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Scammers often take advantage of your excitement about getting the deal of a lifetime on a new car, that you might not stop to think about its legitimacy. There are a few red flags to watch out for and steer away from without getting scammed.

Red Flag: Lender is asking for up-front payment.

A legitimate auto lender will never ask you to pay up-front fees or ask for any other form of payment in order to complete your loan. These schemes usually all play out the same – you send money and never see it or hear from the lender again.

Red Flag: Guaranteed loan approval dealerships.

While technically legal in some states, guaranteed loan approval (also known as Guaranteed Credit Approval) advertising is misleading and can be a pitfall. These kinds of dealerships like to approve you for a loan with heavy strings attached, such as requiring you to purchase a high-mileage junk car or only approve you for a very high APR or a large down payment. 

Red Flag: Driving off the lot without loan approval.

Perhaps the worst car scam is the yo-yo financing scam. While most dealers can arrange competitive financing on the spot, there are some who may call you days or weeks later to say that your loan terms have changed and your APR is a lot heftier than what you originally agreed upon. You can prevent this by securing your financing through a trusted financial institution before purchasing a car.

Here are tips on how to find the best loan for you:

Know your credit score.

“This is one of the main factors lenders use to determine what interest rate to offer you,” said Joe Pendergast, Vice President of Consumer Lending at Navy Federal Credit Union.

Here’s a great chart that shows you what kind of APR to expect based on your current credit score. Or, if you find that you need to improve your score, you may decide to wait until you can get a better rate before financing a vehicle. Knowledge is definitely power when it comes to auto financing.

Get preapproved.

“One of the best ways to make sure you find a car that matches your budget is to get preapproved,” added Pendergast. “A preapproval also gives you more negotiating power at the dealer, because to the dealer, it is the same as paying cash for the vehicle.”

Weigh your financing options.

Having options allows you to compare interest rates and loan terms, so you can make the best decision.

“When you know how much you’re approved for ahead of time, you will be less likely swayed at the dealership to buy a vehicle outside of your financial comfort zone,” said Pendergast.

A military-focused financial institution like Navy Federal is a great place to secure financing for a vehicle. Their five-step preapproval process makes it easy to figure out how much you can afford. They also have tons of resources, especially if you’re a first-time car buyer, to help you navigate financing and the buying process with ease.

When it comes to auto loans, research and some tactical patience can make sure you avoid being the target of a scam and get the best deal to work with your finances.

Navy Federal Credit Union is federally insured by the NCUA.

This article is sponsored by Navy Federal Credit Union.