Watch Out for these 4 Scams when car shopping

By: Mike Davenport   |   14 Jan 2023
Four scams you may fall for, watch out!

These are four scams that you could fall for at any dealership. The owner of Mike's Car Store even got scammed by these in his younger years. Don't be the next one taken advantage of!

1. Spot delivery scam

Don't fall for this scam. The dealerships will go through the entire deal with you, tell you that you're approved, then you go home and start posting about the car. However, you get a call on Monday and the dealership now tells you that you're not approved! What do you do now? Go to the dealership and they will force more money out of you without you ever realizing it. 

2. Yo-yo loan scam

A yo-yo goes down and up and just like a yo-yo a dealership will give you the car, all paperwork is signed but all of a sudden you've had this car for two weeks and there's a call coming in. It's the dealership saying "uh oh there's a problem." Don't go back!! A couple of things to look out for if you do go back. If there is nothing different with the paperwork and the dealership made a mistake, go ahead and sign it. If they changed interest rates, down payment, different monthly payments, etc. DO NOT SIGN. This is how they scam you!

These two scams are how the owner of Mike's Car Store, Mike "Chevy Dude' Davenport, got scammed when he was in his late teens. 

3. Over-allowance scam

The over-allowance scam is when a dealership is trying to advertise they will give you more money than your trade-in is worth. All those commercials you see on TV are fake. A couple of tips to know before taking your trade-in to the dealership. First, know the exact value of your trade-in before you walk into the dealership. or Carmax are the best websites to get the best value for your trade. Second, bring your trade up at the most opportune time. This could be at the beginning or the end of the deal.

Another thing about this scam is if you just want to sell your trade-in, you can! If you go into the dealership and say "I've decided to do something different, can you write me a check for my trade" and they tell you anything other than yes, you're getting scammed!

4. Risk-based Pricing

The fourth scam is risk-based Pricing. Knowing your score before going to the dealership will help tremendously. The salesperson will hand you the risk-based financing form that you may or may not have to sign. It has your lowest score on it because the bank they got you approved with used Equifax, not Experian, and pulled it two or three times. They use this to their advantage to get you to pay more money. 

The best tip is to shop around and know your credit score. Pulling your score multiple times will not hurt!

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