Common Tricks Used In Car Buying

By Author: Marty Vergel Baes
Total Articles: 423
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Buying a new car is considered as a big investment. This simply means you should plan the car purchase carefully. Given this, you need to conduct an extensive car research before proceeding to the actual car buying process. By doing this, you would avoid some of the scams and tricks used by lenders to maximize profit or figure out ways on how to deal with these. This article provides you with two of the most common tricks and scams used by lenders to lure their customers and are written below.

1. The Subject to financing clause trick

The "subject to financing clause" trick is a common tactic used by most dealerships and lenders. What usually happens in this trick is that the salesperson who handles your loan would call you a few days after you sign your first loan. They would usually inform you that the loan you have signed had fallen through. Due to this, they would request you to visit them and sign a new loan deal with another lender.

The trick sets in once you sign the second loan. In reality, the second loan is the same as what you have signed ...
... previously. The lender has just extended the loan term to lower the payments. They would also provide you with wrong information to convince you that you just did the right thing. What you don't know is that you would be paying more for the interest rate.

In order to avoid this, make sure to conduct an extensive car research. Research about the APR, the credit score you have, and the interest rate that is applicable to you. In addition to this, read the loan contract before signing it. Try to take note of the loan term and the monthly payments involved in your loan. In case you have any questions about what is written on the loan contact, ask the lender. If they fail to provide you with the proper answer, you might drop the deal and search for a new one.

2. You need a co-signer trick

The co-signer is also one of most common trick used by lenders. What usually happens is that the lender would require you to look for a co-signer to get the loan approved. They would tell you that credit score is too low and you need someone with a higher credit score. The trick starts when the lender would let you and the co-signer sign a separate set of documents. You would just find out later that the loan was entirely on the co-signer's name. As a result, the loan obligations are placed on the co-signer. In case you failed to pay the loan, the co signer is obliged to pay for this in your behalf.

In order to avoid this trick, make sure that you and your co-signer signs the same contract. Try to check the contract and make sure that it is on your name. Look for the clause which states that you and the co-signer agree as well as share the financial liability attached to the deal.