Matthew Oliver
Buying a car is no small endeavor. As it is, it’s one of the most expensive transactions you’ll partake in throughout the course of your lifetime. But here’s the question—should you buy a new car right off the sales lot? Or should you save some money and buy a used car?
Many people opt to buy used cars, or what we like to call, ‘new to you.’ This is because of depreciation, and your new car will lose 15 to 20% of its value in the first year alone. To make matters worse, that depreciation keeps on going at a rate of about 15% per year. That’s what can make used cars such a lucrative proposition. But, there are risks to be aware of. In this article, we’ll explain some of the most commonly used car scams and red flags for you to be on the lookout for.
Common Car Buying Scams
We won’t beat around the bush—there are risks to buying a used car. Here are some of the scams that you need to be aware of.
Odometer Fraud
Sellers may illegally roll back the odometer to make a vehicle appear less used than it truly is. According to the National Highway Traffic Safety Administration (NHTSA), over 450,000 vehicles are sold each year with fraudulent odometer readings.
For example, a car advertised with 60,000 miles might have clocked over 120,000 miles, significantly affecting its value and future maintenance costs. Always compare the odometer reading to the vehicle history report and watch for signs of tampering, such as misaligned numbers or scratches near the display.
Title Washing
Title washing is the practice of altering a vehicle’s title to hide its past salvage status or significant damage. Data collected by IHS suggests that about one in every 325 used cars has experienced title washing.
Although it’s a federal crime, enforcement is inconsistent, with states like Texas, California, and North Carolina often cited as hotbeds for this issue. For example, a flood-damaged car from Texas could be retitled in another state and sold as clean. Always check the title’s history through services like Carfax or AutoCheck to spot discrepancies.
Curbstoning
Curbstoning refers to unlicensed dealers posing as private sellers to offload vehicles without proper disclosures or warranties. These sellers often use classified ads or park cars in visible locations with “For Sale” signs.
For instance, you may meet someone at a random parking lot who claims the car was their personal vehicle, only to later discover it has unresolved mechanical issues or a questionable title. Verify the seller’s identity and request a bill of sale to confirm legitimate ownership.
Fake Online Ads
Scammers often create fake online listings for vehicles that don’t exist, advertising them at enticingly low prices to collect deposits or steal personal information. A common scenario might involve a buyer wiring a deposit to secure a vehicle, only to realize the seller and car were fictional. To protect yourself, avoid transactions that require upfront payments and verify the car’s existence by arranging an in-person inspection before making any commitments.
Car Buying Red Flags to Look Out For
Just as there are many scams out there, you need to be on the lookout for red flags, too.
Price Too Good to be True
Have you ever considered purchasing something but the price just seemed too good to be true? How did you feel, and what did you do? Did you snatch up the product and head to the cash register, celebrating the great deal? Or, did you pause and walk away, knowing that your gut was trying to tell you something?
Our message is this—if a car’s price is significantly lower than its market value, proceed with caution. While great deals exist, an unrealistically low price could indicate hidden issues such as mechanical problems, flood damage, or even scams. For instance, a luxury SUV priced at $10,000 less than similar models might turn out to have a salvage title. Always research the market value and investigate the vehicle’s history before committing.
Inconsistent or Missing Documentation
Proper documentation is critical when buying a car. Red flags include missing maintenance records, mismatched Vehicle Identification Numbers (VINs), or an absent title. For example, a seller may claim the title is “in the mail,” which could indicate the car is stolen or has liens. Verify the VIN matches across the car, title, and service records, and never proceed without seeing a clear title in hand.
High-Pressure Sales Tactics
Car salespeople are savvy professionals. But in most cases, you are well protected when purchasing a used vehicle through a reputable car dealership. However, private sellers pushing for quick decisions can be a warning sign. They may use urgency to prevent a thorough inspection or background check on the car.
For instance, a seller insisting the car “has several buyers lined up” might be trying to rush you into overlooking serious issues. Take your time to inspect the car and consult a mechanic if needed. And if they tell you that you can’t have a mechanic look at the car, walk away.
Signs of Poor Maintenance or Damage
Physical signs such as uneven paint, mismatched parts, or unusual noises during a test drive may indicate prior accidents or neglect. For example, if a vehicle’s bumper looks slightly off-color compared to the rest of the body, it could suggest a poorly executed repair. Always test drive the car and have a trusted mechanic evaluate it before purchasing. And, consider running a CARFAX report on the VIN to get additional insights before making a decision.
Used Cars Can be a Great Deal, But Proceed with Caution
By no means are we trying to tell you that buying a used car is a bad idea. In fact, quite the contrary. We know that you can save some serious cash on a used car over a new car. That said, going into the transaction informed, avoiding getting emotionally attached to a vehicle, and having a mechanic on hand who can take a look, is always the best course of action.
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