The Most Common Auto Financing Scams

The Most Common Auto Financing Scams

fgActually, auto financing scams are quite widespread nowadays. Unscrupulous dealers enjoy using these tricks to make large profits at the expense of innocent car buyers. Most of them succeed in convincing unsuspecting consumers to sign non-optimal deals. As a result, you may lose a huge sum of money and get stuck with a vehicle of low quality. Keep on reading this article and you can find out about the most common auto financing scams. Furthermore, you can be aware of effective ways to avoid these scams and get the best deal on your vehicle.

Yo-yo financing

Here is one of the most typical scenarios of the yo-yo financing car scams. You come across an enticing advertisement, which offers a great deal. To be more concrete, the ad offers your favorite model with an affordable price. So, you simply head to the car dealership full of excitement and enthusiasm. You have completed the negotiation process with car dealers successfully.

Although the loan application process is not complete yet, the dealer allows you to drive the vehicle home. What happens next is that you receive a telephone call from the car dealer. You get to know that you have to bring the vehicle back, as the loan application wasn’t approved. Unethical dealers may offer you another financial deal with higher interest rates. It is true that consumers who have bad credit score are the main target for this car scam.

Payment packing

The payment packing is also one of the most common auto financing scams. When does this car scam occur? Which are the characteristic features of the payment packing? Usually, payment packing occurs when dealers increase the loan amount. They do it by adding extras without the car shoppers’ consent. In other words, dealerships succeed in packing additional products or services into the car loan. The worst thing is that car buyers have no idea about dealers’ actions. Typically, they are unaware of it, as dealerships show buyers only the monthly payment. As a consequence, because of these additional services, you have to pay more money. As an informed consumer, you should know that payment packing is not legal. That’s to say, you have the right to be aware of these extras. You should decide whether you want these additional products to be included in your loan.

The lower payment scam

The lower payment car scam is on the list of the worst car scams. The peculiarity of the scam is this one. All of a sudden, the dealer contacts you and kindly makes ‘’a profitable’’ offer. Thus, you discover that there is a ‘’great’’ opportunity of lowering your monthly payments. You are probably wondering exactly how they can do it, aren’t you? Well, what they do is simply raising your interest rate and stretching out the payment term. This means that you have to pay more money for the longer timeframe. At this point, dealers make more money. If you don’t want to suffer from this car scam, you should simply turn it down.

How to prevent auto financing scams?

Do you want to prevent auto financing scams? Do you want to get the best deal? Here is a worthy piece of advice for you.

Checking your credit reports

First of all, you should have a clear idea of your credit score. Prior to walking into the dealership, you should be armed with this information. Consider conducting research regarding interest rates that you qualify for. It will help you have a clear idea whether the dealer offers you a fair deal or not.

Read every document properly

This is a very useful piece of advice. It is the key to protecting yourself from unethical car dealers. Prior to signing any document, read it very carefully and make sure that you have a clear understanding of everything. If you notice certain terms in the agreement that you don’t agree, feel free to inform the dealer about it. Did you read the document twice, but still have questions? Then, don’t hesitate to ask for clarification. In addition to that, you should have the copy of all the documents that you have signed.

Avoid driving the vehicle home until the financing is completed

Driving the vehicle home is not a correct decision if the financing isn’t approved yet. Furthermore, avoid signing any document till all the terms that you agreed upon are in the document.

Finally, keep in mind that the key to preventing auto financing frauds is becoming an informed consumer. If you suspect that you are a victim of an auto financing fraud, file a complaint with the Better Business Bureau. Also, consider hiring an experienced lawyer if you are planning to file a lawsuit.