Bad Credit Car Buying Guide Step 4 of 4 - Some car buying scams can leave you humiliated, stuck for cash, or worse...Walking!!!
There are many car dealer scams in use today and many apply to all customers whether paying cash, those with excellent credit and those with bad credit, but there are a few that are most often used when working with bad credit customers.
Trust me, it's better to know about these scams before, rather than after, you've bought your car.
Here's what you'll find below:
The cosigner scam happens when a dealer makes it appear as if both you and your cosigner are going to be on the loan and receiving equal credit for timely payments. Unfortunately, what happens here is that your "cosigner" is the only one on the loan.
They make it look as if you are going on the loan by having you sign to be on the registration, but you are still not on the loan. They may also have your cosigner sign blank documents which they print later with your cosigner as the only buyer.
Don't sign anything blank and be sure that both you and your cosigner are on the Retail Installment Contract.
This scam will usually include GAP insurance as well and takes place when the dealer tells you that the lender requires you to buy an extended warranty and GAP insurance. No lender that I have ever heard of can require you (in fact, it's the law) to buy an extended warranty or GAP insurance.
That being said, I personally believe that a vehicle extended warranty and GAP insurance are extremely important and you should certainly consider each carefully. Either one can really save your financial rear end when stuff hits the fan!
Spot Delivery Scam
Very, very common and can be very embarrassing! Basically the dealer makes you believe that you are approved for the loan, does all the paperwork, collects your down payment and delivers the car, but unfortunately you are not approved and won't be!
Before you take delivery, ask to see the approval, or get something in writing saying you are the new owner of this vehicle. It's pretty embarrassing when you show your new car off to everyone that you know and have to return it a week later.
Report to the Credit Bureaus
Want credit for your well paid auto loan? Of course you do! You not only want to buy a car, but you want to get your credit rebuilt so that you hopefully never have to read this bad credit car buying guide again.
There are, as you may already know, many car dealers that "bend the truth" and one way they bend it is to tell you that your new car loan will be reported to the credit bureaus (this applies mainly to buy here pay here dealers).
What they fail to tell you is that it will be reported, but not until the final payment is made and it will simply show as a one pay auto loan. Doesn't help your credit much.
Get it in writing that they will report to the credit bureau each month. This will benefit your credit the most and help you to get your credit snowball (the good kind) rolling. If you not only want a car, but want to rebuild your credit at the same time, but they don't report monthly, then find another dealer to buy from.
As bad as you may want that car, don't let the dealer talk you into falsifying information on your credit application! This is considered fraud and can land you in a lot of trouble.
Once again, be careful not to sign anything blank (especially the credit application) and don't lie to the bank during the customer interview. You may not get the car you want, but you also won't end up getting sued, or worse, landing in jail.
We've covered some really good stuff to get you on the road to not only buying a car with bad credit, but some great tips on fixing up your credit along the way.
If you haven't taken action on any of the steps in the Bad Credit Car Buying Guide, well there is no time like the present...Quickly apply for your no obligation Bad Credit Auto Loan here.