Scams To Watch For In A Car Loan For Bad Credit

By Mitch Reynolds · Leave a Comment

When looking for a car loan for bad credit, you need to be sure you watch out for scams. Specifically, there are a few typical scams that you might see when looking for a new or refinance car loan for bad credit. I hope to outline some of these scams so that you can no beforehand what to look for, and so you can know how to educate yourself so you do not succumb to these horrible tactics.

First Scam – the car loan for bad credit people make you feel like your credit is worse than it actually this. This scam only works if you don’t have any clue what your credit score (the actual score mind you) is. They may say something like ‘well, your credit is below X-score, but I can still get your qualified…you’ll just need to sign here, here, and here, and pay 23% for the loan, but we’ll extend the terms for 5 years so it still fits within your monthly payment. What you end up with is an extra 2 years of car payments and a super high interest rate. You should not have to go through this even if you have bad credit for a car loan, period. You can remedy this problem by simply paying for a copy of your credit report and credit score (make sure you get the actual score, which you do have to pay for).

Second Scam – they don’t pay off the car you trade in when you take out the used car loan for bad credit (this is also done with new car purchases). Basically, many people get upside down in their cars very quickly (meaning they owe more than the car is worth), especially with new cars. A lot of people with then try to take and trade that car in for a newer car, usually extending their payments a couple of years with the hope of not being upside down anymore. Well, in theory this can work – as long as the car dealership doesn’t scam you. Some people get phone calls from the bank saying they owe money on their old cars because the dealer did not pay off the car as promised, and YOU are stuck with the payments because you signed for the car in the first place. To prevent this, make sure you get something signed saying that the dealer will pay off your car within 10 days or your deal with them is off.

While these are two common scams when trying to get a car loan for bad credit, they are definitely not the only ones. Make sure you do your homework, read the fine print, and think through the deal before signing to ensure that you don’t get caught in one of these scams.