The Financing Scam

I have mentioned this before already, but here it is in all the gory details:

Basically you trade in your old car and the finance manager tells you that your interest rate is good and gives you the car to drive home in.  You figure everything's fine with your car loan.  You never figured that you'd need a bad credit car loan. 

But after a week or two passes you get the call from him that you didn’t qualify for the interest rates that they gave you upon making the deal.  Because every new purchase has a clause in the contract that usually states that the deal is “subject to loan approval.”   

This gives the finance manager a loop hole in getting more money out of you.  Don't let them do this to you!

All that this means in the contract is that the deal is not finished yet even though you already have possession of the car and have signed the contract and drove it home.

The dealer can then charge you $1000 more in finance fees and make your monthly fees increase by $50 or more.  There is absolutely no reason other than you've been scammed that you need a bad credit car loan.
 
This scam is generally pulled on people with bad credit because it makes more sense to the buyer with bad credit.  If you are wondering why they would sell you the car at 6% APR if they knew  you had bad credit (remember they ran the credit check already on you) the answer is simple; to sell the car.

You can avoid this scam by not financing the car with the dealer if you know that you have bad credit.  Go through a bank---even though you'll pay higher interest if you have bad credit, you'll know ahead of time just what that rate will be.  You can always refinance a bad credit car loan later.                                

Keep in mind that when you buy a new car the deal should be made on the price of the car, not on the monthly payments.  Always keep this in mind when negotiating with your car dealer's "finance manager".

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