The Deferred Down Payment Car Dealer Scam

Deferred down payment is another type of car dealer scam practised in many dealerships across the country. When a customer is unable to pay the entire down payment up front at the time when the purchase contract is signed, the dealer can allow him to pay by instalments. This type of payments is recognized as deferred down payment.

The dealer must include the itemized information such as due dates for deferred payments and the balance of payments into the contract. But the dealer doesn’t always add this information (whereas the vehicle code envisages to do it) thus creating obligations not included in the original purchase contract.

Let`s unveil how this car dealer scam works. If a customer wants to buy a car which costs $4500 but he has only $ 3000 the dealer can offer you to take “hold checks” for the rest of the sum. When a customer decides to write two checks for $750 over the next two months the dealer makes him sign “hold check agreements» for each of them. According to this agreement, the customer`s check will be deposited upon agreed date. Certainly, this car dealer scam hurts the customer financially as it creates an unexpected extra debt burden; he will have to pay the amount towards down payment obligation for the next two month, car payment and insurance etc.

How to avoid the deferred down payment car scam?

The simplest way to avoid this car dealer scam is not to purchase a vehicle until you have the necessary amount of money. Always check your credit score and if it`s excellent you can purchase a vehicle with 0$ down.

Not knowing your credit score when applying for any type of loan or credit will be a serious disadvantage for you as a dealer may use this situation to rip you off. So always review credit history before going to the dealership.

If you put 15-20% down when buying a used car you save on bank fees, finance charges etc. Negotiating based on down payment or monthly payment is a bad idea as you`re like to pay too much that the vehicle really costs.

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