Traps to avoid and negotiation tips to use to get a good car loan deal

Traps to avoid and negotiation tips to use to get a good car loan deal

Having a car means you’ll have a more convenient and faster mode of transportation. If you’ve already chosen your model of vehicle and are now looking for financing options, it helps understand how car loan works and secure a loan that’s cost-efficient.


Many dealers often take advantage of the increasing demand for cars by trapping buyers in scams and making them pay more than they should. Specifically, these are the common scams on the market today:

Shell Games

This usually happens during trade-ins wherein dealers will seem to give you everything you want for the price of the car you’re trading, hoping that you’ll miss to notice the price raise they put on your new car.

The 4-Square Method

Using this technique, dealers aim to confuse buyers by mixing all loan considerations (e.g., down payment, monthly payment, total amount repayable and add-on rates) in a single transaction. To avoid this scam, don’t sign the contract then and there. Do some research and price comparison first before making the decision.

Packed Payments

Closely related to the 4-Square Method, dealers resort to Packed Payments when they attempt to combine all aspects of the transaction into one contract. They’ll hide the extra charges (e.g., warranties, fabric protection and insurance) into the monthly installments with high hopes of increasing the car’s TAR.

Apart from scams, repossession is another bad case to get into. Avoid this by being realistic with your capacity to pay. This will ensure you won’t miss the payment schedules, which is the main cause of repossession.


Dealers have a different ways to raise the car’s overall price. But as a wise buyer, you also have various ways to lower your vehicle’s cost:

Loan term – Go for the shortest loan term you can afford to avoid paying off too much accumulated interest rate. One way to afford a shorter loan is to avoid signing up to extra car features as these can add up to your TAR.

Total Amount Repayable – Aim to lower the TAR instead of the monthly payments. Dealers can surely give you a very low monthly rate but may also extend the loan term, which will play to their advantage.

The extras – Extra charges and fees will be imposed on top of the loan’s principal. So avoid getting extras if you think these are not necessary or if you think you can find these in other providers at a lower cost.

It’s very important for you to research on interest rates, add-on prices and other car features before filing for a car loan. You should also be vigilant about the scams and misleading techniques dealers employ to get you to sign up to their unreasonably priced vehicles. To be every sure about your decision, it’s a good move to consult our financial consultants here at Loansolutions PH to guide you through your options and application process.

Need a car loan? Loan Solutions can help you out.