Fraudsters often take advantage of your excitement about buying a new car for life so that you don’t think about its legality. There are some red flags to beware and stay away from scams.
Red flag: Lender requires prepayment.
A legitimate auto lender will never ask you to prepay or ask for any other form of payment to complete your loan. These schemes usually work the same way – you send money and you never see or hear from the lender again.
Red flag: Guaranteed dealership loan approval.
While it is technically legal in some states, advertising for guaranteed loan approval (also known as guaranteed loan approval) is misleading and can be a trap. These dealerships love to approve a loan with tough conditions, such as requiring you to buy an old-fashioned high-mileage car, or approving only a very high annual interest rate or a large down payment.
Red flag: Leaving the site without loan approval.
Perhaps the worst car scam is the yo-yo finance scam. While most dealers can arrange for competitive financing locally, some may call you in a few days or weeks to tell you that your loan terms have changed and your annual interest rate is much higher than you originally agreed. You can prevent this by securing funding through a reputable financial institution before purchasing a vehicle.
Here are tips on how to find the best loan for you:
“This is one of the main factors lenders use to determine what interest rate to offer you,” said Joe Pendergast, vice president of consumer finance at the company. Federal Credit Union of the Navy…
Here is a great Diagram which shows you what annual interest rate to expect based on your current credit rating. Or, if you find that you need to improve your score, you may decide to wait until you can get a higher rate before financing the car. When it comes to auto finance, knowledge is definitely power.
“One of the best ways to find a car that fits your budget is to get pre-approval,” added Pendergast. “Pre-approval also gives you more options when negotiating with the dealer, because to the dealer it is the same as paying for the car in cash.”
Weigh your funding options.
The availability of options allows you to compare interest rates and loan conditions so that you can make the best decision.
“If you know ahead of time how long you get approved, you’re less likely to persuade the dealership to buy a car outside of your financial comfort zone,” Pendergast said.
A military-focused financial institution like the Navy Federal is a great place to get funding for a car. Them five-step pre-approval process makes it easy to see how much you can afford. They also have tons Resourcesespecially if you are buying a car for the first time to help you navigate the financing and buying process with ease.
When it comes to car loans, research and some tactical patience can help you avoid scams and get the best deal for your finances.
The Navy Federal Credit Union is insured by the NCUA at the federal level.
This article is sponsored by Federal Credit Union of the Navy…