Oftentimes there are scams dealerships run to con you out of your hard earned money. Well it’s not all that uncommon for dealerships to run scams, you should check out the reputable dealerships on cars.com. Even though you check out the reputable dealerships, there could be a few that are still like buying a lemon. In order to avoid this you need to better understand exactly what kind of scam is they run. Sometimes called the “yo-yo”, this scam is characterized by the common occurrence when a few weeks after closing the deal, the manager will call you and says that “financing fell through, we need more money.” Well, that just sucks. This is what happens when you sign a contract with the “subject to financing” clause.
I’ll tell you why people fall for this scam. Here’s what happens: You decide to trade in your old car and the manager says that you got a good APR. No problem whatsoever. So you shake hands. The dealer hands you the key. You drive home happy. Then two weeks and 500 miles later, BAM! They call you to say that they’re very sorry but you didn’t qualify for the interest rate that they signed you up for.
Can they do that? Can they really ask for additional money when you already signed the papers that stipulated that that’s your monthly payment, no extra? The truth is they can. If the contract you signed has the “subject to financing” clause, they absolutely can. The fraud lies in the fact that they knew what you qualified for before you signed. They knew that you didn’t qualify but they deliberately misled you into thinking that you did so you will sign the contract with them so they could call you up later, lie to you, and make a profit out of you. Because they would never let you drive off with the car unless they stood a chance to gain something out of it.
When you signed that credit application with them, they know your credit score. If it’s above 680, you’ll get a low APR. If it’s below 680, then expect a higher APR. What’s so hard to understand about that? They’ve been dealing with credit scores for years, how come they didn’t know what you or what you did not qualify for? The only answer is that it’s a scam.
This scam often works if you have bad credit, so it should be easy to avoid. Don’t finance from a dealer if you have bad credit. That simple. Check out the financial calculators on https://www.cars.com/ to help you better understand your financing options. Next, you can try to arrange your own financing before you get to the dealership to compare. Talking to a lender before you visit a dealership will put a cap on how much a dealership can charge you for the car because the loan will already be secured by the bank. If you do have bad credit, you should consider purchasing from a Credit Union. They can also help you get your finances in check.