I used to work for a used car dealer and two friends of mine in other states operate used car dealer lots one legitimately, one not. What makes one legitimate is their Surety Bond or license which is very expensive ($35,000+) and is required by law for anyone selling more than 4-7 cars per year (depending on your state).
The dealer’s Bond’s sole purpose is to protect the buyer (You!) from fraud. A dealer that has his bond, is required to answer to any claims against him due to a car he sells that turns out to be a lemon, or is otherwise not as described. (So PRINT these Craigslist ads before you call them!) Because of this, the bonded dealer is very motivated to offer you a 30 day warranty on the vehicle, instead of getting surprised one day with a summons for court by a disgruntled buyer who intends to get their money back through his bond. Much cheaper to simply refund the returned vehicle, plus the buyer might still buy from him. Oh and did I mention anyone operating without a dealer license gets a HEFTY fine?
So! How can you tell a car is being sold by a sneaky un-bonded dealer and why is it so bad to buy from them?
Why Buying from Unlicensed Dealers is Bad.
1- They are selling cars for a profit. This means they bought it for at least 30% less than what they are selling it for. Ok not a crime. But where did they get these cars so cheap that they can sell them for a profit all day long? Two common answers are Auction and Mechanics Specials
In both situations they are buying cars without seeing them/ testing them or knowing ANYTHING about their past. Then they simply repair them the best they can, as CHEAPLY as possible to get you to buy them and drive away.
The trouble with this is that you’re not buying “my grandmothers car that she drove only on weekends” or this is a common one “my daily driver”, it is actually a mystery car that they got running and are trying to unload quick before they have to fix anything else.
So combine slimy used car salesman with sneaky mechanic and you get a dangerously cunning Ball of Sleaze. I feel we all can, and have, put up with one or the other at some point but if I’m trying to buy a nice reliable car I’d rather look a private seller in their eyes and ask them the right questions than get conned by a professional. They have the knowledge and experience to take advantage of buyers and not having a bond implies they intend to do just that.
Ok so buying from a fully licensed used car dealer gets a couple things or at least you can easily demand a couple things:
1) 30 day warranty against the claims made by the dealer
2) CARFAX report (he should have a dealer account so it won’t cost him anything extra) which he should have done for himself when he received the car.
3) 45 day temporary tag so you can drive it home; you can’t use a homemade one in SC anymore.
Great, so if you want to buy from a dealer find one that is bonded. If you contact them and ask if they have a bond and they stop responding, they DON’T have one! If they do, they are more than proud of it! Same with other trades; No licensed electricians go around pretending they aren’t licensed. Instead they are going bananas about those sleazy unlicensed electricians accidentally burning people’s houses down and getting away with it. Ever meet a Harvard grad that didn’t mention it in every conversation? People are proud of their legitimate businesses, if they have one.
So how can you tell the For Sale by Owner ad on Craigslist is a fake used car dealer?
- NO LICENSE PLATE . Not covered with a finger, not a paper one (if there is a plate you can run it at Carfax.com for FREE to see if it matches the vehicle).
- Is the key in the ignition? Look for the AUCTION TAG, usually a pink, yellow or orange colored tag with the vehicle description on it. And generally just ONE key, no house keys, no Justin Beiber keychain etc..
- “WILL NOT RESPOND TO EMAILS” “CALL ONLY” these indicate that they do not want a paper trail getting back to them. You should Google the phone number, they generally have a couple cars for sale at different websites.
If you can see all THREE of these things and they are listed as OWNER or they are suggesting that they have owned the car for a long time etc., RUN. No matter the deal.
Other clues are, the engine has been steam cleaned, making the car look brand new and most people don’t know about that so your average private seller won’t do it, or they would tell you they did it.
Look around the pictures closely, are there other cars nearby with no plates?
Is the Car parked in someone’s backyard? Or behind a building? Someone who flips cars for a living and doesn’t have a bond to protect his customers is like asking a homeless person to babysit your kids or watch your house while you’re out of town. There are better ways that protect your investment and loved ones from fraud and danger. It starts by looking closely at the ads and beware of these clues I provided as well as ads that offer no information at all.
Good luck.