Is Your Car Dealer a Predatory Lender?
If you've been out of bankruptcy for a few years, then you're probably ready to take the leap and buy a new or used car. If so, you need to be on the lookout for predatory lenders. Predatory lenders in the car finance industry are plentiful and they've got their sights trained on debtors exiting bankruptcy.
Below are a few signs that your car dealer may be a predatory lender:
- If your car dealer is pressuring you to sign up for the "buy here, pay here" schemes, then they are probably a predatory lender. "Buy here, pay here" schemes usually are high interest and designed to resell the same vehicles over and over again. They require a very large down payment which is a significant percentage of the car's value. For example, if you're buying a car worth $10,000, and they lender asks you to place $4,000 down, then they are probably a predatory lender. Post-bankruptcy debtors need to watch out and avoid this type of scheme.
- If your car dealer is trying to get you to sign a conditional sales contract, beware. Oftentimes predatory lenders get victims to sign conditional sales agreements, allow the buyer to leave with the vehicle and then contact them a week later saying that something didn't work out with the car loan. What this really means is that they plan to place you in a much more expensive loan probably loaded with fees. If you're a post-bankruptcy debtor do not sign a conditional sales agreement. Come in the door with a pre-approved loan.
- If your car dealer is trying to sell you all types of expensive add-ons, they are probably a predatory lender. Many of these additional add-ons add to the cost of the car and the loan, post-bankruptcy debtors should avoid them.