This scam occurs when the dealer delays paying off your car, because of his floor plan. A floor plan is a credit line for dealerships to buy vehicles; they can go to auctions and get their inventory without paying for it up front.

This is obviously very handy for small dealerships that do not have enough money to pay for their cars. The lender receives interest payments from the dealer for their inventory and is then paid when a car is sold.

Most dealers don’t want to keep hundreds of cars on their lots without a floor plan, since they have to pay a commission every time they sell a vehicle - so often, if is a bad month, they delay the clients’ paperwork in order to manage their numbers and not have to pay the lender.

This way, you have just bought a beautiful car and you think everything has gone smoothly, but the dealer might have delayed the registration of your new toy, while they still have the loan from your bank.

How to avoid: this scam does not happen very often, as the dealer could lose their floor plan forever and be put out of business, but it still occasionally occurs. The worst scenario would be if you have an accident while your car is not registered to you; you won’t be able to get the insurance, even if it’s not your fault. Make a phone call the day after you bought the car to check with the dealer, just to let him know you are on the ball.