Top Auto Loan Scams

Take a look at some of the most outrageous auto scams:

Negative Equity Overestimation

Watch out for this one! This works by making you believe that the trade-in vehicle is given the same value as the amount which you owe the company so that they get canceled out.

The trade in vehicle is the one that is being exchanged for a new one. If you have an outstanding amount on the trade-in vehicle, the dealer makes you believe that they are offering you the same amount for the older vehicle. The scam is that you are paying a much higher price on the new vehicle. The overheads on the new car also go up proportionally.

Packing monthly payments

Here the monthly installment is calculated at a higher rate. Optional services like window etching, fabric protection, GAP insurance, are presented as mandatory and the monthly installment is inflated. The customer does not realize that these are optional accessories that he can choose or reject.

Contracts and Backdating

It may happen that a customer does not qualify for loans under the stipulations of the first contract. In such instances, the customer may have to increase the amount under down payment to be eligible for a loan. The dealer will then offer the customer a second contract but cleverly back date and append the date of the first contract.

The customer is now paying interest for the period when there was no contract in existence at all. Customers are also not told of the option of returning the vehicle and taking back the down payment if they do not wish to sign the second contract. Dealers have only ten days during which they can change a contract.

All in One Document

The law stipulates that all the terms and conditions that bind a customer and a dealer have to be limited to a single contract. Multiple contracts are not permitted by law. Most of these will benefit the dealer because these refer to condition that affect trade-in vehicles.

Deferred Down Payment

Often customers are not able to pay the entire down payment sum in one lot. They are then offered the provision of making the down payment in installments. The law stipulates that the date of these deferred payments and the amount should be documented.

Advertised Price revisits

Dealers should not sell vehicles for a higher price than what is advertised. Dealers put out false advertisements quoting higher prices.

Using Language

Civil Code §1632 stipulates that a contract should be negotiated in any language that is included in the schedule so that the buyer understands the provisions.

Used Cars

Dealerships have to reveal essential facts about a vehicle. These include accidents, prior use, and accuracy of the instruments.

New or Used!

A “demo” vehicle passed off as new.

Certified Used Vehicles

“Certified used” vehicles which has been in an accident.

These scams have made it to the top ten but are trailed by quite a few more. So, stay on the look out!