How to buy a car and not fall for the tricks of scammers

In the corona crisis, those who had long dreamed of owning their own cars reacted differently. Some postponed their planned car purchase, waiting for the market to recover.

Others rushed to dealerships, rightly believing that, in our country, prices for everything only increase during any crisis. Seizing opportunity to buy a car at “pre-crisis” prices, both large and small car dealerships, as well as scammers, sought to profit. Life analyzed basic tricks used by both disreputable and respectable sellers.

Gray Dealers: Lure and Cheat

The market for new cars operates in two dimensions: one part consists of official dealerships controlled by foreign car manufacturers, while other consists of “gray” dealers. These car dealerships may appear legitimate but have their own “special methods.”

Typically, “gray auto business” operates like this: a legal entity registered in a small province obtains a dealership for an obscure (often Chinese) brand. Official dealers of well-known brands must have a repair base, certified technicians, a large showroom, and a stock of branded parts, all of which require significant investment. Sellers of lesser-known brands don’t have such requirements.

Manufacturers of unknown brands are simply interested in finding someone to sell their products.

The “gray” dealer, armed with a license, opens a dealership in a large city and advertises popular brand vehicles, not ones they are licensed to sell. Aim is to lure customers in for further manipulation.

In ads, “gray” dealers often list prices even lower than those recommended by the official manufacturers. Of course, they don’t intend to sell at that price. The goal is to entice customers and get them to make an advance payment.

The absence of the car on-site is explained as being “from stock” and is supposedly ordered for client. Customers are encouraged to sign contracts and make payments, with promises that everything will be arranged.

Advice: Before dealing with any car dealer, visit the manufacturer’s website of the brand you’re interested in. All official dealers are listed there, along with recommended selling prices.

Official Tricks

Official dealers may not resort to fraud, but they have their own “marketing tricks.”

They may advertise “cheap” cars but won’t go below the manufacturer’s recommended price. They’ll tell you there’s a car at a very low price, and while that may be true, the main aim is to get you to visit the showroom, where they’ll try to upsell you on accessories like floor mats, a spare wheel, and, of course, an alarm system.

Once you’re there, they’ll inform you that if you install any equipment, such as an alarm system, outside their certified center, you’ll lose manufacturer’s warranty, urging you to order everything through them.

This is actually a trick. According to part 2, paragraph 2 of Article 16 of Law No. 2300-1 “On the Protection of Consumer Rights,” it’s illegal to force purchase of additional equipment. The fact that an alarm was not installed by an authorized dealer cannot void manufacturer’s warranty.

Official dealers make most of their money not from selling base-model cars but from selling additional equipment and services. Hence, pressure to buy extended warranties or undergo more frequent maintenance than recommended by manufacturer.

Tip: If the dealer claims you’ll lose warranty by installing equipment elsewhere or skipping extra maintenance not listed in the service book, ask for a signed and stamped official list of conditions under which warranty is voided. Mention that you plan to send it to the manufacturer for confirmation. In most cases, dealer will drop claim.

Also, there’s a difference between independent dealers and dealers representing a specific manufacturer.

Independent dealers don’t have their own stock and rely on advance payments. They order cars as needed. Dealers representing a manufacturer, on the other hand, must sell a certain number of cars and often have inventory on hand. These dealers sometimes sell cars in bulk to gray dealers, which is how the gray market gets actual cars.

Whether a dealer is “independent” or represents a manufacturer affects the price. A dealer tied to a manufacturer may offer a discount on slow-selling cars, but such discounts are rare.

Traps with Used Cars

Selling used cars is a lucrative business for all car dealerships. For large dealerships, used car sales are an additional business line. For smaller sellers, they may start as a dealer of obscure brands but focus primarily on used cars.

Their approach to taking money from clients can differ. Often, these dealerships post enticing ads like “Discounts up to half $10000” or “Urgent sale of 2018–2019 models.” Potential buyers are drawn in by these offers.

When you call, everything is confirmed. They tell you there are two cars left with low mileage, so you should act fast. They’ll show you the selected car and its documents, but the car won’t be sold at the advertised price.

Here’s how the scheme works: They present you with several versions of a contract, changing details each time. After you’ve reviewed and signed, you may be required to pay a non-refundable deposit of $5000-$10,000, or accept services that weren’t discussed, such as pre-sale preparation. The cost of these services is added to the car’s price, or VAT is excluded from advertised price.

If the buyer backs out,dealer still keeps deposit as compensation for time spent. At the time of transaction, car may no longer be available, or there could be an issue with the paperwork, or the car may suddenly have a defect.

The dealer will offer a similar car, but at a higher price. If the buyer refuses, they may suggest a cheaper car with high mileage or from a different brand.

The result is that the buyer ends up paying much more than car’s real value.

Advice: If the dealership doesn’t deliver car at agreed price, immediately call police and don’t leave showroom until they arrive.

While waiting, write a complaint in duplicate. Include details of the purchase, the deadline for delivery, and refer to Article 23.1 of “Consumer Protection Law.” Have the dealer sign to acknowledge receipt. Then file a report with police about fraud.

Often, these steps are enough for dealership to either deliver car or refund money. If they don’t, you’ll need to seek judicial protection.