Buyers beware: How to avoid online car buying scams
We often hear stories of people being scammed and it's not just the smart or very cunning scams that make the headlines.
A really simple scam is selling a car with outstanding finance. In New Zealand the finance stays with the car, not with its owner, so if you buy a vehicle with finance owing on it you'll get more than you bargained for.
If a vehicle is listed with a bargain price tag, it's often to lure in a quick sale and it's usually a very rushed affair. The seller may use the excuse that they're moving overseas. Typically there's nothing really wrong with the car itself, few contact details are exchanged, the car is re-registered and it's not until months later when a repossession firm shows up that you realise the car had finance owing.
This isn't an overly complicated scam but often leaves those affected both carless and penniless.
Sometimes sellers will advertise a trade offer where the listed car is of greater value than your own. Again this will try and lure you into a quick trade without doing appropriate finance checks. Both are easy traps to fall into but look for early warning signs - if the deal is too good to be true and the seller reluctant to exchange details, there's usually something dodgy going on. If you have doubts, get the appropriate finance checks done before you decide to buy and give yourself peace of mind.
Another online scam is when a car is advertised for sale on a website and the seller poses as a dealer. Usually the vehicle will be listed with a very low price tag compared to its actual value of the car -- and the conditions provided by the seller require you to pay upfront. The seller advises that after payment has been received the vehicle will be transported to you. If you're not satisfied you can cancel the contract and return the vehicle. However, once the payment has been processed the vehicle never turns up and the seller disappears with your money.
Scams targeting online car auctions appear to crop up frequently. In these, the scammer is usually overseas or out of town and wants to buy your car for a friend or relative. They might tell you about their elaborate life story to make it seem they have a heart of gold and are trustworthy.
Initially the buyer will contact you offering to buy the car for the exact asking price on the website, no questions asked. They'll ask if they can pay you using some sort of online payment system and before you know it you receive a fraudulent email saying payment has been processed, along with extra money to cover costs for transporting the car to a fake address.
The buyer is in a rush for some reason and will ask you to pay the extra money on to a shipping company's fake online bank account ahead of the money being cleared into your own account. The fake confirmation email makes it seem legit, so you transfer the shipping costs as requested.
A couple of days pass, the money has left your account but the payment into your account still hasn't been cleared. The type of online money transferring system used turns out to be hard to trace and near impossible to get your money back from. This time it's the buyer who disappears, but once again you're left out of pocket.
With any scam there are several early warning signs to watch out for such as lack of personal contact details, the overseas location of a person, unconventional payment methods and the urgency of a sale.
Our best advice is to avoid rushing into anything -- these things can and should take time.