8 Car Buying Myths, Swindles and Scams to Watch Out For
Whether you are dealing with a tricky car salesman, an online website you found in the search engines that seems too good to be true, or with someone you met on Gumtree – it is more important than ever to be aware of some of the most common car finance tricks and scams.
We thought we would pull together 8 of the most frequent, and most nefarious car finance swindles, to help you avoid them.
1) Deposit scams. This scam is certainly at the dodgier end of the scale – you are unlikely to have this happen to you at a decent car dealership. You may also have heard of a similar version of this relating to property rentals. The basic premise is that the scamster will tell you that someone else wants the car/someone else is on their way to make a purchase right now/you have to act quick to buy – and most crucially – you have to put down a big deposit to reserve your car. The problem? Once you have paid, you might find that the scamster is suddenly impossible to get hold of, and has scarpered with your money.
2) Guaranteed finance. No reputable company can or will offer you a 100% guarantee you will get finance before they do the necessary checks and applications. It is simply not realistic or possible. In addition to the fact that it is highly unrealistic, it is actually also illegal. According to Stonacre, The Consumer Credit (Advertisements) Regulations 2010 made it against the law for any company to fraudulently claim that they provide guaranteed finance.
3) Rental car scam. There are many variations of this scam, and similar to the deposit scams – they usually involve theft of your deposit. The idea with this scam is that a dodgy dealer will rent a car, sell it for a knockdown price to as many people as possible, gather deposits, then make off with the cash and return the car to the rental company. As with the deposit scam, to avoid simply make sure you are dealing with someone reputable, and don’t hand over a deposit until you actually have the car.
4) Escrow fraud. Similar again to the various deposit scams, look out for warning signs such as a British car being offered for sale from abroad. Most communications with these types of frauds will be done via email – to hide the fact you are quite possibly speaking to someone from the world’s online scam capital: Nigeria.
5) Deposit? What deposit? Make sure you get a receipt for your deposit, even with dealers that appear to be reputable. Money can go missing, and there is nothing like the horrible feeling that you may have just lost many thousands of pounds.
6) We don’t do credit checks. Whilst it is true that some lenders might only do a ‘soft search’ initially (ie it should not impact your credit score), if anyone tells you they are happy to lend you (a total stranger) as much as ten thousand pounds, and not have to do a credit check – yes – you guessed it – it sounds too good to be true. The reality of the situation is that all sensible and reputable lenders have to do credit checks to lend money safely, without the risk of people defaulting on loans.
7) Your guarantor won’t be liable if you fail to make payments. This one is as old as the practice of guarantors themselves. The whole point of a guarantor is that if you fail to make payments or default on your loan – they are 100% liable for the full amount of the loan. Never believe anyone that tells you otherwise. Many guarantors complain that they too were misled in a similar way – so be wary also if you have been asked to be a guarantor – and be sure that if the person taking out the loan defaults – that you are willing and able to pay for the full amount of the loan including interest.
8) Asset fraud. You get your car, everything may seem fine at first – then you find out something devastating – the car you bought still has outstanding finance on it and you are liable. If the car you buy has outstanding finance on it, then this can mean that the person selling it actually has no legal right to sell it as it is not actually their property. The financing provider may have to release the car to be sold, something which they can sometimes be wary of doing. Beware also, it is a common misconception that if you buy the car as an ‘innocent purchaser’ you will be entitled to keep the car. In the case of stolen or fraudulently sold vehicles – this is absolutely not the case.
In addition to all the above information, we wanted to include some general links to useful sites:
We hope you found our guide useful. If you have any comments or questions feel free to leave them below and we will try to get an expert to answer them for you.
Main image adapted from a photo by: Harry_nl @ Flickr
Latest posts by Paul (see all)
- Buy To Let Changes For Portfolio Landlords - August 16, 2018
- Improve Your Personal Finance By Trading The Financial Market - August 15, 2018
- Bank of England Raises Interest Rates: What Does It Mean for You? - August 8, 2018
- Breaking The Paycheck To Paycheck Cycle – How (And Why) To Make It Happen - July 25, 2018