Is this used car price too good to be true? Is it a scam?
This question usually originates as a result of online car buying and shopping. A buyer sees an ad for a used car with a price that just seems too low. Is it just someone really desperate to sell? Does the car have problems not being disclosed? Or is it simply a scam?
We see this question often on car buyer forums and discussion boards. Fortunately, the asker has become suspicious and has asked about it. Because many of these cases are actually scams, we worry about all the people who didn't become suspicious or didn't ask about it and got taken in by a scam.
The old saying, "If it seems to be too good to be true, ...."
Obviously, to know or suspect that an advertised used car price is too low means you must have some knowledge of "correct" or "average" prices. You gain that knowledge by doing a lot of shopping and noting prices, or you use a used-car pricing guides such as those from Kelley Blue Book or NADA Guides.
Sellers often price cars low when the car has excessive mileage, accident damage, engine problems, water damage, worn tires, cracked windshield, or has a salvage title. These are normal and understandable reasons for reducing price, and are usually explained in online ads where the cars are listed.
The suspicious prices are those that are too low, often way too low, without explanation. There can be several possible explanations:
Seller doesn't understand car pricing - It's possible that some sellers are not very car price savvy and are selling their car for less that fair market value simply because they don't know any better. However, this is very rare. Most sellers do at least some basic pricing research before setting their own price.
Seller knows about problems that he isn't disclosing - The seller hopes he can use a low price to snag a seller who won't detect the problems until after the sale when it's too late. This is why it is so important to get an independent mechanic's inspection on any used car you buy, whether it's online or not. Never take a seller's word about the condition of the car he's selling. It's not that all sellers are dishonest; it's that many seller don't know the full condition of their car. Also get a Carfax vehicle history report to determine if the car has been wrecked or salvaged.
It's a scam - This is the most likely answer when a car is being advertised online for a price that is much too low. We explain how the scam works in our article, Car Seller Scam. We find many people who suspect this scam will use Carfax to get a history report (the car's VIN is usually given in the online ad). However, this tells you nothing other than the fact that the car is real and exists somewhere. It just doesn't belong to the seller, because he got the car's picture, description, and VIN somewhere else on the web and used them in his ad.
Summary
Always be suspicious if you find a great used-car bargain for which there is no explanation for the low price, or if the seller offers suspicious payment and delivery terms. Buying used cars online at long-distance is much more risky than buying locally when you can see the car, inspect it, drive it, and talk directly to the seller.