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July 16, 2014

Car Shopping: When Is A “Deal” Too Good To Be True?

Used-car-dealer-thinkstock-76686162x1200So, you’re shopping for a used car: Whether you’re browsing prices online, or watching the advertisements in the newspaper, we know that vehicle cost is always an important part of your research.

New or used, many shoppers suspect that car dealers may publish prices that are insanely low as a way to get shoppers to come in and take a look at what’s on the lot. They’re called “loss leaders” and by the time consumers get to the dealership, the car has already been sold, or it’s an unappealing model that nobody really wants to buy anyhow. And then the dealer tries to upsell the shoppers into another car on the floor, or attempts to negotiate a sale of the inenxpensive car with expensive loan terms.

Used car pricing too good to be trueHow does a shopper know when such low car prices are too good to be true? According to a recent article at ISeeCars, one way is to look at the price; if the price seems to good to be true, it very well may be. In fact, their recent research shows lower-priced used cars are much likelier to be potential scams than higher price ones.

To determine which used car prices may be too good to be true, looked at 50 million used cars for sale by dealers over the last two and a half years and analyzed vehicles that were priced abnormally below average market value. These “too good to be true” offers were analyzed to confirm their validity by considering several other factors including advanced age, high mileage, or accident damage; the dealers themselves were evaluated for their reputation and any suspicious comments about them in online rankings.

Their findings show that the chances of a used car being too good to be true increase as the published price of the car gets lower. A used car priced more than $12K has a 0.3% (or three out of every 1000 vehicles) chance of being a potential sales scam. However, vehicles priced under $5K are 7.3 times more likely to be so at 2.2% chance (or 22 out of every 1000 vehicles). Cars less than $3K have the greatest odds of being too good to be true at 5% (or 50 out of every 1000 vehicles)!

High-mileage-golf-10544854_10204252797783148_11023308_crop“It may be that dealers think they are more likely to get away with cheating people who are looking for lower-price vehicles,” Phong Ly, co-founder and CEO of said. “We found examples of cars being advertised for much less than their market value or what they’re worth. The dealer’s hope is to lure the potential buyer into the dealership in an attempt to sell them a different car or the same car but on an expensive financing plan. It may also be that the advertised car has some major undisclosed issue or it could be odometer fraud.”

So what are other characteristics of used cars whose price is too good to be true and what else can a buyer learn to be more careful about? discovered that 50% of the vehicles that may be a potential scam are priced under $10K. Further, there is a much greater likelihood of too good to be true listings coming from smaller dealers than larger dealers. Used cars that are 10 years or older or have over 100K miles are also more likely to be scams. offers the following tips for identifying and preventing a potential scam:

Do your homework.
Research the fair market price of the vehicle you are interested in purchasing. calculates a market price for each car; also check pricing services such as KBB, Edmunds, or ClearBook. If the one you are looking at is significantly less, be extra careful and ask questions of the dealer to find out if there are significant problems with the vehicle or if the vehicle is salvage. Buy and check the car history report.

Bring a copy of the listing or advertisement with you.
Check that the advertised VIN is the same as what’s on the car. If the VIN’s are different, or the car doesn’t exist, or the deal is significantly different then what is advertised, walk away. Any dealer who is not honest from the start is not someone you want to do business with.

High-mileage-toyota-matrix-best-10543105_10204252910185958_976292959_cropBe aware of odometer fraud.
Learn the basic signs of odometer fraud and be ready to check the vehicle for them when you get there. Buy and check the vehicle history report. One simple starting point is to look at the oil change sticker or car records to see if the mileage posted on those corresponds with what you are seeing on the odometer.

Prepare a list of questions to ask the dealer.
In addition to reading the vehicle history report, ask the dealer some questions. The answers may lead to why the car is so inexpensive. Ask if it’s been in an accident, if it has been through a weather event (hurricane, tornado), if it is up-to-date on all recall repairs, etc.

Research the dealer. has dealer ratings that will let shoppers see how price-competitive and transparent a dealer may be compared to other dealers. In addition, do an online search to see what people are saying about the dealer. Visit the Better Business Bureau or review sites to see if there are any complaints.

Have the vehicle inspected by an independent mechanic.
This is one of the most important things to do especially if you’re buying a car that no longer has a manufacturer’s warranty. Ask the dealer if you can get an independent mechanic to inspect the car.


High-mileage-mini-10500387_10152513696350733_8730145371777954219_cropMethodology of the Study: is a car search engine that helps consumers find the best deal by providing key insights and analysis about each used car. The proprietary algorithm ranks cars by calculating an overall score based on analysis of the car’s condition, history, negotiability, price and the dealer.

For the purposes of this study, analyzed over 50 million used cars for sale by dealers from January 2012 to May 2014. A car was considered a potential scam or too good to be true if the asking price was abnormally below average market value. Additionally, “too good to be true” listings were also analyzed for several other factors to confirm their validity including dealer reputation and suspicious comments. Vehicles where the dealer gave a reason for the low price, such as the vehicle was salvaged, did not run, or required repairs were excluded.

Thank you to Melissa Spiering and Don Burnside for sharing the odometer photos of their very-high-mileage cars1 


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