Dealer Fraud

One of the auto industry’s dirty little tricks is the practice of lenders giving kickbacks to dealers for charging high interest rates for the car loans. A good example of this would be when a buyer has been qualified for an 8% loan rate, the dealer can, and will in most cases, attempt to charge a higher rate.

Many dealers will tell you they have a 12% rate available (a lot of consumers do not know better) and will jump at the deal just to get credit and drive away in a new or used car. Your $20,000.00 automobile over a 60 month period would have had a $433.56 payment at an 8% rate but now because you signed your loan agreement for a 12% rate you payment will be $475.64. Guess who get the extra $42.09 per month? You guessed right, the dealer who suckered you into the additional rate of interest.

To get the best possible deal on a new or used car or truck, knowledge and information is your best bet. Knowledge is always power in these cases. Dealer scams such as the increased interest rate, packed payments and other common little tricks can quickly remove any savings that you thought you were receiving. Learn how to calculate you own monthly payments, use the internet to your advantage and learn how to negotiate with dealers.

This is one of the oldest and most commonly used dealer tricks when a dealer “loads” your payment you are literally being ripped off. This scam happens when you ask the dealer how much the monthly payment will be on a certain automobile and the dealer will quote you either a slightly higher APR or loan amount. It might not be much but if the actual loan payment should be $325 a month and car dealers push it up to $365.00 that could end up costing you an additional $2300 on a typical 60 month car loan. Actually this dealer fraud is very difficult to detect. However, if before going into a dealership you gather all of the information on the cars you’re interested in you will know what the payments should be.

On the other hand, if you agree to this packed loan payment without comment the dealer will try to increase the final price as much as he can. If you’re not well informed about the car buying process you will end up purchasing high price items such as extended warranties, undercoating and clear coat paint layers. If you’re not careful enough you’ll end up paying extra for items added to the car at the factory!