6 Ways to Tell If Your Auto Loan Refinancing Is a Scam

Auto loan refinancing scams are when people pretend to be lenders, promising customers lower rates through refinancing. But really, they just take people’s money and give them no financial services in return.

Auto loan refinancing scams begin with false advertising, plain and simple. The ads may include:

• Fake customer testimonials
• Money-back guarantees
• Claims about how much money you’ll save monthly
• A legitimate company’s name or a variant of the name

You’ll find these ads online, in a magazine or newspaper’s classified section, or even on flyers posted around your neighborhood.

Once people respond to the ads, the scammer might tell them to stop making car payments to their current lender, pretending that negotiations are in progress. They may charge the unsuspecting victim an “enrollment fee” or “application fee,” often several hundred dollars. Customers may not find out they’ve been scammed until they receive a notice from their lender about missed payments or, worse, their cars get repossessed¹. What a rude awakening!

Fortunately, if you know what to look for, auto loan refinancing scams are completely avoidable.

Look Out for Red Flags

If you spot any of the following signs, the purported lender probably isn’t legitimate.

• You see specific claims about how much money you can save on your loan payments.
• The ad includes words and phrases like “No hassle,” “guaranteed,” “money-back guarantee,” and “Bad credit score? No problem.”
• The lender doesn’t ask to check your credit report.
• The rates seem too low (if something seems too good to be true, it probably is).
• The ad appeared on social media or a flyer.
• The lender pressures you to “act now.”
• The lender asks you for an application fee or any money before you get your loan.
• The lender requests payment in gift cards or Bitcoin.
• The lender asks you for your personal information, most likely to steal your identity.
• The lender offers you a deal before you’ve applied.
• The loan’s terms and conditions are confusing, and the lender refuses to explain them.
• The lender has no physical address and isn’t registered with the state.
• The lender calls you from a 900 number, and you get charged on your phone bill.
• The lender wants to be paid overnight, via a courier service, or via wire — all untraceable methods².

1. Report the scam to the Federal Trade Commission (FTC): https://reportfraud.ftc.gov/#/assistant
2. Contact your state attorney general: https://www.consumerresources.org/file-a-complaint/
3. Get your money back: How you’ll get your money back, if you can, will depend on your payment method. If you paid via credit or debit card, bank account transfer, or bank wire transfer, contact your bank and tell them the charge was fraudulent. If you paid via gift card, wire transfer company, or money transfer app, contact the relevant company or bank. If you sent the payment via mail, either contact the United States Postal Service (USPS) at 877-876-2455 and tell them to intercept the package, or contact the delivery service you used.