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Watch Out For These Two Common Auto Loan Scams
by Dusty Estrada
http://www.qtcar.com/

Buying a used car can be a frustrating and confusing
experience, especially if you have less than perfect
credit. There are hundreds, perhaps even thousands, of
companies that will promise to find you the deal that is
just right for you. Having a poor credit rating will make
you susceptible to frauds and scams.

So, how do you know which auto loan is best for you? How do
you know that you will not be ripped off when you go to buy
your used car? Here is a short outline of the most common
auto loan scams, that are geared towards those with a
history of damaged credit.

One the most common auto loan scams is what is known as the
Spot Delivery Scam. This particular fraud relies on the
consumer not being aware of his or her credit score. You
trade in your old car, having taken out a low-interest rate
loan, after you were told by the salesman that you have a
great APR.

However, a few weeks later, the dealership calls you to
tell you that you don't qualify for the low APR after all-
and since you're tied to the 'subject to financing' clause
in your contract, there is not much that you can do. The
unfortunate fact is that the dealer lied to you when you
were buying your used car; he knew your credit score before
you pulled out of the lot! Sadly, the buyers most prone to
this scam are those with a history of damaged credit.

How do you avoid being taken advantage of like this? The
answer is pretty simple: Know your credit score, before you
shop for a used car! This cannot be emphasized enough. If
you know what your actual score is, you won't be surprised,
when you're ready to sign the paperwork.

Another way to avoid this swindle is to finance your
vehicle before you go to the dealership. This takes away
the salesman's power to manipulate you when you're actually
making the deal, and coming prepared to the showroom will
help you to better define your budget.

The second most common scam when buying a used car involves
the dealer promising to buy out your current loan or lease,
so that you can finance another car. These deals are
advertised on the radio and TV all of the time.

What most consumers don't realize, however, is that a lease
or loan is a contract- a legal commitment- that doesn't
just go away, Intentionally breaking a contract can leave
you in the hole for thousands of dollars in penalty fees.
Whilst a seemingly well-meaning salesman can in fact get
you out of your lease or loan, they will tack the penalty
fees on to the new loan.

For example, if you owe $5,000 on your old car, the dealer
will pay off the $5,000, but then add it to the new loan,
thus, in theory, making the 'new' car $5,000 more
expensive. So, instead of clearing one debt, you are paying
off two at the same time. Worse yet, there have been cases
of dealers not paying off the original loan, as promised.
The buyers were only made aware of the broken promise, when
the bank called them to query the missed payments!

So, how do you avoid getting trapped? Simple: try holding
off buying a new car until you really need to.
Alternatively, wait until the car is worth more than what
is owed on it, and then think about looking around for a
good deal.

Buying a used car can be an exciting time, but it is
important for you to empower yourself, so that you not only
get the car you really want, but to help you avoid getting
yourself into financial trouble.

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