What Everybody Needs To Know About Car Financing Scams

Ever thought of purchasing a car?

Purchasing a vehicle is probably one of the biggest investments any consumer can make today.


Unfortunately due to economic circumstances the majority of vehicle buyers today prefer to finance a vehicle, rather than buying it cash.

The advantage of financing a vehicle is that one can retain ones cash and improve cash flow.

For other users financing a vehicle can be done for tax relief purposes.

Another advantage of financing a vehicle, and only in certain instances, is that the consumer could have recourse against the dealership and/or financing institution in the event troubles occur.

Vehicle financing scams generally occur only with dealerships offering their own finance to consumers.

Well established and reputable financing providers seldom involve in unscrupulous business dealings.


These types of scams are generally committed when a consumer applies for vehicle finance.

The dealership will notify the client of approval and request the client to sign the contract.

After signing the finance agreement, the client will be informed that a higher interest rate was required to approve the finance.

In certain instances the client will also be informed that a higher deposit is required for the finance to come into effect.

In other instances clients will also then only be informed that the vehicle needs to be repaid in a much shorter period, along with the higher instalment and deposit.


Always be careful of advertisements offering lower interest rates in vehicle finance.

When taking part in these offers you should be aware that:

  • You could be required to pay a large deposit in order to get finance approval
  • You could be required to repay the finance in a very short time
  • You may be required to buy additional options or even sign over a manufacturers? rebate to the dealership
  • You may be required to pay the advertised price of the vehicle, and not be allowed to negotiate a better sale price
  • Be careful of reserve prices placed on the vehicle, which needs to be paid in full at the end of the finance agreement as a lump sum, as with a lease

It is highly recommended that you discuss such offers with a person with the required knowledge and experience.

By approaching a finance specialist at any dealership you might be informed of any pitfalls you may enter yourself into.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.


  1. Good post, as ever.

    I would certainly recommend ANYONE to go see a person qualified in your local jurisdiction to get independent financial advice. Even in these not great times, shopping around for finance, particularly if you have great credit, can be a good thing.

    Also, remember 0% 2 yr finance nearly always requires a minimum of 50% down payment.

    The good thing about these troubled times, is you are likely to get a good deal — provided you follow the advice given in this article.

    Finally, I know contracts are boring as hell (I deal with them daily!), but please make an effort to read them — and if you really are unsure, an hour or two of your local solicitors time is quite a small price against the cost of getting the contract wrong. What’s that: your local dealer won’t allow you to take the contract away unsigned? Walk away, walk away fast.



    • During times like these many dealers may be in trouble and so I believe that the various auto scams I’ve written about are even more likely to occur.

      You make a good point about taking the contract away -if someone, car dealer or otherwise, won’t let you do that then stop and think just how big a red flag that is.

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