Buying a used car? Watch out for "credit rebuilders"

You’re looking to buy a used car for sale by owner and you end up at a dealership. You’ve searched used car classifieds as you’d like to buy a used car, but your credit isn’t that great.
The sign outside the auto dealership says ‘Good Credit, Bad Credit, we take them all’. Great you think. But watch out! You may be heading for trouble.

A lawsuit was filed against an auto dealership in Iowa last year for allegedly promising to help car buyers rebuild their credit while providing reliable transportation.

Instead, according to the lawsuit, customers were left with more debt, lower credit scores and high car-repair costs.

This is how they operated their business. The auto dealership did not display prices on the cars they were trying to sell. They did not provide histories of the vehicles, which would have shown any prior damage or repairs. Potential car buyers were not given the opportunity to have the auto mechanic of their choice check the condition of the car.

The auto dealership also had a "buy here, pay here" sales practice, that let the dealership finance cars sales in-house, but it was often at a rate close to 25 percent.

Before the lawsuit even began, the bad publicity caused the auto dealership to file for Chapter 11 reorganization in U.S. Bankruptcy Court in Sioux Falls.

Since the lawsuit the auto dealership has made attempts to modify their business practices, but this does not resolve issues for the hundreds or thousands of their former customers who were in deals or are still in deals that are not in their best interest.

If you don’t need a car right now, and you want to improve your credit rating, this may be a great time to talk to your banker or financial institution.

If you can’t wait, and need to buy a used car now, why not search the used car classifieds for used cars for sale by owner. You’re bound to find a car that you can comfortably afford. It may not be what you want, but it will do the job for now.

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