How to Know it a Dealership is Legit

If you’re worried about buying a car from an untrustworthy or illegitimate dealership, you’re not alone. Whether getting ghosted after paying your deposit, finding out the friendly dealer you spoke to is a fraud, or even unintentionally driving off in a stolen vehicle, buying a car can be risky. With so many dealerships around and complex fraud schemes to spot and avoid, figuring out how to know if a dealership is legit will save you time and money - not to mention ensuring you drive off in the car you deserve.

In this article, we explore what it takes to know if a car dealership is legit. We’ll discuss how to evaluate a dealership’s credentials, conduct due diligence on the business and what to look out for to avoid losing tens or hundreds of thousands of Rand when buying a car.

Introduction

Have you ever been scammed or misled when buying something expensive? Millions of people around the world are taken for ‘rides’ every day. From being duped into paying for services or products that don’t exist to realising that the warranty they paid for is worthless or returning to the business to find they’ve suddenly closed shop, illegitimate car dealerships are everywhere.

Unfortunately, when it comes to cars, the stakes are much higher. Aside from the huge amounts of money on the table, buying a car can be complex, and many scammers and illegitimate dealers take advantage of this. That’s why knowing who you’re dealing with and whether or are genuinely a trustworthy car dealer is so vital to ensuring a happy car-buying journey backed by automobile sales integrity you can count on.

Why dealerships are a better choice

With so many illegitimate dealers around, why not choose a different option to buy your car?

Because your car-buying journey should start safely

Well, purchasing a vehicle from a trustworthy car dealer or recognised marketplace is often seen as a much safer option than buying a car from a private seller or on social media. Check out this post on eight steps to buying a quality used car through a legitimate car sales process before you start searching for your dealer.

Going the official route

Dealerships are businesses that must be registered, must adhere to rules and regulations, and depend on keeping their reputation intact for their success. Legitimate businesses are easier to find, can be held accountable for their practices and often have the financial resources to correct any mistakes they make. Dealerships are also easier to assess and evaluate than informal sellers, not to mention the automobile sales integrity standard they are required to conform to.

But that makes untrustworthy dealers even more dangerous

Unfortunately, some people have found ways to take advantage of the fact that dealerships are seen as better options to buy a car. They use this perception to trick car buyers into letting their guard down, misleading them into thinking they are registered, reputable dealers, only to disappoint later.

Some of the risks of buying a car from an illegitimate car dealer include:

Losing your deposit when you’ve done nothing wrong
Purchasing a damaged or low-quality vehicle without knowing its poor condition
Experiencing bad service or broken contractual agreements
Struggling to get money refunded or reimbursed
Not being able to claim your Right to Repair
Purchasing a car without following the correct legal processes
Not being able to register the vehicle in your name
Unknowingly getting involved in a criminal enterprise

Understanding the business basics of a legitimate car dealership

In order for us to be understand how to know if a dealership is legit, first we need to examine what constitutes a car dealership that you can trust. Here are some of the non-negotiables that apply to legitimate car dealerships (or any legitimate business) that you should cover before evaluating them.

Business licensing and registration

Every business in South Africa is required to be registered as a commercial entity and to hold relevant licensing, depending on the industry they’re operating in. For vehicle dealerships, they must:

Be registered with SARS to hold a tax clearance certificate and be VAT registered if their turnover is over R1 million (which, for car dealerships, is highly likely).
Register with the Companies and Intellectual Property Commission (CIPC).
Hold a motor vehicle dealer license obtained from the Motor Industry Ombudsman of South Africa (MIOSA).

These are essential requirements for any legal car dealership, and if it does not meet these requirements, the dealership is likely illegitimate. You can verify the dealership's legal status, registration and licensing by visiting the Companies and Intellectual Property Commission (CIPC) website.

Business reputation and reviews

Next, you can move on to a more subjective evaluation of the dealership. This means checking online for customer feedback and reviews. Here, you'll apply your own needs and requirements as an important part of how to know if a dealership is legit enough for you.

Check for online reviews and ratings from past customers by typing the name of the business into Google and looking at their business profile and reviews on the right-hand side of the results page.
Visit their social media pages, such as Facebook, Instagram, and LinkedIn, to get an idea of how the public perceives them. Take time to read through the comments and look out for if the dealership responds to any complaints.
Look for any red flags or consistently negative feedback on sites like Hellopeter and by checking if there are any negative news articles or publications about them.

Take your time here - these are important measurements of whether the vehicle dealership is a good option or not.

Business size and resources

Once you have a view of how people feel about a car dealership, you can get into the more technical analysis. This will allow you to gauge if the dealer has the necessary capabilities, resources and capacities to meet your new or used car buying needs.

Look at the number of physical outlets or locations the dealership has. While not all of them may have brick-and-mortar facilities, the ones that do are often the most legitimate.
Consider the business’s financial position. Dealerships with good cash flow and access to financial resources are better at handling disputes and offering better deals.
You can also check the dealership’s market performance to gauge their automobile sales integrity track record. This involves finding out how many cars they have been able to buy and sell over the years and if their vehicle turnover is increasing or dropping off.

Evaluating the dealership's facilities and operations

Once you know the business is legally incorporated and have a good idea of who they are and what they can do for you, it’s time to evaluate the individual dealership. During this phase, it’s important to critically analyse the dealership itself and examine whether or not it can deliver to your needs and meet your expectations.

Inspect the physical location

Visiting the dealership in person is the best way to establish if it is the trustworthy car dealer they claim to be. Assess the overall cleanliness and functionality of the dealership, pay attention to the level of professionalism and courtesy of the staff, and don’t forget to consider where the dealership is located.

Examine the vehicle inventory

Investigate the size of the dealership’s inventory. Check how many vehicles they have on offer, and how diverse the available selection is. A dealership offering many different makes and models and dozens of cars is likelier to have the vehicle you want. Plus, chances are they are more reputable automative dealers than competitors with fewer vehicles. Ensure the cars on show are in good condition and properly maintained, and check for any discrepancies or potential issues the vehicles may have.

Investigate the financing and warranty options

Legitimate dealerships boasting high levels of automobile sales integrity often include attractive financing terms and warranties in their offerings. Investigate the dealership's finance conditions and policies in detail and ask the important financing questions that will directly affect you. Verify the availability and coverage of warranties on vehicles and compare these to other offers around the market.

Conducting good due diligence

Conducting good due diligence means checking out the business’s credentials and performance over the years. It means making sure you don’t miss any red flags and taking your time to decide whether or not the dealership is legitimate enough for YOU. Don’t be afraid to ask dealership representatives the hard questions and spend time evaluating and comparing against other dealerships around you.

Many good dealerships combine both physical locations with a strong online presence. Their extensive inventories are listed on their digital marketplaces, allowing buyers to first check out their collection before heading over to an outlet to see the car in person.

Auto Pedigree – As legitimate as car dealers get

There are many different choices out there when it comes to car dealerships in South Africa and how to know if a dealership is legit. Choosing between the legitimate ones and the not-so-trustworthy options can be tough. Still, if you do your homework and take the time to properly evaluate who they are and what they have to offer you, you should have no problem making the right decision.

Auto Pedigree is one of the largest used car dealers in SA, operating for more than 30 years. With 60 branches located across the country, finding a legitimate car dealership near you is easy. Aside from the extensive inventory of quality, low-kilometre used vehicles on offer, Auto Pedigree also provides a wide range of financial services, operates 13 accredited service centres nationwide and delivers exceptional service to thousands of South Africans every year.

What more proof do you need? Visit a legitimate Auto Pedigree today and see what a trustworthy car dealer can do for you.