You want to buy a car and need financing, but your credit isn’t so great. Most dealerships have a Finance and Insurance (F&I) Department that will tell you about their financing options. To get the process started, the F&I Department will ask you to complete a credit application, which includes your monthly income and information on current credit accounts, including debt you owe.

At least that’s how it’s supposed to work. But there have been reports that some dealers inflate your income information for the financing without your knowledge. That can cause you serious financial harm. You could be saddled with car financing that you can’t afford to repay. That means your car could be repossessed and your credit score could take a hit.

The FTC has a few tips to help you avoid unscrupulous finance deals:

  • Consider your options for financing. You might be able to arrange financing directly with a credit union or finance company before you pick a car. This will also give you a sense of what credit terms might be available to you, so that you can compare them with what a dealer is offering you. If the dealer’s offer differs vastly, make sure the offer is based on accurate information about your income and employment.
  • Research the dealer before visiting the sales lot. Check the dealer’s reputation online by searching for the company’s name with words like “scam,” “rip-off,” or “complaint.” Research the dealer with your state Attorney General and local consumer protection agency to make sure there are no unresolved complaints on file. Also, ask family or friends for recommendations.
  • If a dealer encourages you to overstate your income, take it as a sign that the dealer is not reputable, and leave the dealership.
  • Ask to see the credit application — completely filled out — before you sign it. Make sure your income and other personal information is correctly listed.
  • Make sure to get a copy of your paperwork before you leave the dealership.
  • If you find out your dealer has falsified your income or other personal information, complain to the FTC online or call 1-877-FTC-HELP.

To learn more about buying a new or used car, visit Buying & Owning a Car.

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