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How to avoid online car buying scams Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by offering interactive tools and financial calculators as well as publishing unique and impartial content. We also allow you to conduct research and compare data for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that are advertised on this site are from companies who pay us. This compensation could affect how and where products appear on the site, such as for instance, the order in which they may appear in the listing categories in the event that they are not permitted by law. This applies to our mortgage home equity, mortgage and other home loan products. This compensation, however, does affect the content we publish or the reviews appear on this website. We do not include the universe of companies or financial offerings that could be open to you.
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5 min read Published October 13, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the details of using loans to buy an automobile.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances through providing precise, well-studied information that dissects complicated topics into bite-sized pieces.
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Making a purchase from the convenience of your home by just a few clicks is a great option however, it comes with some risk. Like the majority of the internet there are scams that have slipped into the online world. Beware of common scams to ensure you don’t make a loss when you purchase an automobile. Common online car buying scams The FTC (Federal Trade Commission) has for online car sales, but there are several common scams to look out for when . Identity theft Scammers do not just want to swindle you out of your funds, but also to collect your personal data. They’ll ask for details such as you Social Security number, birthdate or banking numbers. Don’t share your personal information with prospective sellers, other than your name and telephone number. If you apply for the position, make sure it’s licensed, legitimate and has good reviews. If not, it’s more beneficial to apply outside of the dealershipor visit a place where to verify that the seller is above board. Fake ads When you are searching for a private sale there are ads that do not include the VIN or vehicle identification number. If you are not able to verify that the car exists — in other words, seeing it in person and be sure that the VIN is valid — don’t send money. It’s not uncommon for fraudsters to advertise vehicles in ads but not have it. If the vehicle is present, ensure that it’s not listed as stolen and that it has a clean history report. The scam of “curbstoning” occurs when a dealer pretends to be private sellers with the intention of selling an unconformity-related vehicle with normal dealer regulations which means it has an unsalvaged title or is otherwise damaged. A salvaged title could be a major problem when it is time to insure the vehicle. You can avoid this scam by staying clear from vehicles sold online from empty lots or on the side of the road or at the residence of the seller. Like all private sales, make sure you check whether the seller and VIN are authentic before you sign a contract to purchase. Buy sight unseen. Never sign a contract to buy a car without seeing it. Not only is it best to take your potential car for a test drive and purchase it sight unseen, but it could mean that the car may not appear as the photos suggest or worse — not exists at all. If the seller pressures you or encourages you to complete a fast deal before you have a chance to see the car in person, it is probably a fraud. Demand a wire transfer or gift cards If the potential seller asks for an electronic transfer to make the payment of the vehicle, leave. This is a tactic that scammers use to steal your money and offer no vehicle in return. The money you wired isn’t traceable and extremely difficult to trace. This means you may end up with no car and no potential reimbursement. Similar to scammers wanting payment via wire transfer, a few sellers will request gift cards for the payment. Again, walk away. Gift cards cannot be traced and means that the seller is likely attempting to fraud you. Title washing Title washing is an attempt to conceal damage caused by a wreck, or other problems with the vehicle’s past. If you do have to pay for it yourself make sure you get a car history report to the VIN. This isn’t guaranteed to show you everything the vehicle has been through, but it can help you avoid falling prey to a scammer looking to offload an unsafe vehicle. Fake escrow account Although this scam can take place in two ways, it is important to be conscious of the need for fraudulent escrow accounts when buying a car online. Using an escrow account is legitimate method to keep both parties secure from fraud. However, scammers may use fraudulent escrow accounts to convince you to deposit funds directly into the seller’s account. When it comes time to collect the car and transfer the title the seller has stopped being available to be contacted — and you are stuck with no option to recover your money. Is online car buying a good idea? If you go through a legitimate service, then buying a car online is the same as purchasing a car from an auto dealership. If you choose to go with a private seller, do not allow the possibility of a scam happening deter you from buying. By being an informed consumer You’ll more likely not get fooled and will be more likely to leave content with your purchase. Benefits of buying a car online If you know the types of scams to look out for and look up a reliable source, buying a vehicle online can have its advantages. First, it helps save time. You don’t need to go to multiple dealerships and deal with physically browsing inventory on many. Online shopping gives you unlimited possibilities for shopping. Since you aren’t limited to the selection of a dealer and you can be sure to find a more exact fit for your requirements. There’s no sales pressure since, in the end, you’ll be browsing through websites via your phone or computer and not exposing yourself to professional salespeople. If you choose to go with a brand like Carvana or Vroom You’ll have access to national delivery. There might be a small fee, but if you locate the perfect car, it might be worth it. Drawbacks of online car buying Apart from the fraud, there are a couple of reasons why people prefer traditional dealers. Large online sources mean no negotiations. You can bargain with a private seller but you’ll be at risk of being caught in an enigma. Lenders may not offer financing for a private sale when you search online. Should they, then you may be surprised to find the costs are higher than those for a new or used car loan. You may not be able to do an in-person inspection until you meet with the seller , or have the car delivered. And it may be more difficult to have a mechanic inspect it when you are shopping online. What should you do if you’ve been victimized If you believe you’ve been a victim of an online fraud, there are a few steps you should take. Make a formal complaint directly to the fraud center. Contact your state attorney general. Report the fraud to the FBI . Inform the FBI of the . It could become difficult, or even impossible, to obtain your cash back if you made the money via wire transfer or transferred gift cards. Be aware of the transactions you made with your bank in the event that you have entered information on an illegitimate website. If you notice any activity, contact your bank regarding the fraudulent activity and change any usernames or passwords linked to the account. The bottom line If you think a deal on a car is too amazing to be real, it probably is. The purchase of a car online could be a safe method to buy a secondhand vehicle. But you need to keep an eye on common scams and trust your instincts. If something seems off then it’s probably. In time’s end, there’s a lot of used cars available on the market. You can always opt to walk away from a deal and locate a different, more legitimate seller on trusted websites — or go with the used car dealership. Find out more
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Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ways and pitfalls of taking out loans to purchase a car.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since the end of 2021. They are enthusiastic about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces.
Auto loans editor
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