You are buying a new car and cannot wait to drive it. After you fill out the paperwork, the financing manager checks out your credit and comes back with “good news”; according to your credit score, it seems like you can get a low rate of interest. He hands you over the keys and says that although the loan hasn’t been officially approved yet, you can pick up the car right away. You get in the car and drive off, ready to show it to your family and friends.

A week later, the dealership calls you to tell you that, indeed, you qualified, but unfortunately you didn’t qualify for the low interest rate discussed.

Justifying this with the contract’s fine print, where it says “subject to loan approval”, he tells you that you now have to pay a higher rate. In the fine print, they have a “client agrees to pay a higher interest rate if not qualified” clause, threatening to sue you if you don’t agree.

How to avoid: don’t ever think you can have a “gentleman’s agreement” with a car dealer. The dealer knows exactly what you can qualify for the moment he comes back in the room, but giving you the keys is his assurance that you won’t back off. This scam usually works on people with bad credit, because they know they are not perfect and will not even challenge the decision.

Also, if you did a trade-in transaction and got scammed this way, they will tell you that your old car has already been sold, so there is no chance of re-doing the deal. Never drive off a car until all the details of the contract are finalized.