How to Avoid Scams for Bad Credit Car Loans


When you have bad credit, you’ll find it a lot harder to get a car loan or a home loan. You still need a car to get to your job, and you still need a house to provide a safe haven for your family. You can apply for bad credit car loans in Cincinnati to purchase a car at a reasonable rate, even if you’ve had financial trouble in the past. 

Unfortunately, many unscrupulous lenders will prey on your vulnerable position, knowing that you really need to get a car but don’t have many options to do so. They may offer outrageous interest rates or include hidden terms that cost you much more money in the long run. You can learn the signs of scams to avoid these shady dealers.

Here are a few tips for avoiding scams for bad credit car loans:

Check Your Own Credit Report and Score

You may already know that your credit isn’t the best, but you may not know the exact details. A shady dealer can try to tell you that your credit report contains all kinds of problems or that your score is actually much lower than it is. 

The best way to protect yourself against these kinds of lies is to check a copy of your credit report and to get your credit score before you start shopping for a new car. Make sure you look at your report from all three credit bureaus, and check the reports carefully for any errors. 

What you see on the report is exactly what lenders see, so it’s not like the dealer has any information that you don’t. If an unethical lender tries to make it sound like your credit is worse than it is, you can pull out a copy of your report and go over the facts.

Look Beyond the Interest Rate

You may be dazzled by a lender offering you an extremely low interest rate that is far below what anyone else has offered you. However, you need to look closely at the terms to know if that interest rate is too good to be true.

For example, the interest rate may only be an introductory rate. The interest rate may actually balloon after a certain number of months, causing your payment to soar and become unaffordable. Or the interest rate may only be offered if you make a significant down payment that you can’t afford. The actual interest rate you qualify for may be much higher. 

You must read the fine print on the loan closely and ask a lot of questions. Never assume anything about the terms. Always check and re-check the information so you know exactly what you are getting yourself into before you sign.

Pay Attention to the Term Length

Besides the interest rate, the length of the loan is a popular way to manipulate how much you ultimately pay. For example, a lender might offer you a much longer loan term to lower your monthly payments but ultimately make more money off of you through interest. With a shorter term, you might pay a little more each month, but you’ll pay much, much less in the long term. 

Bad credit car loans are also typically offered on previously owned cars, so a longer term could saddle you with debt for a car that dies off before you have a chance to pay off the loan. 

It is important that you carefully consider the length of the loan and how much you are paying in the long term. One key component to rebuilding your credit is creating financial health, and you can’t do that if you are paying out thousands more in interest than you need to on your car loan.

Watch Out for Extra Fees

Another way that lenders make money off you is to charge fees. There may be an origination fee for the loan, fees for late payments or a fee for paying off the loan early. Some lenders might even charge you an “administrative fee” for the loan, which can be hundreds of dollars.

Your lender may not bring these fees to your attention, but they must be outlined in the loan document. That means that you will need to read the fine print carefully to know exactly what you are financing. You could pay hundreds or thousands more for fees — plus interest. 

Don’t Make a Cash Deposit

Some shady lenders may take your cash deposit and then never follow through with the financing, claiming that it “fell through” and then not returning your cash. Protect yourself by never making a cash deposit. Instead, use a credit card or a personal check. That way, if there is a problem with the financing later, you can dispute the charge and take action against the company.

Work with Reputable Lenders

One of the best ways to protect yourself against bad credit car loan scams is to always work with reputable lenders. Do as much research online as you can before you shop. Check out company profiles at the Better Business Bureau and other consumer protection agencies. Read online reviews from former customers, and ask for feedback and referrals from people you know.

The more you can do to establish the trustworthiness of a lender before you shop, the better protected you will be. You’ll then be able to enjoy your new car without worrying about future problems, and you’ll be slowly rebuilding your credit in the process.


McCluskey Automotive is a trusted supplier of bad credit car loans in Cincinnati. We offer fair rates and affordable terms for all our loans, giving our buyers a chance to get the car they need at a price that will fit their budget.

We also carry a wide range of affordably priced previously owned vehicles, giving you diverse options to find the right car at the right price. Visit us today to learn more about our financing options and our selection.