3 Common Scams In Car Buying

By Author: Marty Vergel Baes
Total Articles: 423
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Many car buyers are victimized by different car buying scams. Instead of buying their vehicles at affordable prices, these buyers end up spending more than what they should. This is due to their lack of sufficient knowledge and failure to conduct prior car research. In order to provide you with an idea of scams played by most car dealerships on their unsuspecting customers, this article provides you with some of the most common. Try to read and understand each of these for you to figure out how to avoid them when you buy your own car.

1. Interest rate bump scam

The interest rate bump scam usually happens to car buyers that are dependent on finance sales persons to shop around for the best loan rate they would use for car buying in behalf of them. What usually happen is that these sales persons would search for the best loan deals and process it on their client's behalf. The scam sets in when the sales person charges his or her client with an additional percentage on the interest rate.

For example, a finance salesperson has found the best available ...
... loan rate of 6%. The salesperson would then tell his client that the best loan rate offered is 8%. The additional 2% on the interest would then go directly in his pockets. Thus, the client pays for an inflated interest rate until the car loan term ends.

In order to avoid this scam you should as much as possible conduct an extensive car research and look for car loans on your own. You should also know your credit score and the applicable interest rates that go with it. By doing this, you would prevent the sales person from taking playing scam against you.

2. Add-on requirement scam

The add-on requirement is also a common scam involved in car buying. In this scam, dealers would usually require you to purchase an Extended Warranty before the loan is approved. This might be a lie and the dealer would probably earn extra profits from this. Do not sign any paper works with additional charges to avoid paying more than what you should.

Another common strategy used by dealers in implementing this scam is by charging you with the Dealer Preparation Fee. They usually charge additional $300-600 for a few hours of preparing the car before you can drive it home. This could be a very large amount paid for such an easy work.

3. Low credit score scam

Most lenders use the low credit score scam to car buyers that are not aware of their credit score. They usually tell that the credit score you own is too low and lenders would usually charge you with higher loan interests and earn greater profits.