Remember Joey's "Porsche" on Friends? With a few cardboard boxes, a strategically placed tarp, and a set of keys, Joey convinced more than one passerby that he’d reached peak luxury car ownership. A lot of common car-buying scams to watch out for are like this: They look good on the outside, but with one little bump, it all comes crashing down. 

Think you already know how to avoid car-buying scams? You might be surprised how convincing scammers can be, let alone the new angles they continue to develop. The good news is you can protect yourself from auto loan scams by finding a trustworthy local credit union. Meanwhile, learn how to protect yourself from many potential scams involved in buying a car.

Types of car-buying scams

There are plenty of common car-buying scams to watch out for, from a dishonest dealer turning back the odometer to a wholesaler hiding the vehicle's history. However, a little care can significantly reduce your risk of falling for tricks when buying a used car.

Here are the most common types of car-buying scams you're likely to encounter (in no particular order), along with some tips to avoid them:

1. Odometer scams

Despite added protections and controls in new cars, odometer scams have grown more common. By changing the mileage, a scammer can add thousands of dollars to a vehicle's perceived value. 

Your best protection against odometer scams is a full vehicle history report. Still, you can also check maintenance records and documents, such as the title and registration, for any inconsistencies in the recorded mileage. You should also get a full inspection by a qualified mechanic who can check for signs of odometer tampering.

2. Salvage scams and title washing

Title washing happens when a seller gets a new title to hide something about the vehicle's past. This is often done by re-registering the car in a state with limited title protections or requirements.

Additionally, you may have heard warnings about "flood cars" following a hurricane or other natural disasters. This form of salvage scam involves buying large numbers of salvaged vehicles, cleaning them up, and then re-titling and selling them without a record. This can also be done with cars totaled after a major accident.

A full vehicle history report is the best tool for spotting salvage scams and title washing. Look for frequent changes in ownership, particularly between companies. You can also look for specific indicators, such as a salvage title, or words such as "junk," "rebuilt," or "total loss."

3. VIN cloning

Vehicle identification number (VIN) cloning is a bit more sophisticated than other scams and involves altering the vehicle. The VIN is a unique number commonly displayed on a dashboard and is visible through the windshield. To hide the fact a vehicle was stolen, a thief or seller will find a valid VIN for a similar make and model of car, such as from a legitimate car lot. They will then alter the VIN on the stolen car and forge documentation such as a title and registration.

Vehicles will display the VIN in multiple locations, including the driver's side door frame and the engine firewall. Check all VIN locations to ensure they match. You should also look for signs of tampering or removal around all VIN locations.

You can also request a local law enforcement agency to perform a courtesy VIN check. During a VIN check, the vehicle's VIN is used to pull up details from a centralized national database. The details from the database can be compared to those of the car, including the name it is registered under and where it is registered, to ensure the VIN is correct.

4. Financing fraud

Unlike other common car-buying scams to watch out for, financing fraud is not about the vehicle itself. Most commonly, the seller hides details from the buyer, such as by adding on payments for made-up services or non-existent upgrades. The seller may also apply coercive tactics, such as convincing you to take the vehicle home before the financing is finalized and then trying to pressure you into a more costly contract after the original financing "falls through." 

Some scammers may even use a car sale to forge unrelated documents, access your personal information, and steal your identity. You should thoroughly review any financing paperwork before signing. Ask questions about anything that looks strange or that you don't understand. Watch out for pressure from the seller to rush you through the process. The more they try to hurry you, the slower and more thorough you should be.

One of the best tips to avoid car buying scams involving financing is to work with reputable and well-established businesses. If you anticipate needing financing, talk to a local financial institution with strong roots in the community, such as your local credit union. They have regular contact with local dealerships, and their not-for-profit status helps them offer lower rates on car loans. 

Tips for avoiding car buying scams

Many of the most common tips to avoid car buying scams may seem like common sense, but scammers return to them again and again for a reason — they work. Here are several ways to protect yourself:

Avoid deals that are too good to be true

Be particularly cautious when dealing with private and online-only sellers offering what appears to be a great deal. This also applies to high-pressure situations where you are told the seller is "motivated to sell" or there are "lots of other offers." Even legitimate sellers are more likely to look out for their best interests than yours.

Know the car's history

A vehicle history report gives you information about ownership, reported accidents, and recorded maintenance. You can also compare the report's details against the actual vehicle and the seller's claims to see if anything doesn't match up. Any discrepancies — even minor ones — should be treated as red flags.

Regardless of the history report, you should still get the vehicle professionally inspected. This will reveal potential mechanical or electrical problems and give you an idea of future maintenance or undocumented safety faults that may come up, such as a rusted frame that could fail in an accident.

Finally, thoroughly investigate the title and get a VIN check from a local law enforcement agency, as noted above. Pay attention to any concerns or suspicions raised during an inspection and a VIN check.

Protect yourself from predatory sales

Having financing figured out beforehand protects you from being pressured into accepting a price tag that isn't in your best interests. In fact, if you feel pressured at any point during a sale, take a step back and remember that you are calling the shots. 

Additionally, always protect your identity and personal information. A seller may want to start running your credit or try to get the paperwork started while you are still shopping. You do not have to let them do anything until you are ready.

Red flags to avoid

The most important tip for avoiding car-buying scams is to be skeptical. Don't let scammers catch you off guard by breezing past details or pushing you to sign too quickly.

Stay alert and keep your eyes open for red flags such as:

• Sellers who refuse inspections or come up with excuses for not needing them. This includes a seller who insists they have checked everything over, yet for some reason, doesn't want to put it in writing or certify it.

• Lack of documentation or inconsistencies can appear small but should not be overlooked. If something doesn't look right, hit the brakes and wait until your concerns are addressed.

• Sellers who push for cash payments may have plausible-sounding reasons. However, cash doesn't leave a paper trail, which is why sellers running a scam may insist on it.

• High-pressure sales tactics are often expected in any sales situation. However, even if the seller isn't trying to scam you outright, high-pressure tactics are never in your best interest.

• Unusual payment methods such as wire transfers or cashier's checks can be difficult — or impossible — to recover if you fall victim to a scam. Avoid anything without proof or traceability when buying something as expensive as a car.

What to do if you suspect a scam

Don't be too hard on yourself if you fall for a scam. If you think a crime was committed, contact law enforcement. And if you believe the fraud is potentially criminal—say you discovered you purchased a stolen car—consider contacting a lawyer to determine whether you might face repercussions.

Of course, you may still have legal options even if the scam does not rise to law enforcement involvement. If you feel safe doing so, you can contact the seller directly and demand they fix the situation. 

But what if you only suspect a scam and don't move forward with buying the car? You can still report your suspicions. If someone attempts to sell you a stolen car or turn back an odometer, this is unlikely their first time. Calling in a tip to local law enforcement could help protect someone who doesn't know how to avoid car-buying scams.

Further resources on how to avoid car-buying scams

Your best protection against car buying scams is knowledge and preparation. The more you know, the more likely you will spot a scam.

• Pay attention to the vehicle history report. Reporting agencies may focus on different aspects of a vehicle's history, so make sure you choose the right vehicle history report. 

• Know your rights. A lawyer specializing in consumer fraud will know best whether you have a case, but you can start by learning about federal consumer protections that may apply.

• Be cautious about fraudulent buyers. Car-buying scams can go the other way, too. If you plan to sell your car, consider these tips for spotting a fake check. 

Leave worry in the rearview mirror

One of the best tips for avoiding car-buying scams is to have a plan. You are the driver in the transaction, so remember these common scams to watch out for, and know you can pull over and stop any time you want. 

While the car-buying process should be a positive experience, constantly monitoring for scams and those who want to take advantage of you can make it more exhausting than exciting. Fortunately, your local credit union team is as invested in your personal outcomes as you are. Check out your credit union car loan options today!

Did you know?

Credit unions have extensive experience in the car loan marketplace, accounting for around a quarter of all auto loans issued in recent years. Unlike for-profit banks, the lower interest rates credit unions offer as not-for-profit institutions play a significant role in this, and so does their community-centered reputation for staying invested in borrowers' outcomes.