The first warning light for many scams is any kind of pressure tactic. Don’t fall for manipulative ploys, such as “You must do this today”; “No need to read the paperwork”; or “You can trust me!” Be prepared to walk away from anything that feels suspicious during the auto loan process.
Keep on the alert for these common scams:
Add-ons Scam
The dealership wants to sell you additional features—such as paint protection, an extended warranty, gap insurance, or a GPS system—and charge you much more than they are worth.
Ask yourself: Do I need this? Can I get this feature at a better price from my lender or at a third-party company?
Hidden or “Junk” Fees Scam
Some unnecessary or inflated costs—such as administrative fees and dealer-prep charges—are “hidden” in the fine print of your contract. In addition, some of the add-on fees mentioned above may be included in the final price without you realizing.
Before you sign anything, read all the paperwork and ask questions if you are unsure about any part of it.
Yo-Yo Scam
You may believe your loan is final, or almost final, and the dealer tells you to take the car home or delivers it to you. Days or weeks later, they contact you to say the deal fell through and then pressure you to sign a new financing contract with worse terms.
Always complete your financing before taking your vehicle home or accepting its delivery.
Bait-and-Switch Scam
A dealer advertises too-good-to-be-true financing and then changes the terms when you are ready to buy.
Read the fine print on all advertising before you go to the dealer. If the terms change during the buying process, walk away.
Loan Modification Scam
In order to refinance your auto loan, you’re required to pay a large fee, pay in an unusual way (such as with gift cards), or start making your car payments to the “negotiators.”
Do not pay anyone but your current lender. Contact a credit union or another reputable lender about refinancing your auto loan.
The Federal Trade Commission and Scams
The Federal Trade Commission (FTC) is constantly working to combat auto loan scams. Effective July 30, 2024, the FTC implemented the Combating Auto Retail Scams (CARS) Trade Regulation Rule, which addresses bait-and-switch tactics, hidden junk fees, and more. Be sure to read it before you go car shopping!
If you do get scammed, file a report with the FTC, as well as with your state attorney general or consumer protection agency.
Excite Credit Union: Get Preapproved for Your Next Auto Loan
The best way to avoid many auto loan scams is to get preapproved for an auto loan from a credit union. With competitive rates, flexible terms, and personalized service, Excite Credit Union makes financing your next vehicle simple, straightforward, and scam-free! And there is no penalty for paying off your loan early. Excite also offers quick and easy refinancing.
Visit our Vehicle Loans page in order to:
- Check out our rates for new, used, and older vehicles.
- Try our auto loan calculator and our auto loan refinance calculator.
- Learn about our First Time Auto Buyer Program.
- Get a loan for a truck, motorcycle, recreational vehicle, or boat.
- Get your auto loan refinanced with terms to fit your needs.
- Complete a short form to get started.
At Excite Credit Union, we’re more than just a lender. We’re your partner in every mile.
