Avoid new car financing scams

  • Published
  • Courtesy of 1st SOW
HURLBURT FIELD, Fla. --  Over the past couple of weeks the legal office has seen an increasing number of problems with new car financing. 

To keep from falling victim, Airmen need to be aware of the process, potential traps and yo-yo financing scams. 

The yo-yo scam starts with an individual entering into a financing agreement with a dealership at an extremely low interest rate. Shortly after the buyer leaves with the new car, the dealership calls back and informs the buyer they could not get the interest rate they had offered, and the buyer must come back and sign a new financing agreement at a higher rate. The dealership may even tell the buyer if they don't sign the new agreement, they will repossess the new car, keep the trade-in and ruin the buyer's credit. 

The trade-in of a previous vehicle is another opportunity for a dealership to attempt to trap a buyer. During a trade-in trap, the dealership will offer the buyer an extremely high value for the trade-in vehicle. When the dealership calls the buyer back in to renegotiate the terms of the finance agreement, they say they have already sold the trade-in, putting the buyer in a position where they no longer want a new car, but need a new car. 

There are things a buyer can do to protect themselves. 

The first option is to finance through their bank. But, if financing is done with the dealership, get everything in writing. Finally, if a deal seems too good to be true, most of the time it is. Know the approximate trade-in value of the car before going to the dealership. There are several publications that will give a ballpark figure of the trade-in value of a car. If a dealership is way out of that ballpark, be very skeptical.
There is help for anyone caught in one of these scams. 

The National Association of Consumer Advocates has a Web site that contains a lot of good information. Or come to the legal office, and one of the attorneys here can help. The best advice is to be an informed consumer. 

Before walking onto the car lot, research cars and understand personal financial limits. Knowing the facts puts the buyer in the best position to get the most for their money.