Signs of a Bad Car Loan

Posted on December 12, 2019 by NALN

Buying a car seems easy, but it isn’t. Cars are expensive, and most people need a loan to buy one. Getting the right auto loan becomes difficult when one does not have a good credit history. Once you have found a car that suits your needs and agreed to a price with the car dealer, you might think that the task is over, but it’s not. In most cases, a bad auto loan can make your life miserable, while making even the cheapest car unaffordable for you.

Let’s discuss the three common signs of a bad car loan.

1. Additional Charges

Have you ever heard the term “loan packing”? It happens when the car dealer adds extra charges to the price of your car, without you even knowing. They try their level best to make sure you don’t find out. When it comes to added charges, some charges are legitimate, while others aren’t.

Here are some of the legit charges that come with the cost of your vehicle.

  • Title and registration
  • Advertising charges
  • Destination fees
  • Documentation charges
  • Sales tax

The fees mentioned above are non-negotiable and do not fall into the category of loan packing. However, some unnecessary charges are added to your car’s cost and put you under a significant amount of financial burden. Some of them are listed below.

  • Paint and sealants
  • Gap insurance
  • Pin-striping
  • Car rugs
  • Alloy wheel upgrades

If your car deal is full of the charges mentioned above, it is better to walk away and look for a car deal somewhere else.

2. The Price of the Car Differs from What Was Agreed

In a hypothetical situation, you have agreed with your car dealer to purchase a car worth $15000. You visit their finance office, hoping they would give you the same price, but they don’t. In such situations, some of the most common excuses given by car dealers are your factual inaccuracies or the expiration of deals. Doing so, the dealer wants to earn a higher profit from you. If your dealer is doing the same, walk away. If they can’t give you the agreed price, do not make the mistake of entering a loan contract with them.

3. Conditional Sales Agreement

A conditional sales agreement is also known as Yo-Yo financing. The dealer might tempt you with a reasonable interest rate, and compel you to sign a conditional contract. After you have signed, the dealer might say that the deal fell through, thus making you re-sign with a higher annual percentage rate (APR).

If you notice any of the signs as mentioned above, look for an auto loan elsewhere and save yourself some time and money.

About National Auto Loan Network.

National Auto Loan Network is headquartered in Newport Beach, California. The company was founded in 2010, by a group of finance professionals with over 40 years of combined industry experience. Under the direction of president and CEO, Marco J. Rasic, NALN specializes solely on the refinancing of motor vehicle loans. National Auto Loan Network''s skilled team of loan officers help hundreds of consumers replace their high-interest auto loans more favorable ones. For more information about National Auto Loan Network please visit