The Top 10 Auto Financing Scams
- Auto Financing
- Top Auto Financing Scams
Protecting ones credit stability needs to be done when applying for auto financing online, as well as when you're doing face to face negotiations with a car loan company. This is especially true for those who have bad credit and need a vehicle loan to help them rebuild their credit.
That is why our AutoNet Financial specialist have found the most used scams by auto lenders across the nation, and compiled a list that will help provide better insight when buying a new or used vehicle in the future.
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10 Common Car Loan Scams
According to Bankrate.com these are ten of the most commonly used scam tactics by dealers on people who are trying to buy and/or finance a car:
- 1. The Terrible Credit Score Trick
- In most cases special financing for people with bad credit is a much more complicated process for a dealer, but there are things that can be done to still get you into a vehicle; however, this usually results in higher interest rates. This equals more money for the lender, and since shady dealerships are aware of this they may tell an applicant their credit is too low for a normal loan and try to get them to sign off for more expensive financing.
- 2. Numerous Transactions
- There are a select few dealers who will try to roll the initial cost of an entire purchase into one transaction and make their customers think that this is all they have to negotiate for, but this is far from the truth. In fact, when a you buy a vehicle with low credit financing you actually should be negotiating for the vehicle price, any trade-in value, and the car loan as well. By doing each of these as separate transactions you can make sure you get the best deal possible on your purchase.
- 3. Manipulating Payment Plans
- Everyone likes the idea of having low monthly payments, and many bad credit auto finance companies knows this and some try to exploit this need. A seller may tell you that they can get you into a specific automobile for very low monthly cost, but you have to consider what the cost will be. In some cases it can be at the risk of a longer loan term or increased interest rates.
- 4. MSRP vs. Invoice Cost Ruse
- Many dealerships across the U.S. try their hardest to get a car buyer excited about the sticker price of a vehicle, but what you want to know is the
invoice cost instead. By knowing how much the vehicle normally sell for at our dealers you can better negotiate your way into range that better suits
what you want to spend instead of the dealer.
- 5. Cash Incentive Scam
- Often times a manufacturer and dealership may have different intentions when selling certain autos, and it's commonly seen with cash incentives. This is when a manufacturer offers a better price to help increase the sell of certain models, but some dealers don't make an effort to advertise these deals. Therefore, it's a good idea to occasionally do some research to locate some and them pose the question to a local car lot.
- 6. Financing Four-Flush
- When a consumer fills out a bad credit auto financing application they usually think that they have to wait long time periods to find out if they have qualified for their loan, but that is not necessary. Certain dealers can find out if you qualified for financing after 15 minutes. This tactic is often used to make you desperate and willing to take any kind of vehicle loan, even if it's more expensive.
- 7. Buying Insurance
- Once you have begun the car buying process it is very common to have a seller try to sell you an insurance policy. This is not necessarily a scam, but a salesperson can be overly aggressive and make you feel like it's a necessity. So, the best thing to do in this situation is to research the popular insurance policies that dealerships offer and see if they fit what you need.
- 8. No Interest Rate Trick
- Much like how low monthly payments can be very attractive to a car buyer, so is the opportunity to get financing with no interest rates. The reason these deals are not always a good idea is because they tend to be for short loan terms which have more costly payments. It's also worth noting that people with bad credit often have a more difficult time qualifying for these kinds of loans.
- 9. Very Long Loan Terms
- If you wanted to receive very low monthly payment rates with good interest rates you may be able to find a lending company that offered car loans for six to seven years, which sounds like a great deal right? Wrong. These types of loans are nearly impossible to pay off and may result in you paying more than what the car is actually worth.
- 10. The Rollover Scam
- It's funny how we as people sometimes finance a vehicle with bad credit auto loans, and before we pay it off want to buy a brand new model. Some dealers are aware of this and will offer you the chance to rollover your previous loan into a new one. This will prove very costly as you will now have to pay off a two loans and be in the same predicament as those with longer term loans.
How to Avoid Car Dealer Scams
Despite these being some of the common scams that dealerships utilize it is still very easy to protect and guard your credit rating. By simply doing the necessary research on a dealers you can possibly find reviews from previous companies and gauge whether you should take your business to them. It's also a good idea to apply for a car loan online as you can quickly find out if you qualify and be better directed towards a lender that can best serve you.
Here at AutoNet Financial we help provide opportunities for people that earn over $1,500 per month, regardless of how long they have been on the job get car loans with the help of a down payment. We also offer helpful advice on local loan companies, credit monitoring and repair, and best financing practices that well help you finance a great automobile.