Dealer Fraud

You must have a credit score of at least 680 to get a zero interest auto loan and you can get your credit report and credit score from True Credit and Equifax.

Negatives on your credit report that you weren’t aware of will cost you more money because you will only be able to qualify for a higher interest car loan.

The other thing is that car dealers will frequently lie to you about whats on your credit rating. So take your credit rating with you!

A car dealers loan department is not the place to get carried away and start making hasty emotional decisions, and believe me - that is what they are counting on!

If you go in there unprepared you will end up so confused and burned out that you will gladly sign away anything to just get the deal done with - and they are counting on you eventually being in this condition! Its all part of the process.

If you rely on the internet too much you may be missing the boat. You will need to do a bit more research than what the World Wide Web has to offer. If you think that all you need to be armed with to avoid dealer fraud is the dealer invoice amount that you so diligently down loaded from the internet to get the best price can be sorely mistaken. This is not the same as dealer cost. Another common error is, not knowing the actual prices that other in your area are paying for the same vehicle. If you think that a dealer who belongs to an internet buying service will be giving you the best price in town then think again. Make your research pay for itself. Make sure you visit as many dealers as you can to discuss prices of the same vehicle and make double sure they are the same in engine size and all add on accessories.

It is also a good idea to already have your most recent credit report with you and also make sure you have learned to calculate both loan payment amounts and lease payment amounts.

Another good idea would be to check with other lenders on their rates or even pre-qualify yourself for the best loan you can find before you start visiting you local dealers.

Most consumers know that people with bad credit are generally charged a higher interest rate for financing. However, a surprisingly large percentage of consumers, including many auto customers, have no idea what their credit report looks like.

This lack of knowledge facilitates fraud. While most dealerships will deal honestly with customers, some dealerships will defraud customers by (falsely) telling them that their credit is terrible – as a way of justifying exorbitant interest rates. The scam makes sense: people are willing to accept interest rates if they think that the rate is based on their credit. Unfortunately, this is not always the case. In the last few years, various class actions have been brought (both nationally and in California) alleging that minorities pay significantly higher financing, even when the numbers are adjusted to statistically account for differences in credit. In short, minorities with equally good credit often pay more.

If you’re thinking of financing a vehicle through a dealership, you should consider taking the following steps:

(1) Obtain a copy of your credit report and be familiar with both your score and your credit history.

(2) Compare financing rates at local banks and credit unions. Many will offer competitive rates much lower than dealerships.

(3) Write down your expenses, go through your budget, and be clear on what you can afford.

(4) Go in knowing what interest rate is fair based on your credit history, the age of the car, and how long you are looking to finance.

(5) If the dealership makes any statements about your credit that you believe are questionable, ask to see your credit report.

(6) Remember that interest rates are negotiable, and that the rate quoted to you by the dealership probably includes a discretionary markup. Feel free to negotiate.

In some cases, where a customer’s income or credit history is not sufficient to finance a vehicle purchase, finance companies will accept the contract if there is a second individual – a “co-buyer” or “co-signer” – who also signs the contract. The abuse occurs, however, when co-signers are misled about the responsibilities they are accepting. Some customers are told that the co-signer is merely being used as a “reference” and has nothing to do with the car.

Statements like these are false. In the event that payments are not made, the co-signer’s credit can be affected, debt collection efforts can be made against the co-signer, and the co-signer can be sued for the payments that are owed. In short, the co-signer is equally responsible for making the payments on the vehicle. Only sign a contract as a co-signer if you are prepared to accept these responsibilities.

If you are a co-signer and were misled about your responsibilities, consider taking the following steps:

· Get a copy of your credit report to make sure that there are no negative references on your credit as a result of the loan;

· Contact the finance company, explain the fraud that has occurred, and try to get your name off the loan;

· If this doesn’t work, talk to the buyer and see if the loan can be refinanced to take your name off the financing;

· If you find that your credit has been negatively affected, get legal help.

Your options are not as limited as you may think in this situation.  This situation is created when a dealer performs a “spot delivery,” which is a sometimes risky venture on everyone’s part.  Essentially, the dealer obtains your credit report (with your permission), and you and the dealer agree to terms for a vehicle that you want to purchase.  The dealer, wanting desperately to sell you a car, will often just delivery the vehicle and “guess” at the finance rate.  If the dealer gets it wrong and the lender requires different terms (which might include more money down, a higher interest rate, and/or a shorter term loan), then they guessed wrong and have to give you the bad news.  The letter you received in the mail is referred to in the industry as a “10-day letter,” because a provision in the letter allows the dealer to rescind the contract within 10 days if they are unable to obtain financing on your behalf.  When you receive this letter or phone call, you may be getting set up for the “yo-yo contract,” which is a type fraud where the dealer delivered the vehicle at terms that you thought were favorable but the dealer acted in bad faith.  In this instance, the dealer may have already sold the vehicle you traded in., and then you get the call telling you they need another $1,000 or more down in order to get you financed.  Now you are stuck - either agree to whatever the dealer offers or return the car and be without transportation because they sold the car you traded in.  This type of fraud can be difficult to prove and will most likely require professional or experienced assistance, and the worst part is that it is very inconvenient for you because of the transportation situation.  Your best defense is to act quickly to get this resolved.

Even shoppers armed with online auto quotes aren’t immune to loan scams. The car salesman may tell you that he needs to pull a credit report because of Patriot Act reporting requirements. You might even notice the form you are filling out is titled “Application for credit.”

The Patriot Act does not require a credit report or your Social Security number so don’t be fooled into applying for dealer financing. Your name and driver’s license number should be all they need.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]

Some car dealers may say something like, “With your credit score, you won’t qualify for competitive financing rates.” Now, this may be true if you’ve missed some payments or have a pattern of paying your bills after their due dates. However, some car dealers will imply your credit is worse than it is so that you think you’ll have to pay a higher interest rate.

To avoid being misled, know your credit score before you head to the showroom. Contact the three major credit bureaus and ask for a copy of your credit report. You may have to pay a nominal fee.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]