Few Americans enjoy shopping at used car dealerships. Sellers are famous for fast talk, false promises and general untrustworthiness.

Worn-out customers drive off lots wondering if they overpaid for the wrong car, and whether they actually wanted the extras they bought.

Now imagine that process for young Chinese college students who just arrived in the United States. They are like sitting ducks.

Coming from a country where cities and towns tend to have popular and trouble-free public transportation, the world of American used-car dealers can feel like another world. For many new arrivals here, they are buying a car for the first time.

Everything from buying a vehicle to getting auto insurance can turn into a bureaucratic and cultural maze for Chinese buyers who are new in town. Salespeople at some dealerships are aware of this, and they are ready to take advantage of the situation.

A Deal You Can't Refuse

With a return to in-person college classes in the fall, there was an influx of international students, which was a boon for some used-car dealerships.

Carson Chiu in Fastrack Auto Inc.
(Photo courtesy of Carson Chiu).

Some went out of their way to attract such students. Carson Chiu, a pre-owned car dealer at Fastrack Auto Inc. in Rosemead, explained how dealerships target Chinese students. Efforts run from free airport shuttle services for new-arriving international students to advertisements in the Chinese student groups, such as Chinese Students and Scholars Association.

The logic behind the airport shuttles is to establish trust with students who know little or nothing about a new world, the U.S. auto market.

Building trust can also deliver a big payoff. Chiu says that the difference in prices for a vehicle in China and a similar car in America "can be quite huge," with many major car brands selling at a far higher cost in China, partly due to import fees, taxes and other added costs. He suggests that well-informed dealers know this and can charge higher prices than they usually would, while new-arriving buyers think, at least initially, that they are getting a good deal.

Beyond negotiating skills, some Chinese students don't know basics, like how to inspect a used car. Few are likely to understand how financing works in the U.S., which leaves them more vulnerable not just on the overall price, but on added costs.

Chiu said that many used car dealers have a bad reputation when it comes to honesty, especially about vehicles' accident histories. Some create a clean history out of thin air because convincing a buyer that a damaged car has a clean bill of health can sharply increase a sales price.

CarFax reports are a helpful resource that many Chinese students use before making a purchase, but they don't necessarily know that many drivers don't report accidents to their insurance companies and instead get their cars fixed at low-cost non-certified repair shops. Such cars might end up on used car lots without any record of an accident, making it easier to obtain a higher price from unsuspecting buyers.

An even more blatant tactic used by some dealerships is to simply lower the mileage listed on a vehicle’s odometer.

"I do not do all these kinds of shady business [practices] is because, first, I want to maintain a good reputation of the company," Chiu says, noting that the goal is to develop a long-term relationship with customers. "I think reputation is the most important element."

Chiu understands the vulnerability of new-arriving international students. "I just don't want any more international students to become a victim like I did," he says.

Chiu got scammed by a seller who took advantage of the fact that he did not carefully read the content of the car sale contract, which made it possible to hide the true condition of the car. Even though there was a consumer protection clause on the contract, the sales did not inform him about it.

The Fallen Prey

Used-car dealerships that cater to Chinese students have other methods, as well. Dealerships where staff or owners speak the language of the customer can help establish a sense of familiarity, especially when they are from the same ethnic group.

Before Thanksgiving in 2015, Shi Wang, a student at the University of California at Irvine, used to walk more than an hour from his home to campus. He needed a car.

His Chinese driving instructor invited him to a WeChat group. Most of the group's members are students, but there are also several Chinese car salespeople.

"The salesperson in the group chat sent me pictures of a 2013 BMW 335i with 30,000 miles and the out-of-door price was only about $29,000...the price is almost $5,000 lower than the market price," he said. Wang decided to check out the car, spending nearly $100 on an Uber to and from the dealership 40 miles away.

The dealer, who was from the same region as Wang in northern China, greeted him warmly and showed the high-quality, high-performance German luxury car he inquired about. "Her words made me kind of want to buy this car," Wang said. The search for a car over the previous several weeks had already cost him time and money as he went from dealership to dealership.

He bought the BMW. The car had a no-accident CarFax report, but it soon became clear that the dealer's high-quality sales pitch during the test ride was hiding something.

Reflectors on one side of the front bumper had not been properly installed. Wang began to suspect that the front bumper had been damaged and fixed before. When he purchased vehicle insurance for the car he purchased, the agent told him that there was no sign of an accident report for the car prior to his purchase.

Three day after he bought the car, the steering wheels began to make a squeaking noise on turns. There were also other abnormal sounds from the driver's side doors.

In his first year of ownership, he had to take his BMW 335i to dealerships at least 10 times: the engine lights came on twice; the interior rattled after driving for more than 30 minutes; the driver’s seat moved by itself due to a malfunction of the adjustment switch; the rear tail light sensor was broken due to a malfunction code on the computer; the air conditioning system began to smell horribly when he turned it on. In the second year, the engine started making a whining noise and it turned out that the belt tensioner needed to be replaced; both the oil filter housing gasket and valve cover gasket were replaced twice due to an oil leak issue.

"Obviously, this BMW 335i is not as good as the dealer sales mentioned to me," Wang said with a laugh.

A Chinese student studying for his undergraduate degree in New York who spoke on condition of anonymity, said he was scammed twice in Flushing by Chinese car dealers.

When he sold his first car, he lost about $2,000 because of a discovery that had been hidden from him by the Chinese car dealer who had sold the car to him. The vehicle had been in an accident.

The next time, the student decided to simply buy a car from a private seller and found a Chinese student salesperson to act as an intermediary to help contact a student who was selling his car. But he still inevitably fell for a second scam.

The dealer suggested a way for the student to avoid sales taxes on the purchase of the vehicle by listing it as a gift on the sales document. The car title only needed to include the word "gift" where you would normally write in the purchase price, and that would mean no tax on the sale. "I didn't dare to pay zero tax," he said, so "finally I decided to report half of the selling price to the DMV. The dealer said I had to pay him the money for the tax and he would transfer the title."

However, after the payment, the sales person refused to acknowledge the fact that the student had already paid and insisted that the buyer had to pay the tax to him again or he wouldn't transfer the title and give him the car. The negotiating process had been handled through face-to-face conversations, so there was no written agreement. He ended up paying tax twice, which cost him several thousand dollars.

"What you are exposing will touch their interests and I want to remain anonymous," the young man explained. "The Chinese community is too small, I do not want to be found," he wrote over WeChat. He added that "many gangster Chinese in New York do car dealership business, so Chinese students sometimes suffer losses and tolerate in order not to make things bigger."

Loan Scams

If a local student with a good credit history wants to take out an auto loan, the interest rates will start at 3% to 7%, but if a Chinese student without a social security number applies for an auto loan, the only option left for him/her will be a loan shark, and those rates start at 10%. The higher interest rates for international students give Chinese car dealers an incentive to offer those high-rate loans, and they advertise them.

Ashley Fan's white Mercedes-Benz C63
(Photo courtesy of Shi Wang).

Ashley Fan decided to buy a Mercedes-Benz C63 AMG Coupe. It is the sort of high-performance luxury car that appeals to a young woman like her because of its fancy appearance and status symbolism. The question was how? She applied for an auto loan with no social security number required from a Chinese loan company. The Koramoney company contract detailed a 25% interest rate and payments over 36 months. Her monthly payment is $1,313, she explained. The out-of-door price for the car is over $90,000, but adding on all the extra interest payments and service fees, she will end up spending six-figures for the car.

Her story suddenly reminded me of the day I was at a Chinese used car dealership in El Monte inquiring about affordable used Japanese cars, but the Chinese dealer conversely was touting BMWs and Mercedes in the parking lot to me, "We can offer you a no-credit loan with a low interest rate, and if you can refer a student to buy a car from me, you'll have one month payment waived," he said confidently.

He tried to persuade me to act as a student salesperson among USC’s Chinese students. After I politely declined, there was a flash of displeasure on his face, but then he immediately smiled and asked me what Chinese restaurants and supermarkets USC students usually go to, and asked me to pinpoint these locations on his Google Maps.

I refused.

Sellers don't care about the financial cost to young students in such a high-interest-driven auto loan business, "they just care about selling one more car." Chiu said.