Sales Holdback

One of the most used car dealer tricks or scams is to get you to pay a higher interest rate for your car loan and the extra that you pay rolls right to the dealer not to he bank that's fronting the loan. If you have had some problems in the past like missed or late payments, you are the greatest mark for the automobile dealership and this practice.

When you finance with the dealership they run a credit check on you. The one thing that they get to help them make their decision is a credit score. This is a score that is computed by the big three credit agencies, TransUnion, Experian and Equifax. The higher the score the better. A low score and you pay a premium price to own a car.

Now the trick that's played is when the dealer tells you that your score is lower that it actually is and that he'll have a tougher time getting a lender at a good rate. So he gets the rate based on your score, but tacks on a few more percent to pad the deal.

You pay for your car and the bank or automobile finance company pays a kickback to the dealer. You pay more in interest and a higher payment or stretched out a payment more than what you could have had it for. This is why you should know your credit score before you apply for a loan and better yet, have your loan completed before you walk into a showroom.