Jul 28 2008
Car Dealer Bonus Scam: Lowered Monthly Payments
How this scam happens: You purchase a new car, sign all paperwork and drive home with your new car. About a week later the car dealer calls and informs that he was able to get a better deal for you a lower monthly payment and less APR. All you have to do is go back to the dealership and resign the documents.
You go down to the car dealer to re-sign the paperwork, and this is where a scam occurs. You discover that the dealer changed your loan from 48 months to 60 months, or even 72 months. In fact, what the dealership did was increasing the APR on you and not lowering it like they lied. The dealership spread out your loan over more months, which lower the monthly payment. This commonly used tactic tricks you into thinking you are saving money when you’re getting ripped off. Most of the consumers believe their car dealer and think they are actually paying lower APR.
However, when most lenders increase the number of months in the loan, the APR goes UP, not down. You can easily notice this if you look at their rate card. The salespeople who pull this scam sometimes make buyers re-sign the paperwork and don’t give them copies, and the buyer finds out later on the car dealer lied about the “reduced APR”.
How to avoid the scam: If the car dealer calls you and offers a lower rate simply let him know that you are happy with your car loan. If you want a lower rate consider refinancing the your car loan.
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