make the payment on time and for the proper amount. The dealer gets the title, and the old car loan is paid off.