Many people need to apply for an auto loan to get a car for personal use.

Unfortunately, consumers who suffer from bad credit history or low credit score may find it a lot difficult to get the best deals from dealers or car loan lenders. Consequently, predatory lenders may take advantage of customers because of their bad credit.

In this article, let’s discuss how bad credit car loan scams are done and the best way you can avoid them.

The Bad Credit Car Loan Scam

One common scheme that car loan lenders use is the quick sign-up trick. A representative of a lending company may convince you to fill out a car loan application and sign up without doing research with the promise of getting a guaranteed approval.

At first glance, the deal may seem like a great offer. The car loan may start out with a very low interest rate to easily attract borrowers to sign up in a hurry. Nevertheless, you may get the biggest surprise after a week or two when, the same dealer calls you up to tell you that the initially low interest rates and fees have been changed. These changes may not be included in the original car loan contract you signed up for.

What happened to the first car loan contract you signed up? Apparently, the trick is that what you thought to be the contract is only a pre-approval application. The lender may explain that your car loan application has been denied after all because you’ve been found to have poor credit history. Thus, to continue with the loan, you’ll need to settle for the higher interest rates and costs.

Most consumers may accept the new deal despite the unexpected changes to avoid the hassle. Some people may be badly in need of a car for use and refuse to go through the whole process of searching for a car loan lender. You may agree to keep the car and settle for the new fees instead of returning it. This is why consumers are warned to do extensive research right from the beginning.

Don’t Let The Bad Credit Car Loan Scam Get You

Don’t let these car loan scammers fool you into signing up for the wrong car loan. How can you avoid such vicious scams? By getting a pre-approval on your own. Getting pre-approved gives you a better idea as to which lending companies are willing to provide you with the loan despite the status of your credit rating. Getting pre-approved also enables you to know your budget right away before searching for the car to purchase.

Do research about the car dealer or the lending company’s background carefully. Don’t just negotiate with any car dealer even though the offer seems to be unbelievable. Avoid dealers who force you to sign up and grab the opportunity right away or else you may lose it. You should take your time comparing different car loan deals especially if you have a history of bad credit.