Buying a car is likely to be one of your biggest loans, perhaps second in size to a mortgage. Those who are financially savvy will often come into a dealership with cash or a prearranged loan. While they are in business to sell cars, financial experts say that unscrupulous dealerships often come up with other ways to make additional money off customers.

The Patriot Act scam

One scam is the salesperson who claims that the Patriot Act requires them to run a formal credit check on everyone buying a car. This is not true. It is in effect a way for them to size up your credit rating while also charging you to do so. Moreover, running that credit check also automatically lowers your credit rating by about 5 points.

Dealers want to give you that loan

Most people do not have the cash to buy a car outright, so dealers often provide a service of shopping around a loan to get the best deal for you. It is important to remember that not only does the lender make money off the loan; dealers will also mark up the interest rate and then split that money with the lender.

Undercutting your financing

Those buyers with preexisting financing need to keep in mind that some dealers or salespeople will use the driver’s license information you left with them before a test drive to check your credit in a way that does not affect your credit rating. Armed with that information, they then may try to undercut your preexisting arrangement.

Not all dealers are crooks

There are certain tasks that a dealer must perform. The Patriot act, for example, requires car dealers (and other select businesses) to check all buyers against a list of blocked persons and designated nationals who may be sympathetic to terrorist organizations created by the U.S. Department of Treasury Office. The IRS also requires an IRS Form 8300 to be filled out if a dealer receives a cash payment of $10,000 or more

Finances always seem to be complicated

Those who have filed bankruptcy understand the importance of a credit rating. Attorneys with bankruptcy experience can often provide needed insight into good loans versus bad ones, ideally helping you restructure or eliminate bad debt. Unfortunately, predatory lending does not make it any easier.