Préstamos del coche del crédito malo: diga no al 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.
Protect Yourself from Scams
The first defense is, if possible, to avoid leaving before knowing that your credit deal is a sure thing. One way to do this is to make your own deal with a bank or credit union for a car loan instead of using the dealer’s lender. Or, get pre-approved for a loan before you shop for a car so that you know whether you will get the credit deal that you want. A pre-approval lets you know how much car loan you qualify for so you don’t wind up looking for something that is out of your price range.
If you do decide to use the dealer’s financing, make sure that you read all paperwork carefully. Do not sign anything that involves conditional terms; these can open you up to a bait and switch.
If a dealer calls you after you’ve left the lot and says that you need to take a more expensive finance deal, ask to see the rejection notice. Often, this demand will be enough to set things back on track. But, if you were indeed rejected, you may need to return the vehicle or agree to the new terms. Should you get a loan that does not work for you, make payments on time and work to refinance later.
And, always be prepared to make different plans. You may do better looking at a used car than a new one. Talk to credit unions and member organizations like USAA to see if you can get a better deal. Most of all, keep educated about your options so that you keep your credit clear and your finances safe.