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.

The ready availability of longer-term auto financing, car loans that are 48, 60 or even 72 months, means that it will take longer to get into an equity position with your vehicle. He also points out that, just because you get into a negative-equity situation with your car loan, it won’t necessarily affect your overall credit score, but it could affect your purchasing power, and it could impact the auto loan rate you get for your next loan.

Extended-term financing isn’t necessarily a bad thing. It all depends on buying habits. That might be OK for the consumer who likes to keep vehicles for extended periods, and that’s certainly a stronger option for all consumers, because of the ever-improving quality of vehicles. It does improve affordability, and as long as it matches up with the trade-in frequency, then they’re perfectly fine and it will work very well for them.

If you’re a consumer who likes to purchase a new vehicle on a fairly accelerated frequency, say 24 to 36 months, then that extended financing may mean that you end up with negative equity when you go in to trade your vehicle.

This scam is ridiculous at best. This is when the finance manager tells you that your credit score is lower than it really is so that they can get you for higher interest rates.
This scam is pulled on everyone; good or bad credit. This scam is easy to avoid. Just get your own copy of your credit report from Equifax.com, and bring it with you. It is really difficult to lie to you about your credit score if you have your own copy of it. If your paper and theirs doesn’t say the same thing, go somewhere else because that dealership is lying to you. Don’t forget to let them know it too because it’ll be nice to watch them squirm.

We saw a resurgence of this scam in 2005 and 2006. It typically increases when interest rates go up, and fewer people qualify for loans as lenders tighten their belts. A straw purchase traditionally refers to handgun sales. When one person buys a handgun for a person who is ineligible to own one, it’s called a Straw Purchase, carrying stiff penalties. That’s how the Columbine High School student shooters got their guns. With car buying, the dealer tells you that with your horrible credit score, you can’t qualify for a car loan so you need to get a co-signer, plus they tell you that it will help build your credit again. No problem, Grandma will co-sign the papers for you. The dealer knows your horrific credit score could not possible ever qualify for a loan, even with a co-signer. Grandma is easily duped by the dealer during the paperwork shuffle, tricked into signing as the primary borrower, and 2 weeks later you find the dealer did not process a co-sign loan, the entire loan is in Grandma’s name! This does not help your credit, even though you are paying the monthly payments, because the loan is in grandma’s name, and the car dealer lied to you. State laws are vague but I hear some states like Texas have laws against Straw Purchases on cars.

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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]