Most Common Car Scams
Scam 1: The straw purchase scam
One common example of car scams is the straw purchase scam. Here a straw purchase means someone purchases an automobile for other people who, due to poor credit, cannot purchase it themselves.
In order to make you buy the car without any hesitation, the car dealer may assure you that you can get a car loan even if your credit record is not very good. Moreover, they will tell you that you can build your credit by using this car loan, and the only way to do this is to find a co-signer for your contract. And next you will find out that the co-signer is not the primary borrower of this loan but the only borrower-your name is not even on the contract.
It is difficult to detect the straw purchase scam. You can avoid it in advance. Remember, never sign contracts separately, as this is a good chance for the dealers to perform the straw purchase scam on you.
Scam 2: The check bounce scam
Such car scams occur in case you are using a credit union or an online car finance site. For getting the commission to sell you the car dealer’s financing, the car dealer will refuse your bank draft first and then lie to you using the reason that the online lender always bounces check. So you have to agree with their offer of financing your car purchase, even though that car dealer financing comes with a higher ARP.
Scam 3: The spot delivery scam
The spot delivery scam is also a types of car scams. It occurs a few weeks after the car purchase when the car dealer calls you and says that your credit score is too low to have the low ARP you signed on the contract. But in fact there is no problem with your credit score. This is just a spot delivery scam.
The best way to avoid this kind of scam is to use your own financing instead of using the financing that the car dealer offers you. Never give the car dealer any chance to trick you.