Not surprisingly, some enterprising companies offer a truly tempting zero percent interest and very low monthly payments. They've come under the spotlight recently; both because of their attractive offers, and complaints from clients about defaults.These are reports that several companies have begun offering financing assistance to those availing of car and motorcycle loans. Their main draw is requiring even lower monthly payments than any bank or dealership is able to offer.
The problem with this “system” is that it adds an unknown third party to the financing transaction, typically between just the bank and the buyer. The vehicle trader’s company name is kept off the books and the customer is asked to simply “trust” the company to make the higher payment for them. They claim that the payments are even made far ahead of the deadline, keeping the customer in good standing.
The bright red flag in this case is the fact that the trading company is not on the line for anything. Neither the vehicle nor the loan is in their name. In fact, customers that avail of the “system” are reminded not to inform the dealer or bank of the company’s involvement in the financing. There is no collateral given to the customer to ensure the company makes the payments. In the event of a default, the company gets away scot-free while the customer is left to face the consequences.