What to do When a Car Dealer Lied to You

Reviewed by: Attorney Chuck Panzarella

KEY TAKEAWAYS

If you are wondering what to do when a car dealer lies to you, then you are not alone. Every day we receive several calls from car buyers who have been lied to by their dealers.

The most common complaints are that the car salesman lied about the condition of the vehicle, warranty coverage, the features included, and the past history of accidents and service.

We frequently hear that the car dealer lied about the advertised price, financing terms, and loan rates, and the sale took hours to close, with extreme pressure to sign the contract without having enough time to review all the documents to sign.

The 7 Most Common Car Dealership Scams and Lies

Car dealerships lie to car buyers for one obvious reason: to sell more cars with maximum profits. Here are some of the most common lies by dealers when selling vehicles:

1. Dealer Lied About Price

By far, the most common fraud is when the dealer lied about the price. We pull a VIN report to research the sales history of every vehicle to verify that the advertised price was no more than the cash price paid. This can quickly be done to make sure that you did not overpay for your vehicle.

2. Dealer Lied About Warranty

Another common issue is when the dealer lies about the warranty, typically, the coverage is exaggerated; usually, the warranty sold by the dealer excludes necessary repairs, or excludes paying for parts and labor for common mechanical issues.

In some cases, the dealer fails to inform the buyer that the Manufacturer’s warranty still applies, or tells the buyer they need to purchase an extended warranty that is purely optional.

3. Dealer Lied to Bank

Another common issue is when the dealer lies to the bank about the income or employment status of the buyer. This may be hidden from the buyer, or the buyer may know about the fraud and the dealer will tell them they will not qualify if they don’t participate in lying to the bank. 

4. Dealer Lied About Repairs

Another common issue is when the dealer lied about repairs. Dealers frequently refuse to provide a copy of the CarFax or AutoCheck because they do not want to disclose the service history, or previous damage/accidents.

The dealer may provide a “clean” Carfax report. However, this doesn’t necessarily mean that the car is “clean”. Many accidents or flooding do not show up on a Carfax report depending on whether an insurance claim is made.

Dealers often lie to buyers about the service history and past maintenance to convince buyers that the engine is in “great” condition. In some cases, dealers do not disclose that the car was used as a rental vehicle or had sustained some damage. This lowers the value of the car.

5. Dealer Lied on Credit Application

Another common scam is when the dealer lied on credit application. Dealers inflate buyers’ income, time on the job, and the amount of the down payment to make sure that buyers will qualify for a loan. 

In many cases, buyers cannot afford to make high loan payments when they are approved with falsified income. This sets up a repossession scenario and hurts the buyer’s credit in the event of a default.

The dealer also benefits by collecting on the loan from the buyer after a repo, and they turn around and sell the car again [and again] making a profit multiple times.

6. Dealer Lied About Down Payment

Another common fraud is when the Dealer lied about the down payment. On the contract, the dealer is required to write up the exact amount of the down payment, whether it is paid on the date of purchase or divided into payments over time [deferred down].

Many dealers inflate the amount “paid” as a down payment, knowing that it will help the loan approval process. It is clear fraud when the dealer inflates the amount of the down payment or fails to clearly write up the deferred down payment due dates.

7. Financing Scams

Car dealer financing scams are very common because the loan terms can be confusing to the average buyer. Common scams include telling the buyer their credit score was too low for a premium interest rate and term, forcing them to accept a higher interest rate and term than necessary. 

One common scam is called yo-yo financing, where the dealer sends the buyer home with a car “pending loan approval” knowing that the approval will not happen – and calls them back to the dealer within 10 days to sign a new contract for a higher interest rate and worse loan terms.

Sometimes the dealer will tell you that you need to purchase additional items such as GAP or a Vehicle Service Contract to get financing. NOT TRUE. These are ALWAYS optional and you may decline to buy them.

You may be quoted a monthly payment at the time of the sale without realizing that it reflects not only the vehicle price, tax, and interest but also additional items that were never even mentioned to you.

What to Do If You Have Been Lied to by the Car Dealer

If you believe that you were lied to by your car dealer, or you think your vehicle was in a prior accident, contact our auto fraud attorneys for a free consultation. We have a long track record of bringing legal claims against auto dealers and can quickly assess your case in just 5 minutes.

Some buyers contact the salesperson to address the issue. Bad idea! If they lied to you once, they will probably lie again. Instead, contact our auto fraud attorney first who will assess your case for FREE, and then, if your case is viable, we will represent you in your case.

Many dealerships systematically lie to car buyers assuming that car buyers will not take any legal action against them. We help car buyers who have been lied to by their car dealer get their money back and get out of their contract.

Call us at (818) 254-8413 today and we can tell you if you have a case in just 5 minutes! The call is FREE and the peace of mind is PRICELESS!