Top Dealer Games You Can Avoid When You Buy Online

When you’re shopping for a new car, you spend a lot of time worrying about dealers. Yes, dealer games are definitely a hot-topic – they always have been, it seems – but these days, there’s a little more to it.

The advent of the internet and the growth of consumer power has left many of the unscrupulous out to dry. That’s good news, of course, but it has pushed the more ingenious to devise new ways to trap the unsuspecting.

Today, dealer games are highly sophisticated and they often go undetected by the inexperienced buyer – until now.

Here, we’ll outline for you the top dealer games, what they are, how they work, and how you can spot them a mile away.

Game #1: The first game we’re going to discuss is the good ol’ fashioned, “Financing Fell Through” game.

This is the oldest trick in the book and many people still fall prey to it. The story goes like this: you buy a new car and the manager gets you financing with a low APR. They and you the keys to your new car and you drive home feeling quite please with yourself.

Two weeks later, after you’ve put a nice 1,000 miles on the clock, you get a call from your dealer. You’re quite surprised to hear from them but it’s their news that really knocks you off guard. They tell you, in no uncertain terms, that the financing for your new car has, in fact, been rejected. You don’t actually own your new car! In particular, your dilemma has to do with the “subject to financing” clause on your contract. It’s come back to haunt you.

Like just about everyone else, you drive away from the dealership thinking all is said and done. When you sign the papers, you feel it’s a done deal. The dealer knows exactly what you qualify for before you sign so long as they are aware of your income and credit score.

What is the real problem behind the dealer's Retail Installment Sales Contract? The short answer: it's just a game. Avoid the problem all together by finding an alternative to dealer financing like your local credit union or independent bank.

Game #2: The second most popular game to be aware of is the Straw Purchase Game. This game was particularly popular in 2005 and 2006; its usage is linked with interest rates; fewer people qualify for loans when lenders tighten their belts.

The Straw Purchase Game in car buying involves the dealer saying that with you cannot qualify for a loan because of your low credit score. They tell you, however, that you can qualify for a car loan if you get a co-signer (having a cosigner will help you qualify build your credit again).

You find a co-signer as requested. In reality, the dealer knows that you can’t qualify for a loan but they also calculate that your co-signer is as unaware of this as you. What happens, in fact, is that your co-signer is presented as the primary borrower. This does nothing for you except require you to make the monthly payments and jeapodized your relationship with your co-signer. It might also put you at risk legally since some states, such as Texas, have laws against Straw Purchases on cars.

To avoid this game, either get your financing in order before you approach a dealer (don’t use dealer financing) or make sure that you and your co-signer both sign a single contract at the same time (avoid separate contracts).

Game #3: Forgetting to pay off your trade creates the basis for another common game. When you trade in an old car on which you still owe money, a dealer is supposed to present  you with a payoff figure and payoff the loan. When you are buying a new car, you can add the payoff amount to your new car. Several months later, you hear that the new car dealer did not, in fact, pay off your old car loan as they were supposed to.

The dealer pays you less for your trade than promised.  Ultimately, you are responsible for the loan and not the dealer. After all, the car loan is in your name although the dealer is supposed to be paying it off on your behalf. If the dealer does not pay off the loan, it is your credit score that is affected. If the dealer does not pay promptly, your score will still be affected.

If you do decide to take action against the dealer, a judge will definitely ask to see the contract that establishes the dealer’s obligation to pay off your old car loan.  If such a contract existed, you can bet there would be no such game.

To avoid this type of problem, don’t buy a new car when you still owe money on your old car. Pay off your old loan first. Once the first loan is paid off, you will get the title from the bank. You can then trade it in or sell it privately.