You've Been Warned: Buying A Car From A Small Dealership Could Cost You

Choosing a car is a process that deserves careful thought, particularly regarding where you make your purchase. Opting for a small dealership can sprinkle your experience with several perks: sharper deals, more attractive price tags, all while supporting a local business. However, this route isn't without pitfalls that can transform your buying journey into a less than joyous affair.

There is the deceptive tug on your wallet. When you buy from a small car dealership, you might notice the sticker price seems just right. Don't let that fool you — the overall cost is way higher and you will find out at the point of payment. You see, small dealers often set low prices to compete with the big guys. To make the money back, they might sneak in extra charges into the final bill. Things like inflated documentation fees, title transfer, reconditioning, and other hidden costs can send your budget spiraling by hundreds, even thousands, of dollars and makes it tricky to compare deals and plan your spending ahead of time.

Another challenge when buying from small dealerships is financing. While larger dealerships tend to have partnerships with various lenders, which gives buyers financing options, small dealerships might only offer limited or higher interest rate financing. If you want to get a car, explore financing options outside of the dealership. There may be more issues to look for, as well.

When buying from smaller dealerships, there's a considerable risk related to the vehicle's history. Unlike larger dealerships that often have access to comprehensive records and work with trusted third-party services, small dealerships may not offer the full transparency. They may not provide detailed maintenance records or an extensive vehicle history report so they could sell a car with hidden problems that will cost more in the long term. This becomes your problem if the vehicle was involved in an accident, or major mechanical failures.

Also, small dealerships may put you in the line of fire of "title washing," where a vehicle's history is intentionally concealed by altering its title, making it appear as though the car has a clean history when, in reality, it may be a "lemon" — with major defects that affect it's safety or value. To know if a car has been in a flood, look for rust in hidden areas like wheel wells and under the car, or moisture in the headlights and taillights.

Some dealers can cover these bases. So get a Vehicle History Report (VHR) from reputable sources like Carfax, AutoCheck, or the National Motor Vehicle Title Information System (NMVTIS). This report can reveal if the car has been labeled as "flood-damaged" or a "salvage" vehicle. Be wary of cars with recent title transfers across states, which might be done to hide flood damage.

The first thing to do when you are visiting a small or even large car dealership is to get a trusted mechanic or a car expert to perform a thorough inspection before purchasing any used car. This can help identify potential problems that may not be obvious to a newbie. Sure we have the consumer protection laws and regulations designed to safeguard buyers from unfair or deceptive practices. However, these may be restrictive when dealing with smaller, independent dealerships. Small dealerships may not give you the same comprehensive warranties or return policies as larger franchised dealerships. This leaves you with limited recourse if problems arise after the purchase.

To avoid this, carefully review all documents and understand the terms and conditions before signing any agreement. You should also go through the dealership's policies regarding warranties, returns, and dispute resolution to understand your rights and limitations, and a detailed breakdown of the fees. If a dealership is unwilling to provide this information in writing, it is a red flag. If you can, secure independent financing before deciding to get a car. But you will not get it if you have a bad credit score because dealers work with different lenders that may be able to finance you even if you don't qualify for banks or other traditional lenders.