Be careful when you shop for car loans. Fraudulent auto lenders today have learned to make their tricks subtler. We don’t want you to be a victim of their traps. Here’s how to spot potential fraudulent auto lenders and their scams.
1) Offers are too nice.
No money down, zero interest, guaranteed approval. These are just some of the commonly used sales pitches by auto lenders to attract potential borrowers. Offers like these are often deceiving and sometimes not true at all. Although some lenders stay true to what their ads imply, there are still many lenders out there that just are after gaining more profit.
Don’t get too excited when you encounter offers that seem too nice. Read the fine print or ask the lender about the hidden terms before considering it as one of your options.
2) Demands upfront fee before processing your application
Legitimate lenders are unlikely to demand upfront payment. If ever they do, the amount is surely not hefty. But unscrupulous lenders would ask you to wire the payment through a third-party service provider. If a lender asks you to do this, stop your transaction with them. It might be a scam. They could be one of those guys who run away with your money without giving you an auto loan.
3) Requests to keep everything a secret
Now it should really start to smell fishy when the lender asks you not to tell your family about the transaction. For what reason? Clearly, the lender is trying to hide something. It’s probably a fraud.
4) Offer is unsolicited.
It may not be safe to entertain lenders that contact you and promote their offers via email. Be wary if a lender you’re not familiar with communicates with you online. Unsolicited offers channeled online often appear attractive and tempting, but it’s not far from possible that they are scams.
5) Terms are complicated.
Fraudulent lenders would try to confuse you so you won’t notice they’re ripping you off. Before signing an auto loan, read all the paperwork first and raise every concern you have. Make sure all terms are accurately indicated in the papers. Don’t hesitate to clarify things with the lender. Terminate the transaction if the lender seems uncooperative with clearing things up.
6) Background check on the lender is not applicable.
The Better Business Bureau suggests that consumers look up a lender in their website to see whether it is a registered business or not. It makes sense. A legitimate auto lender would be recognized by BBB and is registered to do business in San Diego.
If you can’t find any information about a lender, they might be operating illegally. Find out who are the reputable auto loan providers here in San Diego so you can check their offers out first when you shop.
7) Gets your credit report for you
An unscrupulous lender would seem so kind to get a copy of your credit report for you. But they do this only because they want to charge you a higher interest rate by lying about your credit score, basically making it lower than what it really is. Make sure you have your credit report in hand when you visit a lender and dealer. Abusive lenders won’t be able to fool you if you know well where you stand in your credit.