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Last updated: December 20, 2023

6 Ways to Tell If Your Auto Loan Refinancing Is a Scam

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Can’t pay off your auto loan? One option is to refinance, taking out a new loan with different terms to pay off your existing one. In the best-case scenario, refinancing results in a lower interest rate and monthly payment, along with a shorter loan term, especially if your credit has improved since your first loan was approved.

Although there are many legitimate refinancing options available, there are scammers out there eager to get your money and pocket it for themselves. In this article, we’ll tell you how auto loan refinancing scams work, how to avoid them, and what to do if you’ve fallen for one.

Pro Tip:

Are you considering refinancing an existing auto loan? Our Auto Refinance Calculator can help show you if it makes financial sense.

What Are Auto Loan Refinancing Scams?

Auto loan refinancing scams are when people pretend to be lenders, promising customers lower rates through refinancing. But really, they just take people’s money and give them no financial services in return.

How They Work

Auto loan refinancing scams begin with false advertising, plain and simple. The ads may include:

  • Fake customer testimonials
  • Money-back guarantees
  • Claims about how much money you’ll save monthly
  • A legitimate company’s name or a variant of the name

You’ll find these ads online, in a magazine or newspaper’s classified section, or even on flyers posted around your neighborhood.

Once people respond to the ads, the scammer might tell them to stop making car payments to their current lender, pretending that negotiations are in progress. They may charge the unsuspecting victim an “enrollment fee” or “application fee,” often several hundred dollars. Customers may not find out they’ve been scammed until they receive a notice from their lender about missed payments or, worse, their cars get repossessed1. What a rude awakening!

How to Avoid Falling Victim to Auto Loan Refinancing Scams

Fortunately, if you know what to look for, auto loan refinancing scams are completely avoidable.

Look Out for Red Flags

If you spot any of the following signs, the purported lender probably isn’t legitimate.

  • You see specific claims about how much money you can save on your loan payments.
  • The ad includes words and phrases like “No hassle,” “guaranteed,” “money-back guarantee,” and “Bad credit score? No problem.”
  • The lender doesn’t ask to check your credit report.
  • The rates seem too low (if something seems too good to be true, it probably is).
  • The ad appeared on social media or a flyer.
  • The lender pressures you to “act now.”
  • The lender asks you for an application fee or any money before you get your loan.
  • The lender requests payment in gift cards or Bitcoin.
  • The lender asks you for your personal information, most likely to steal your identity.
  • The lender offers you a deal before you’ve applied.
  • The loan’s terms and conditions are confusing, and the lender refuses to explain them.
  • The lender has no physical address and isn’t registered with the state.
  • The lender calls you from a 900 number, and you get charged on your phone bill.
  • The lender wants to be paid overnight, via a courier service, or via wire — all untraceable methods2.


Preapproved or prequalified offers are illegal, but saying a loan is guaranteed before you’ve applied is not.

Check the URL

If the supposed lender sends you a website link, you can make sure it’s legitimate by checking for a padlock symbol next to the URL in your web browser. The URL should also begin with HTTPS3.

Search the Lender Registry

See if the lender is registered with government agencies.

Perform a Keyword Search

Google the lending company’s name with words like “complaint,” “scam,” and “review.”

Hang Up on Robocalls

If you get a call from a random number and it’s a recording, do not give out any personal information. Instead, hang up immediately.

Never Pay in Advance for a Loan

A legitimate lender will never ask for any money in advance of providing a loan. Never pay an upfront fee, which is a key sign of car loan scams.

So You’ve Been Scammed: Take These Steps

  1. Report the scam to the Federal Trade Commission (FTC):
  2. Contact your state attorney general:
  3. Get your money back: How you’ll get your money back, if you can, will depend on your payment method. If you paid via credit or debit card, bank account transfer, or bank wire transfer, contact your bank and tell them the charge was fraudulent. If you paid via gift card, wire transfer company, or money transfer app, contact the relevant company or bank. If you sent the payment via mail, either contact the United States Postal Service (USPS) at 877-876-2455 and tell them to intercept the package, or contact the delivery service you used.


If you paid the scammer in cryptocurrency, the transaction is most likely not reversible. However, if you paid through a crypto exchange, you can try contacting that company to get your money back.

If you see words like “guarantee,” run in the other direction.

  1. Auto Loan Refinancing Scams. FTC Consumer Advice. (2022).

  2. Predatory Loans and Loan Scams. New York State Department of Financial Services. (2022).

  3. Car Buying and Personal Loan Scams. Navy Federal Credit Union. (2022).

  4. How do I find my state’s bank regulator?. Consumer Financial Protection Bureau. (2022).