Car loans for bad credit
do exist in the market but not all offers are genuine.
In fact, the market is filled with lenders and car dealers who may try to take advantage from consumers who are not aware of their tactics.
This article presents some of the most common scams that consumers must watch out for.
Car Dealer Financing – Not a Loan?
Car dealers that offer financing do not provide the funds on their own. Instead, a customer will be provided with a Retail Instalment Sales Contract. This document will be presented to a bank or lending company which will be providing the car loan. Once the loan is approved, the car dealer may impose additional rate and charges, making the final terms even more costly.
Consumers are warned against car dealers that offer financing because most of them charge excessive rates and hidden charges. Keep in mind that even with bad credit, you still deserve to be treated with all dignity and fairness.
“You did not qualify for a low APR.”
Another common tactic use is the promise of quick approval along with a low APR. An interested borrower may excitedly submit his/her car loan application. Nonetheless, after one or two weeks, the car dealer may inform the borrower that he/she is not qualified for the low rate because of a poor credit score.
The truth is the dealer already knows the APR you will get the day you sign up the contract. It’s important to be aware of your personal credit standing before applying for a loan to avoid getting scammed.
All you need is a co-signer.
Here is another trick. A car dealer may advise you to get a co-signer to avail of good rates. Some scammers will process the loan declaring the co-signer as the Primary borrower. The disadvantage here is that no matter how prompt you are in paying your loan, your credit score will not improve because the account is another person’s name. If you want to get a co-signer, evaluate every statement in the contract before signing up the contract.
“Your Credit Score Is Really Bad.”
There are car dealers who may tell you that you have a lower credit score than what you have. Sometimes, even if you have an average credit, you cannot qualify for a better deal. To avoid getting ripped off, order a copy of your credit report before applying for a car loan. When meeting with a prospective lender or car dealer, bring your copy with you. This way, lenders and dealers will know that you are aware of your real credit standing.