10 Most Common Scams When Buying a Used Car

There are quite a lot of scams you should be aware of that are involved in the process of buying and selling a car. It does not really matter where you are looking to buy your car, what matters is the fact that car selling scams can take a considerable amount of money out of your pocket and leave you feeling helpless.

Most car dealerships practice good business ethics but turn a blind eye to the sales people they employ. These Sales People might have suspicious ways of making sales since they are paid by how many cars they sel,l and will go to great lengths trying to increase their sales and commissions. The drive to make a quick sale is not limited to car dealerships and is also present when dealing with private sellers. We wrote this quick guide of the 10 most common scams when buying or selling a used car to keep an eye out for.

This article will explain what to look out for and how you can avoid these 10 scams when you are out shopping for a car. It is, however, important that you note that these are not the only car scams you might encounter. You should go an extra mile in educating yourself on other scams just to armor yourself with information and knowledge that will assist you in making the right decisions when you are purchasing a vehicle.

#1. Title Scams

If a vehicle is stolen then recovered, involved in an accident, or damaged by natural disasters, it will be branded with a Salvage Title Brand. This status will reflect on the vehicle’s title. Although most of the salvage vehicles will get repaired and might actually appear to be new, they might be fraught of mechanical issues that will cost you a good deal of money and consume a lot of your precious time in repairs.

Title washing is a scam that involves the changing or getting rid of the salvage information on the vehicle’s title. There are rules to curb this scam but unscrupulous dealers still find a way to bend the rules and wash the titles. The burden falls on the buyer since they take all the responsibility after the purchase.

The best way to avoid this type of scam is to check the vehicle history report prior to handing in your hard-earned cash. You can find a list of vehicle history reports here.

#2.  Illegitimate Escrow Account Scam

Escrow accounts have been popularized by the different online buying activities. Normally, an escrow account company will hold the money from the buyer until the new owner receives the vehicle, and afterwards gives it to the seller. This practice has given rise to anew age of criminals who set up fake escrow companies and even go so far as to leave false reviews of their escrow company on forums and other places.

The most common way used by these criminals is the advertising of a popular model vehicle on online classified ads such as Craigslist. The asked price is considerably low to lure in as many buyers as possible. The scam artists will go through a lot of trouble just to make sure that what they advertise is appealing to any used car buyer desperate to make a quick purchase.

To avoid such a scam, it is important that you simply stay away from deals using escrow accounts that appear to be too good to be true because they probably are; unless the escrow you are using is established and verified or of your own choosing. If the dealer or private-party seller asks you to wire the money to facilitate the deal, turn away and run very fast. This type of scam has the ability to empty your account easily.

You can get more information on known, verified Craigslist Scams here.

#3. Disappearing Trade–in Scam

Trade-in deals can go sour, especially when dealing with a greasy car dealer. What happens is that a shady dealer will take your old car as a trade-in, and because it is of little value, they will not indicate it on the final papers as an item of negotiation. Make sure the vehicle appears on the paperwork. Some will claim to be paying you for the old car while in the real sense you can get a better deal else where without the trade-in factor. They will take your car and give you a small amount of money but after you walk away, then sell it for almost 7 times what they offered you. Make sure you are not sucked into the trade-in scam by getting a better deal on your old car; at least try to sell it as a private-party seller first. Craigslist is a good place to put your car up for sale for free.

#4. Negative Equity Scam

Dealers will claim that they will pay off your trade-in car no matter how much. This is not an act of goodwill by any chance. No one in business, especially car dealers , will hand you money jut like that. You should know that the moment you fall in love with a new car that you want so bad, the dealers will take advantage of this and will tell you to trade-in and they will take care of the payment. News; you will not only pay for the new cars as the amount you owe on the old one will be added to the cost of the new and thus you will simply be paying for the old car as well.

When you get this offer, put aside your love for your new car because a few months or years from the day you accept the deal, you will be suffering financially wishing you never listened to that dealer, and instead, sit down and look over the numbers that the dealer is promising; see how much the new car would cost without trading in your old vehicle.

#5. Four-Square Scam

Dealers use a diagram referred to as the four-square for illustration involving the value of the trade-in vehicle and the price of the new car, the down payment and the monthly loan payment for the new car. This scam is used to class buyers and then the dealer tailors a suitable deal for him/herself.

Four Square Car Dealer Scam Sheet

Four Square Car Dealer Sheet – Photo Credits Edmunds.com

The diagram becomes a jungle of numbers to a point where you cannot tell one number from the other. You get confused but then you have a deal and you will not even know what happened. This four-square sheet is used in more than just automotive scams, it’s been known to be used by timeshare salesmen and other people selling high-value items.

You should educate yourself on issues surrounding the value of the car, your financial status, credit worthiness, and you will not have to worry about this diagram because it will be irrelevant to the transaction.

#6 The Dealer Addendum Scams

When checking out cars at a dealership, you will come across a sticker showing the cost on some items such as accessories, options and paint. This is nothing less of a way for the dealership to charge you more money for the basic options; I mean ask the dealer if they’ll drop the price if you get a car that’s NOT painted.. Any vehicle that has a sticker that indicates a large amount of money for the “add-on features” is just a way for the dealer to add that “price” on at the end and should be avoided. The dealer will remove the sticker and items as a sign of good will but this will not be it. At the end of your purchase, they will try to sell other add-ons just to milk the most amount of money they can from you.

In some cases, the addendum sticker will be legitimate, but there are only a few of these cases. If you walk into a dealership and find out that all the vehicles have the addendum sticker, this is not a dealership you should walk into in the first place. This is because it shows that they have decided to try all the tricks in the book to rip you off.

#7. Low Credit Scam

Not knowing your credit score will put you at a vulnerable position when dealing with car dealers. If you are not aware of this fact, they will tell you that your credit score does not allow you to pay low interest rates and thus will hike up the vehicle’s price. The fact that you do not know your score will give the dealer room to fabricate all manner of lies to ensure they get hundreds if not thousands of dollars from you. You can check your credit status on Equifax, Experian, and TransUnion free of cost.

#8. Low Payment Scam

If you are only interested in paying on a monthly installment, the dealer may take this advantage to increase the price of the down payment and extend the payment period. This will damage your pocket in the long run by forcing you to pay more in Interest.

To avoid this scam, make sure you know the price of the car, the interest rates involved and the period or loan term. There are car loan calculators online that will assist you in this process and help in making an informed decision. If you are well aware of these financial elements, it will be impossible for the dealer to pull this scam.

#9. One Day Only Scam

If the dealer tells you that the current price on the vehicle is only valid for that day, turn around and just walk away. With the exception of actual holidays, the car dealers will usually do this because they know that one day is too short for you to investigate or research on the car, comparison shop, or check your finance status. Though there might be some truth in their statement but you might not be able to tell the genuine offer from the scam so the best thing is to stay away, maybe visit a competing dealership to see what deal THEY will offer you.

#10. Spot Delivery Scam

Most dealers will let you have the vehicle even if the finance department has not yet processed the loan agreements. They do this because they do not want you to back out or find out about the deal. They will then call you later and then tell you that they failed in finding financing for you and that you will have to pay more for the down payment and more in monthly payment, or face the law when you give the vehicle back.

Some dealers will have you sign paperwork that will give them the right of rescission which means that they can change the terms or your agreement without your consent. With the wrong dealer, you can get in trouble because they can manipulate the deal whichever way they please after you have signed the paperwork; allowing them to do so.

To avoid this type of scam, do not agree to spot delivery until all financial elements of the agreement are addressed. Do not sign any blank forms since you can always come back another day. Be aware of your financial status to prevent any manipulation by dealers.


These 10 scams are by no means ALL of the scams out there. Be sure that you’re researching the car dealership before you set foot in it; Google Local is a good way to find user reviews on just about anything. Once you’ve found your dealership of choice, go ahead and run a VIN Check on any car you might be interested in to see its history report. You can find the best cheap vin checks by going to this website (click here).

The best thing you can do to avoid getting scammed is STAYING INFORMED, so do your research before deciding on a dealership and again more research before deciding on a particular car.

Do you know of any other car buying / selling scams? Add your thoughts and comments below!




  1. […] looking at buying a car, there are many things to consider and look out for, so make sure that you do your research on the car and the dealership before committing to a […]

Speak Your Mind