![]() ![]() When you apply for financing through a dealer, they shop your application to several lenders and get to see what rates you qualify for. (See: How to Obtain Your Credit Score for Free) To prevent this, make sure you check your credit score and get your free credit report. When the dealer presents a loan with a high interest rate, you're more likely to take it, not realizing that you just gave the dealer thousands of dollars in extra interest payments that weren't necessary. After they do a credit check, they don't have to reveal what your score is, they can just tell you that you won't qualify for competitive financing rates.Īt this point, most car buyers are desperate and think they won't get financed. If you go to a dealership without knowing this and you're going to rely on them to get you an auto loan, you're just dying to be ripped off.Īll it takes is for the dealer to lie to you about your credit score. Some dealers rely on the fact that many car shoppers don't know their own credit score. The way to prevent this is to arrange your own financing - don't just rely on the dealer, they're not looking after your best interests. If you have bad credit and this happens, you can rest assured it was a scam all along. There are times when financing legitimately falls through, but these are rare and no dealer should allow you to take a car home in the first place unless they are 100% sure you will be approved. Either way, you end up paying a lot more than you expected and the dealer makes a nice, fat profit. When you're back at the dealership, they will pressure you into signing a loan with a higher interest rate, larger down payment, or both. This is when the dealer arranges the financing, let's you take the car home, then calls you up several days later telling you the financing fell through and that you need to bring the car back. (See: Packed Payments Scam for more details) A monthly increase of only $33 over a 60 month loan will cost you $2,000.Īn easy way to avoid this scam is to arrange your own financing before going to the dealership. This is the most common car financing scam and it works on the premise that most car shoppers focus only on the monthly payment instead of the actual price of the vehicle.ĭealers will increase the car payment by including (or packing) products and services that you didn't ask for into the loan, such as extended warranties and GAP insurance. Here's how dealers typically screw over car buyers: Since they're middlemen, they get a piece of the pie. They simply arrange financing using their relationships with banks, financing companies, and in some cases their manufacturer's captive finance company. What most people don't realize is that dealers do not finance the car loans. ![]() They know most car buyers don't take time to research financing options so they are likely to pass hidden fees into the car loan without anyone making a fuss. This is a huge mistake that dealers easily take advantage of. It's surprising how many car buyers don't take the time to shop for car financing before going to the dealership. Guide → Car Loans The 7 Ways Dealers Can Rip You Off With Car Financing ![]()
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