What is Co-Signer Scam? How to avoid it?
Car buying scam occurs frequently in auto dealerships across the USA. It has a large number of varieties and some of them are interrelated. For instance, spot delivery scam, straw purchase and co-signer scam have a lot of the same characteristics and are very similar to each other.
A customer walks into a car lot to buy a vehicle. When the salesperson does a credit check on the customer, he finds the customer’s credit is too bad to qualify. However, the salesperson does not tell the client this information, instead lets him pick the car he wants to buy and drive it home, telling him they will call in a few days about the car loan. This is called the Spot Delivery Scam. The salesperson will call the buyer a few days later and tell the customer that the loan was not approved. The customer is then pressured into finding a friend or family member to co-sign the loan.
The co-signer will go to sign papers and may be told he is signing as a reference only to help the customer establish a good credit standing. But the truth is the co-signer signs for the car note not knowing he is the only one on the note for the purchase of the vehicle. There are many variations of this particular co-signer scam, also known as the “straw purchase” scam. The “straw purchase scam” often begins with the “spot delivery car dealer scam”.
As soon as a customer realizes he will not qualify for a car loan the dealer dives in with the suggestion that the buyer ask if a family member will agree co-sign. The situation is basically the same in these shady deals. Only the co-signer`s name will be found on the loan documents, and it may be months before this car buying scam is discovered.
So, this is how the co-signer scam works. But you can avoid it by following some tips.
• Being fully aware of low credit score your best bet is to save your money until you can pay cash for your car
• If you do go to a dealership, do not use their financing, instead going to your own bank or credit union for the loan
• Read all the documents before you sign and always ask for copies of everything. Do not sign more than one contract at a time.
• If you do use a co-signer make sure you sign the same papers. Carefully look through all the papers to get sure that both of you are on the contract and in the right place.
If you`ve fallen a victim to co-signer scam or another car buying scam turn to the Law Office of Hovanes Margarian for legal help or at least for a free phone consultation.