There are some new car financing tactics to watch for if you’ve opted to get financing through the dealership. Most people are honest, but some salespeople will use tactics that are less than ethical to get you to sign on the dotted line and put more money in their pockets. So keep an eye out for the following tricks they use.
Some salespeople will talk up your new car choice and get your mouth watering with a very low APR. But after all that excitement they come back with your credit report, explaining that the score is too low to qualify, and here’s the best (and of course, much higher) APR they could get for you.
If you have poor credit you won’t get a good APR anywhere you go, though you could shop around at a finance company for a slightly better rate. But if you don’t know your credit score, how do you know what you’re being told is even true? Get a copy of your credit report before you go to the dealership, just for this reason. If the number they give is drastically different, show them your report and know that they’ve just tried a tactic with you on the assumption that you were clueless about your own credit. Do you really want to do business with someone like that?
Another tactic is to sell you the car, then after a short while call you and let you know the great news—you can come in and sign a new loan contract that offers a much lower payment! The catch with this tactic is that while your monthly payment is lower, they’ve extended the terms of the loan. You might be paying for one year, two years or even more beyond the amount of time in the original loan agreement. So in the end, you’ll be paying more. If you’re given such an offer, just turn it down.
Something that’s happening a lot today is the salesperson insisting on running a credit check on you even when you don’t plan to finance through the dealership. They may even claim that they have to before they can sell you the car. This is just a way to get your permission to run a credit check so they can formulate a financing offer and try to beat the financing you’re getting elsewhere. While there’s no harm in letting them try to beat the terms and give you a better deal, if you’re set on outside financing there’s no need to let them check your credit.
Another way unethical salespeople can get extra money out of you is by claiming that their bank won’t approve your new car financing unless you pay X amount for an extended warranty or X amount for insurance that will pay for the car if you die. If they won’t approve the loan now, why would they be willing to approve an even larger loan? This is just a way for the salesperson to make more money from you and your new car loan.
