One week later, the dealer calls to tell you that because of a problem with the financing, you must pay an additional $2,000, pay a higher interest rate or trade in the Mustang for a cheaper car. The dealer threatens to immediately repossess the Mustang or have you arrested for auto theft if you resist. After you decide you no longer want to be a part of this deal, you ask for your old Honda back, but the dealer tells you he already sold it.

Unfortunately, this a common car-dealer scam where the dealer sells you the car you want, but pulls a bait-and-switch with the financing. The dealer will guarantee financing at a particular interest rate, then change his story in order to force you to agree to pay extra money.

While this tactic is often illegal, taking the dealer to court can be time consuming and expensive; the best thing to do is to avoid this or any other type of scam before you sign a financing agreement. If you are in the market to buy a new car, follow the steps below to avoid common car dealership scams.

Leave yourself time for the process
Give yourself as much time as possible to buy a car, especially if it is used. Allow at least three days, but give yourself several weeks if you have the time. Don't allow yourself to be pressured to sign a contract at the end of the day. Always be able to leave a car dealership without purchasing a car. If you absolutely must buy a car in one day: pay cash, do not finance. Go to as many dealerships as possible, and set the maximum amount you're willing to pay, and don't budge from this amount. If the dealer offers you a “nicer“ car for more than your maximum, walk away.

(Used) Investigate the car's history
A seller must have a car's title document to sell it. Ask to see the title and look to see if it identifies the previous owners and how long the current seller has had the car. If you have time, try to contact the prior owners and ask them about the car's history. Use www.carfax.com or other similar service to see if any information is available on the car, including odometer disclosures, how many times it has been titled, and if it was ever branded flood or salvage. (NOTE: CARFAX and other similar services do not provide a complete history on the car, but can provide useful information. The Air Force and the 11th Wing Legal Office do not, in any way, endorse CARFAX or other similar services.)

(Used) Investigate the car's current mechanical condition
Have a mechanic check the car over. Spending a hundred dollars now on an inspection may save you thousands of dollars in repairs in the future.

Research the reasonable price for the car
Use Consumer Reports, NADA (www.nadaguides.com), Kelley Blue Book, or other available materials. You can also look at classified ads, www.cars.com, www.autotrader.com or www.edmunds.com.

Shop the credit terms if you finance
You do not have to finance your vehicle with the dealer! When taking a loan out on a car, you must be provided with a Truth In Lending Act disclosure that gives you information about the financing, including the interest rate, finance charges, total payments, etc. Before you sign any credit contract, ask for a written copy of the Truth In Lending Act disclosures from the dealer and take it home to review. Then shop around for a better rate! Contact a bank, credit union, and⁄or other lenders, and ask about their loan rates for the same car. Obtain a Truth In Lending Act disclosure from each institution that can offer you financing. Then compare all the numbers and see which deal is best for you. Although not always followed, federal law requires you be given a copy of these disclosures before you sign. Never sign any conditional contract, bailment agreement or delivery agreement. Also, beware of any dealer who says you are approved to borrow much more than others have been willing to loan you.

Read all the contract documents
The only way to know the terms of the deal is to read the contract. Do not sign any document without thoroughly reading it! Carefully review all documents for anything marked as an option, and only agree to it if you wanted it. If there is anything you don't want, cross it out and initial by it. Have the dealer's sales manager initial by it, as well. If you finance, look out for a paragraph in bold print that says, “The dealer has the right to rescind (undo) this contract if the dealer is unable to find a lender willing to give the customer a loan for the proposed amount.“ If your agreement has this paragraph, you will probably soon find yourself in the bait-and-switch scenario described above.

Check that all numbers and promises are accurate and in writing
Any promise that is not in writing is extremely difficult to enforce. All the terms and numbers must be accurate. If you are financing a car, make sure every document is true, with no false numbers. If the dealer states he or she changed the numbers so it will work itself out in the end, insist the numbers be changed to reflect the true amounts. If the dealer refuses, do not sign the document.

Be sure that title is signed over to you by the seller
The only way to buy a car is to have the title held by the seller signed over to you. The federal odometer disclosure must be on that document. Whether or not you finance the sale, you must still see the actual title held by the seller and the seller must sign it over to you. Never buy a car from someone if they do not have title to the car they are selling.

Research the dealer
Research the dealership before you buy a car from a dealer. Look up their record with Better Business Bureau (www.bbb.com) and even Google the dealership and⁄or sales person by name. Even a “reputable“ dealership may have complaints lodged against them.

Almost all car sales fraud cases can be prevented by the consumer. If you can, try to pay with cash. If the choice is between purchasing a cheaper car for cash and purchasing a more expensive car with financing, choose the cheaper car. Remember, you always have the power to get up and walk away from the deal. You will be surprised how a deal that expires by the next day will actually still be offered a week later and can still be negotiated down. If an offer is too good to be true, it probably is.

If you believe you have been a victim of car sales fraud, contact the legal office at 202-767-5297 to make an appointment. Please be sure to bring all of the documents pertaining to the fraud to your appointment.