Several classic Car Scams used by Auto Dealers (part 2)
In our previous article, we discussed a few classic car scams that some auto dealers use to practice. This article will serve as a kind of a continuation to the previous one. We will introduce to you some more car scams that have become rather widespread these days.
“Spot Delivery” Scam
This scam is usually practiced on people with low credit scores. The dealer may allow you to take the vehicle home BEFORE the paperwork is completed. A day or two later, they will call you and tell you that the financing could not be completed due to your low credit score. So you have to either bring back the vehicle and pay some fees for wear and tear, or sign new car financing terms with a higher interest rate and a higher down payment. The trick here is that the dealer knows you would not qualify for the financing with your credit score. But they could not let a potential buyer go without purchasing the vehicle. So, they use this trick to make a person get attached to the new vehicle. They agree to any new terms and conditions offered to them later on. You can learn more about this scam by reading our article Beware of Spot Delivery or Yo-Yo Financing Scam.
“Negative Equity” Scam
Negative equity means that a vehicle loan term has been such a long one that if the owner decides to trade-in the vehicle, the trade-in value will be less than they owe on the car loan. The negative equity scam occurs when the dealer promises you to pay off your existing loan. However, the truth is that with this promise on, the dealer will charge you with much higher a monthly payment for your new vehicle. Thus, in order to avoid paying for two cars at the same time, you had a better pay off your loan for your old vehicle and then try to trade it in.
These are some more classic car scams that you probably did not know about. Follow our blog and get more updates on car scams and car buying tips.