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Top 5 Used Car Scams

Most people have a natural suspicion of car salespeople, and there are a million and one jokes about used car salesman. But getting ripped off when you buy a used car is no laughing matter. Here are five of the many used car scams that are out there - beware!

  1. Odometer Rollbacks.
    Rolling back the odometer is the oldest trick in the book, but one that is unfortunately all too prevalent. The National Highway Traffic Safety Administration says the numbers are escalating, in part due to the demand for relatively low mileage used cars. The agency estimates that odometer rollbacks rip off consumers to the tune of over $1 billion per year. Unfortunately, digital odometers are just as easy to manipulate as the old-fashioned kind. Your best bet? Check the vehicle's history with CARFAX or a similar service. You'll get a history of odometer readings so you can determination about potential odometer tampering.
  2. Lemon Laundering.
    When a manufacturer buys back a lemon, some states require that the car's title be rebranded to indicate that it was a Lemon Law buyback. Some manufacturers get around this by informally settling with a consumer (so it's not officially a "buyback") or by taking the vehicle to a more lenient state that doesn't require rebranding. Again, check CARFAX or a similar service for the vehicle's repair history to make sure you're not buying someone else's nightmare.
  3. Title Washing.
    Similar to Lemon laundering, title washing is a way to avoid rebranding the title when a car's been declared a total loss following an accident. Dealers will take vehicles to lenient states to have them titled, and then sell them to unsuspecting consumers. Don't succumb to the temptation of a speedy, too-good-to-be-true deal. Take the time to find out the vehicle's accident and repair history. By the middle of 2009, the federal government will have a database of vehicles that have been totaled, so that's a good place to start.
  4. Flood Damaged Vehicles.
    Following Hurricane Katrina, there was literally a flood of damaged vehicles that were sold across the nation. The same is true for the more recent Midwestern floods. Inspect a vehicle closely for signs of flood damage, such as dirt or rust in the trunk and glove compartment, moisture in the headlight and taillight assemblies, sluggish power windows, and so forth.
  5. "As Is" Requirements.
    If a used car salesperson insists that you sign an "as is" agreement, run away as fast as you can. Many states (though not all) prohibit "as is" sales, and every car sold automatically comes with what's called a "warrant of merchantability." This is a common sense warranty that says that the item being sold does what it's expected to do. Depending on the state, other implied warranties may be included in the law. Don't give your rights away by signing an "as is" agreement!