Another popular option at dealerships is rolling the remaining loan on your current car (after taking off the trade-in value) into your new loan. This instantly puts you “underwater” on your car and could mean you have to pay cash out of pocket to cover the shortfall should you be forced to sell or have an accident that totals your new car.

http://callforaction.org/projects/buying-a-used-car/

Applying your tax refund to the purchase of a vehicle has become popular. This can seem like a great way to quickly get a down payment, however it can create problems. If the deal falls through after your tax return has been submitted to the IRS it can be a time consuming process to get your refund, often taking months.

http://callforaction.org/projects/buying-a-used-car/

STATE REQUIREMENTS
An equally important part of the purchase process is complying with state rules and regulations.

States tend to use a value guide, such as NADA, to figure the amount of sale tax due. Having a notarized sales agreement can help to challenge the tax due if it is based on a higher value then the price you paid.
http://callforaction.org/projects/buying-a-used-car/

Often dealers will handle tax and title services for you, normally covered by the processing fee they charge. Private sellers will generally give you the signed title and you must go to the local Motor Vehicle Department to complete the title and tag process. Look into the availability of temporary or “purchase” tags in your state to be used between the time of the sale and registration. This could keep you from getting a costly ticket for not having tags on the vehicle. Stand-alone tag and title service companies are also available to help you navigate the process for a fee.

http://callforaction.org/projects/buying-a-used-car/

Buyer Beware
Most auto dealers and private sellers are reputable but some are not – here’s how to watch out for common scams.
TITLE WASHING
Title washing is a practice used by sellers to remove brands and other negative information from a vehicle’s state issued title.

http://callforaction.org/projects/buying-a-used-car/

In many states once a car is totaled or flooded its title will be marked “salvage,” “rebuilt,” or with a similar brand. Some states don’t recognize or carry certain brands over to their titles. By having a car retitled in a state that does not brand titles it effectively creates what appears to be a clean title for the vehicle. This new clean title can then be used for a sales transaction or taken to a third state to obtain a local clean title for sale, making the car not only appear to have a clean history but also local origin. The car itself doesn’t have to ever leave the state, only the title paperwork moves around.

http://callforaction.org/projects/buying-a-used-car/

In many states once a car is totaled or flooded its title will be marked “salvage,” “rebuilt,” or with a similar brand. Some states don’t recognize or carry certain brands over to their titles. By having a car retitled in a state that does not brand titles it effectively creates what appears to be a clean title for the vehicle. This new clean title can then be used for a sales transaction or taken to a third state to obtain a local clean title for sale, making the car not only appear to have a clean history but also local origin. The car itself doesn’t have to ever leave the state, only the title paperwork moves around.
Title washing is often done with flood vehicles and other cars totaled in natural disasters. The loss of a salvage or rebuilt brand can be dangerous to consumers since often airbags and other safety features are not checked following a rebuild.
A good private history report will often uncover title washing and other important events in the vehicles past.

http://callforaction.org/projects/buying-a-used-car/

AS-IS
Buying a used vehicle “As-Is” leaves the buyer on the hook for any repairs needed from the moment the transaction is complete. Many consumers believe that there is a three-day cooling off period or right of return on used cars. No state has this law for vehicle purchases; it is normally only applicable to “in home” purchases (door to door sales).

http://callforaction.org/projects/buying-a-used-car/

Nationally it is legally required that all car dealers must place a window sticker on vehicles being sold “As-Is”. Most states use the Federal Trade Commission’ Buyers Guide while a few states such as Wisconsin and Maine have their own version.

http://callforaction.org/projects/buying-a-used-car/

Buying “As-Is” can also mean a number of possible safety issues may need to be addressed, like airbags and manufacturer recalls. To find recalls for the make and model you are considering visit the Nation Highway Traffic Safety Association’s website. Once you know the recalls to check for, call an authorized dealer for the make and model you are considering and have them check the VIN number of your perspective purchase to ensue the recalls have been completed.

http://callforaction.org/projects/buying-a-used-car/

An important note about “As-Is” sales and service contracts: If you buy a service contract from the dealer/seller within 90 days of the time of sale, state law “implied warranties” may give you additional rights.
http://callforaction.org/projects/buying-a-used-car/

DECEPTIVE FINANCING
Some dealers have been caught using ads that don’t provide the complete picture on price and payment information. Some will show a monthly payment price that is contingent upon a large down payment amount not mentioned in the ad. Others will create the price based on certain discounts that not all buyers qualify for, such as college graduate, military status and others.

http://callforaction.org/projects/buying-a-used-car/

Sometimes a low monthly payment will be advertised but it is only for the first few months of the loan, after that a higher monthly payment applies for the remainder of the loan. Another scheme used to advertise or offer a low monthly payment is balloon loans. These loans involve monthly payments for a set time, such as 48 months, plus a final “balloon” payment at the end. These balloon payments are typically thousands of dollars.

http://callforaction.org/projects/buying-a-used-car/

“Yo-Yo” financing is another tactic used by some unscrupulous dealers. They allow you to leave with the vehicle after accepting your trade with the promise of certain loan terms. When you return to complete the transaction the terms have changed and your trade-in “has been sold”. Another variation has you sign all the documents needed only to be called back later and told the financing you agreed to isn’t available and you need to comeback in and sign different, often higher, terms. Many states have laws that allow the consumer to return the vehicle and walk away (with their trade-in and downpayment returned) if financing falls through, but not all states have these protections.
Always carefully read the entire financing agreement and look for these unexpected terms before signing.

http://callforaction.org/projects/buying-a-used-car/

ONLINE SCAMS
AdviceToSellersThe increase in online vehicle marketplaces has led to a number of scams that prey on buyers. Sometimes it is as simple as the pictures and description don’t match the car being sold. Many of these transactions are done from afar and require travel or shipping expenses before you find the discrepancy.

Other ads are fake listings in order to get information from consumers, a practice know as phishing. The deals are often too good to be true and the scammers come up with very real sounding reasons for you to wire them money in advance or provide personal information that they can then use for Identity Theft.

Personal safety is also an important consideration. Always meet in a crowded area to view a vehicle and, if paying with cash, never take full payment with you. If needed, take a smaller deposit and only make the final payment once all of the details have been ironed out.

http://callforaction.org/projects/buying-a-used-car/

Remember that a reputable dealer will have a physical place of business. Some sellers attempt to avoid state dealer licensing and other requirements through a practice known as curb selling. They portray themselves as private sellers but actually sell multiple vehicles a year.

http://callforaction.org/projects/buying-a-used-car/

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We realize that buying a vehicle is second only to housing as the most significant and capital-intensive transaction you will face. For that reason, we have partnered with Call For Action Inc. (CFA), an international nonprofit network of consumer hotlines founded in 1963 whose mission is to empower consumers by giving them a voice larger than their own. Volunteer professionals in CFA offices around the world are trained to assist consumers through mediation and education to resolve problems with businesses, government agencies and other organizations. CFA’s services are free and confidential and available to all individuals and small businesses.

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