Countless high school graduates are preparing for the next chapter in their lives over the summer season, whether entering the workforce, enrolling in college or enlisting in the military.
Regardless of their plans, an everyday necessity most recent graduates share is to have safe, reliable transportation, especially if their plans include moving to areas with few mass transportation options.
While some parents can provide a working vehicle to their children as a graduation gift, other graduates embrace their first opportunity to purchase a big-ticket item with varying confidence levels.
Purchasing a vehicle is not a task to be taken lightly and includes hours of research, thought and planning. With limited funds and a short timeframe, many young consumers turn to online marketplaces to search for and purchase a vehicle. Others enter a car dealership and find themselves unprepared to close the deal on their chosen vehicle. Unfamiliarity with financial terms, such as annual percentage rate (APR), compounding or simple interest and misunderstandings about required maintenance and cost further complicate the issue, causing frustration and disappointment.
In addition to these challenges, some may find themselves interacting with a car seller that is fraudulent or utilizing unethical practices. In 2021, Better Business Bureau received over 500 complaints regarding auto sales, renting and leasing businesses across Texas from May thru July. Reports to BBB Scam Tracker describe consumers losing thousands of dollars to fraudulent online sellers, often with no way to recover the money sent.
In March 2022, one Texas resident lost $2,400 after attempting to purchase a vehicle with a listing price of $1,200 online. “The seller told me I need to purchase the vehicle with eBay gift cards,” the consumer reported to BBB Scam Tracker. “After sending a payment of $1,200, I received an invoice that the client requested another $1,200 for insurance which they would return once the car was delivered. [The seller] then said I had to pay customs tax, and I called eBay to find it was a scam.”
To avoid unethical business practices and scams when purchasing a vehicle, whether at a dealership or online, BBB recommends following these guidelines:
Set a budget. Before finding the perfect car, it is important to establish an ideal budget. You will also want to factor in monthly expenses with owning a vehicle, including insurance payments, fuel, parking, and routine maintenance and repairs. A clearly defined budget will make choosing a car, negotiating with a dealer, and getting a loan easier.
Do thorough research. Once you have narrowed your search, compare models you are interested in, keeping a close eye on safety ratings, owner reviews and warranties. Visit manufacturer websites to see detailed images of each car and research mile-per-gallon (MPG) statistics, interior options, cargo space, towing capacity, and more. The additional time you spend on these initial steps, the more comfortable you will feel when making a purchase.
Shop for a deal. These may include cash-back deals, rebates, low-interest financing options, or incentives for recent graduates, military veterans, Uber and Lyft drivers, or first responders. In addition, many dealers are willing to make price cuts on the previous year’s models or any model that did not sell as well as expected. Purchasing one of these surplus vehicles can mean extra incentives from the dealer.
Speak with internet sales managers. When you find a car you are interested in, it is time to contact an internet sales manager. During your initial conversations, focus on what car you want, whether they have it in stock or can get it, and how much its price is. If you are considering purchasing a certified pre-owned vehicle, now is the time to ask for a copy of the vehicle history report.
Test drive the vehicle. You should always take a test drive before you sign the final paperwork. There is no substitute for seeing a car in person, looking under the hood, sitting in the driver’s seat, and making sure the engine runs smoothly. To do so, you may need to travel to the dealer’s place of business. Some dealers offer the ability to test drive upon delivery, and if anything isn’t as expected, you may be able to cancel the sale.
Complete the sale at the dealer or upon delivery. It is still usually necessary to sign the final paperwork in person. If you would rather avoid visiting the dealership, ask about delivery. Some dealers will drop off the car at your home or place of business and allow you to sign upon delivery.
Avoid Online Car Sales Scams
There are plenty of pros to buying a car online, but caution is also needed. Anytime you shop online, and especially when making an expensive purchase like a car, you should keep the following tips in mind:
- Watch out for too good to be true deals. They are most likely a scam. Scammers often steal consumers’ personal information and money by offering them high-value goods at highly discounted prices.
- Never wire funds or complete bank-to-bank transactions. Scammers love this kind of transaction because there is no way to get your money back once completed. Instead, make legitimate purchases by check or credit card.
- Contact the seller by phone. During your negotiations, speak with the sales manager on the phone. If they are unusually vague about specific details of the sale or cannot confirm their location or the vehicle location, it’s most likely a scam.
- See the car first. Never buy a car without making an in-person inspection and taking a test drive first.
- Don’t give in to pressure. Scammers often try to pressure you to give up your personal information or make a down payment before you have time to think about the purchase. Take your time and consider a deal over before agreeing to anything.
- Don’t trust a seller or buyer who says that eBay, PayPal, Craigslist, or another online marketplace guarantees the transaction. These sites explicitly explain they cannot guarantee that people using their services are legitimate.
See the BBB tips on buying a new car and buying a used car to learn more. You can also look up car dealerships at BBB.org to check their business rating and read customer reviews.