Scams Targeted at Those With Bad Credit

If you have bad credit, you're likely to see more scams than the average buyer. People with bad credit are often easy prey because the nastiest scams occur in the finance office, where some might be foolish enough to let down their guard after the sale. In the excitement of knowing you are able to buy a car, don't forget common sense in what you agree to pay for that car.

Avoid spot delivery: Some dealers will urge you to go ahead and take the car home while they complete the financing. Don't do it. There's a good chance that they could come back and tell you that they couldn't get the financing deal they promised you. You may have to cough up a bigger down payment or pay a higher interest rate or both.

This is where the "subject to financing" clause on contracts come back to haunt you. It's normal to think if you've signed papers and driven off then the deal is done. But it's far from done. They knew what you qualified for before you signed, unless you lied about your income. Otherwise, they'd never let you drive off with the car. They knew your credit score. So why is there a problem with the dealer's lender? There usually is no problem, it's a scam.

They'll tell you that you must produce an additional $1000 AND your payments would go up $50 per month. They pull this scam on people with bad credit, because the customer is so hoping for a good deal and becomes gullible. If you're told you're getting a car financed at 10% when you were sure it would be 18% because of your low credit score, please BEWARE. You may be getting set up for the FINANCING FELL THROUGH SCAM.

Do not take the car or sign papers until the financing costs are final and in writing in your contract.

Lie to the Customer About Their Credit Score. This can happen to customers with good and bad credit. The loan manager at the car dealership lies to you about your credit score, telling you it was really low, so you now have to pay a much higher car loan interest than you thought.

No salesperson should know more about your credit history than you. If they pull this scam, pull out your credit score and put a stop to it. This is why it is so important to know your credit score and shop for your car loan before you shop for your car. If the car dealership pulls any funny business, pull out your bank draft from your pre-approved loan from a lending institution or just leave and go to another more reputable dealer.

We'll Pay Off Your Loan or Lease No Matter How Much You Still Owe.

They rely on your brain to trick you, as if the obligations of your current lease or loan just magically vanish. They are not doing anything at all for you; they just want your trade in so they can give you far below market value for it, while selling you a new car at a high profit. Then they resell your trade in for a high price. Here's how the scam works: If you are upside down (you owe more than your car is worth) on your car loan and you still owe $10,000 for it, the dealer pays off your loan, then you owe that $10,000 to the dealer. This gets financed along with the $15,000 car you are buying; now you are financing two cars for $25,000! Did you know that?

Your payments are spread out over 60 or 72 months so you don't notice what just happened. The more months they add to the loan, the lower the payments so you don't notice. In fact, it's possible that the payments could be less than your current loan, so you think you're saving money when you just got shafted! Their ad, "We'll pay off your loan or lease no matter what you owe," made you think that trading in a car relieves you of your obligation to that car. It does not! This gets many, many, many people into trouble. You are actually taking on double your current debt when you thought you were dropping one debt for another and buying a new car. They lied to you in their ad. Sure they did get you out of the lease or loan, but you are not really out of it.

In truth they should advertise, " "We'll Get You Out Of Your Current Loan or Lease, then we'll roll what you still owe plus penalties into your new purchase, so you can pay off two cars!" If you are in a lease now, it's best to stay in it until the end. Ride it out-you slaughtered the cow, now you have to eat it. If you are upside down on a loan, now is not the time to trade in the car. You need to wait until the car is worth more than what you still owe on it. Try selling it privately. By mixing a trade-in with a new car purchase, you will lose the maximum amount of money possible. Don't ever think you walked away ahead on a trade in.