Bad Credit Car Loans: Say No to the Yo-Yo
An auto loan can be one of the easiest ways to build credit. Car loans are granted more easily than other types of installment loans, with one-quarter of all auto financing going to people in the sub-prime market. But, low credit scores and lack of financial education make some people vulnerable to auto loan scams. Financial experts say that people with credit scores of 680 or lower are considered subprime.
Caught on the Bad Credit Car Loan Yo-Yo Unscrupulous car dealers will sometimes attempt to hook unwary buyers and exhort unreasonable fees and interest rates. The way the scam goes is this: the buyer leaves with the car and a signed contract. But, since most car purchases occur on evenings or weekends, the full paperwork for the loan has not been put through. Then, the buyer gets a call: they were not approved for financing. The dealer offers a new deal, usually with a higher down payment, higher interest and terms that go up to seven years. If the buyer asks to return the car, they are threatened with high “rental fees” for the time they had it, or outrageous cleaning charges. Some dealers even threaten to have the car repossessed or to report it stolen.