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By Brenda

Bad Credit Auto Loan Scams to Avoid

Jun 26 2015 Parent Category I

A bad credit auto loan is one of the many types of loans that typically don’t require people to go into a bank, but instead simply have to fill out a few forms on the Internet. Unfortunately, this means that loan scammers can easily take advantage of people who are trying to find a car loan that they are able to obtain with bad credit. These types of scams are very easy to implement, as it isn’t necessary to meet the lender in person. It’s crucial that you always check the Better Business Bureau and other agencies before you give up your personal information, such as your social security number to a bad credit car loan lender. Here are some common bad credit auto loan scams that you need to look out for.

 

Scam Using a Co-Signer

People who have no credit at all or bad credit may require a cosigner in order to obtain a legitimate car loan at their bank. However, some scamming auto loan lenders will tempt you to find a cosigner as they say you won’t be able to be approved for the car loan otherwise. You may think that finding a cosigner will aid you in getting the loan, which in turn will help improve your credit score. However, the lender will put the entire loan under your cosigners name, which won’t do anything to help your credit and may even cause insurance issues. It will also put the entire burden on the cosigner. If you do need a cosigner, then it is important that you make sure that the documents have both your names on everything.

 

Altering Terms Scam

One of the most popular scams for bad credit lenders is when you finance through a dealer, however it can apply to online car loans as well. After you’ve been informed that you’re able to get the loan, sometimes even after you have the car, the car dealer or car loan lender will call you and tell you that there’s an issue and you weren’t approved for a loan. They will then inform you that you are able to obtain another loan, but at a higher interest rate. This is a trick to get you to pay more money, as they know you won’t want to return the car. If this happens to you the best thing to do is to return the car, refuse the auto loan and find a better loan.

 

Trying to Hand Off a Bad Car Scam

Many auto dealers will lead people who have bad credit to a certain car that they’re having a hard time getting rid of due to the fact that no one wants it because it’s actually a piece of junk. They will inform the consumer that this is the only car that they will be able to qualify for due to their low credit score. If you have bad credit then the best thing that you can do is to compare various loans and try to figure out the financing on your own. It is not worth it to deal with vultures that will try to squeeze every last penny out of you for a car that isn’t even worth half the price they’re trying to sell it for.

 

Lying About Your Credit Score Scam

Some auto loan lenders rely on the fact that auto shoppers don’t actually know their own credit score. If you are looking for a car loan without actually knowing your credit score then you’re just asking to get scammed. All it requires is for a lender to lie about what your credit score is. Once they do a credit check they can simply tell you that you don’t qualify for competitive financing rate without telling you what your credit score is. This is in order to make you desperate, and willing to take a bad credit auto loan even when you don’t necessarily need to.

 

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