🚨 Top 10 Car Loan Scams in Canada: What to Watch Out For 🚨

Not all car deals are created equal — and unfortunately, not all car loans are offered in good faith either. Whether you're buying your first car or looking to lower your monthly payment, it’s important to understand the most common car loan scams in Canada.

Below is a list of red flags and shady practices to avoid. If you already have a car and loan, you may be in a much better position to refinance through trusted lenders like CIBC or AutoCapital on CarRefinancing.ca.

🔎 Top 10 Car Loan Scams to Watch Out For

1. Yo-Yo Financing (a.k.a. Spot Delivery Scam)
   You’re told you’ve been approved and drive off the lot, only to get a call later saying your loan "fell through" — and now you owe more or need to sign a worse deal.
2. Packed Payments
   Dishonest dealers inflate your monthly payment by sneaking in extras like extended warranties, insurance products, or vehicle add-ons — without clearly disclosing the costs.
3. Fake Pre-Approvals
   Some lenders or dealers advertise "guaranteed approval" or "pre-approved" loans to lure in desperate buyers — only to change the terms after a credit check.
4. Bait-and-Switch Interest Rates
   You're promised a low interest rate in ads, but once you’re in the dealership, the rate jumps significantly — often after hours of paperwork and pressure.
5. Loan Flipping
   A scam where a dealer convinces you to trade in your car — and roll over negative equity into a new, even more expensive loan. Each time, your debt gets worse.
6. Title Loan Disguises
   Some bad actors offer "easy loans" that are actually vehicle title loans with insane interest rates — using your car as collateral without clear disclosure.
7. High APR for ‘Bad Credit’ with No Justification
   If you’re told the APR has to be 25-30% because of your credit score, double-check with other lenders. Some predatory lenders use fear to justify inflated rates.
8. VIN Cloning or Vehicle Mismatch
   In rare cases, a shady dealer may use a stolen or misrepresented vehicle in your loan documents — potentially making your loan (and car) worthless.
9. Pressure to Add a Cosigner You Don’t Know
   Never sign a loan with a cosigner who isn’t directly involved with the vehicle. Some scams use fake cosigners to commit fraud or stick you with someone else’s debt.
10. Loan “Application” Fees or Upfront Charges
    Legitimate lenders don't charge massive upfront fees just to “apply.” If someone wants $200+ before you even see loan paperwork, walk away.

✅ Already Have a Car Loan? Here’s the Smarter Move

If you already have a vehicle and a car loan, you might not need a new one at all. In fact, refinancing your existing car loan can help you:

• Get a lower interest rate 💸
• Reduce your monthly payments 📉
• Pay off your car faster 🚗
• Avoid getting scammed by starting fresh with a trusted lender ✅
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CarRefinancing.ca works with reputable Canadian lenders like CIBC and AutoCapital to help you refinance your vehicle with confidence. No shady surprises. Just better rates, better terms, and honest options.

🔁 Ready to Refinance?

Get started in minutes with no obligation. All you need is:

• Your existing loan details
• Your vehicle’s VIN
• Some basic info about your income and credit

Same car. Better deal. Peace of mind.