Yes, but unfortunately it is tax evasion on your part too.
I had the exact same thing happen to me.
I bought a car for $3500 10 years ago, and the dealership wrote it up at $750.00, claiming it would save me money.
What they really did was two-fold.
Dealer buys a car for $1000 at the auction.
Dealer puts $200 into the car to make it sellable.
Dealer now has $1200 invested into the vehicle.
Dealer sells the car for $3000 to Bob Smith, but convinces him to allow them to save Bob money by writing it up as $800. Bob agrees.
Now, on paper. The dealership has "officially" sold the car for $800, $400 less than they invested. They can then declare that as a loss.
Basically, it helps them evade taxes on profit. If they pull enough of them, they end up offsetting the profit made on legit or loan deals and showing little or no profit by the end of the year.
The other problem with this is, if you bring this to their attention, the response usually will be "well, you broke the law too by evading sales/excise tax, so I don't think it's smart to tell anyone".
They hold you over the barrel and scare you into keeping your mouth shut, when in all reality, you've avoided a lot less $$$ then they did, and they talked you into it.
My suggestion. If this ever happens to you, go DIRECTLY to the Better Business Bureau and your local Attorney General's office.
NEVER buy a car from a deal "as is".
NEVER try to save a buck by letting the deal sell you the car on paper for less than you're paying.
NEVER sign ANYTHING other than a normal sales form. Especially if it states something about you defering a standard warranty or something.
ALWAYS do your homework about a used car. Get retail and trade-in prices, car and driver reports, etc. Talk to people who have owned one. Search the Internet for Recalls.
ALWAYS have a mechanic (someone YOU know or trust) look at the car. A good mechanic will perform this service for $50 - $100 knowing that you will use him/her for service in the future.
ALWAYS shop around. If it looks too good to be true, or they seem way to willing to unload the car, WALK AWAY. It's most likely a problem car.
ALWAYS trust you instinct. If you feel that you're being screwed, you are. Remember something. If you are buying any car from a dealer, used or new, you will be screwed to some extent.
I suggest always buying a brand new car from a reputable dealer. Never buy the "year end" model. Always buy the new model in Febuary or March of the new model year. Never get more than a 60 month term on your car loan. You will owe more than the car is worth for almost the entire life of the loan.
So, in short... If possible, Research, Buy BRAND new, get invoice price info, offer $500 above invoice first, then talk about rebates or monthly payments.
Never let any car dealer show you the cost in the form of monthly payment. Agree on the price of the car, then move on to trade in, down payment, loan rates and monthly payments. Remember, $500 above invoice is usually acceptable. $1000 is normal for luxury cars.
The above recommendation to always buy new and to always buy the current model-year is horrible advice. I just bought a car less than 3 years old with some factory warranty on it for 33% of the sticker price. If you can't inspect a used car, most mechanics will do it for you for $50 or less. Even if the used car does turn up some problems, so long as you ensure that it's in good shape and runs well when you buy it, a used car is going to cost you far less in the long run than a new car.
I personally would never buy from a dealer who would recommend this practice. If they would try to steal money from the government what makes you believe you can trust what they say about the car?
A note on the above reply. Dealers who do this kind of thing hurt dealers reputations. The important thing is take responsibility when buying a car. DO YOU homework and have a fair price in mind. You get what you pay for.
Make sure to inspect the car and my recommendation is NEVER buy new unless you need the write offs or plan to keep the car for life and pay for it upfront. The best cars to buy are generally just off lease or just nearing the end of manufacturer warranty. An extended warranty is the cheapest to get at this time.
Try using sites like eBay where you can see peoples feedback before you buy.
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