How to Avoid Auto Loan Refinancing Scam?
The increasing number of car loan scams is concerning and consumers should be alert to any attempts of being tricked. Auto loan refinancing scammers target car owners who don’t want their vehicle to be taken away from them. Learn how to spot it.
Refinancing is switching to another lender with lower interest rates and saving money in the long run. However, auto loan refinancing fraud is on the rise and consumers should educate themselves about financing to avoid them. It’s vital to recognize that a car loan is just another product sold at the dealership. Don’t let the salesperson or credit officer deceive you into thinking that they are doing you a great favor so you can leave the dealership in a new car. Remember that they are making a good profit charging customers as high an APR as possible. Beware of the tricks and scams they will set in train to make you believe you are getting a good deal when you really are far from it.
There are some “red flags” which can reveal auto loan refinancing scam.
Con artists frequently seek upfront fees before providing the services. Customers should avoid any upfront payments as they are illegal. Although some small fees can be associated with modifying the paperwork to testify a new lien holder, but the application itself as well as credit check won’t cost the customer a penny.
The credit company should always disclose interest rates, loan terms, and fees up front. If it fails to do that, then they look suspicious at least. Additional costs and fees not originally quoted are a red flag for consumers seeking auto loan refinancing.
Verifying the credit company before starting cooperation is a must. Never give sensitive information until you make sure the business is reputable. You can check it easily with the state consumer advocacy agency or local Better Business Bureau whether the company is in good standing.
If a company promises to give you more money than the existing loan on your current vehicle you should treat it with caution. Most auto refinancing programs are aim to provide enough funds to repay the existing car loan. Customers should always review all the documents and never sign a blank contract or documents containing incorrect information.
Key Auto Loan Financing Tips
Never shop based on the monthly payment
Dealers can extend the length of a car loan to decrease monthly payments
Beware overpriced add-ons put into the car loan in order to rip you off
Compare the ARP of several car loan options to avoid getting scammed
Know you budget and credit score before shopping