“Keeping clean” of scams should be high on used-car dealers practices, according to a CPA newsletter headlined USED-VEHICLE FRAUD.
Dealer CPA Dawn M. Lopez, of Tampa, FL, lists three of the most frequent scams as follows:
1. falsified loan terms
2. misrepresented mileage
3. misrepresented history and condition
Dealers are warned against targeting customers with weak credit scores, or running up the profit on a deal by using the dealership’s financing obtained online
Lying about mileage or history; which can be checked by an educated customer. (dealers should save their credibility by offering the used car histories first.
Bumping prep and handling fees,can invite the state’s attorney general to indict dealers for customer tampering or securities fraud. Says Lopez, “you may never realize how valuable your dealerships’ good reputation is until it is ruined by an unscrupulous employee.”
Used car dealers or departments at franchised dealers beware! Tradeins are higher quality than ever, are expanding their sales to such an extent that “lease here/pay here” deals have become viable as never before.
CPAs see the following three benefits for “lease here/pay here” business:
1. Federal and state income taxes can be reduced and deferred
2. Cost savings are generated in customer bankruptcies or vehicle repossessions
3. Lease-share dealers can apply minimum insurance coverage with lessors, as can dealers in some states.
CPA Jim Meade, of Brentwood, TN, advises that since lease accounting significantly changes finance statements on tax returns, “dealers should advise that financial covenants are not violated by adding lease-here or buy-here.
”All in all, the U.S. market has definitely enjoyed its return to leasing as a boon to sales. Why can’t Ally give parent GM a boost with more $99 monthly lease deals-as on Chevrolet Cruzes (advertised in those full-page ads heavy-duty?) GM Chairman and CEO Dan Akerson wouldn’t be so dour at his media events!
