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Dealers violate Truth-In-Lending in tight market

by | Mar 2, 2022 | Consumer Lawyer

Picture this: You have been saving all your hard-earned money for the opportunity to buy a new or used vehicle. You see the vehicle online and head to your local bank to get outside financing in hopes of beating the dealership’s inhouse rate. Or you saved really hard, and plan on buying the vehicle outright in cash. You show up to the dealership, look at the vehicle and do your due diligence on its history and condition. You decide you want to purchase the vehicle. When you tell the dealer you want to pay them in full right now either with the outside financing or cash, and they refuse to see you the vehicle. What gives?

Unfortunately, this is starting to happen more and more often with the shortage in supply of new and used automobiles. Consumers are reporting that cash and financing from outside the dealership are not welcome. Dealers try to get some of the consumers to finance by quoting higher prices for cash sales and even outright refusing to sell if the dealer was not allowed to arrange the financing.  It is illegal in the state of Georgia for a dealership to charge a different price for a vehicle depending on what payment method you use.

Financing is a key profit center for dealerships as they collect a portion of the interest rate or a fee when they arrange the loan through an auto company, bank, or other financial firm. Financing allows these dealers to sell high margin add-on products like insurance. According to J.D. Power, financing and insurance have driven more profits per new vehicle for dealers than the sale itself. In addition, according to John Van Ast at the National Consumer Law Center dealerships are using more pressure tactics recently to lead customers away from bringing outside financing or paying cash.

This exact scenario has happened to me at a local dealership in the west Georgia area (I will refrain from using names). I walked into a dealership ready to buy a $10,000 vehicle. The dealer said that the $10,000 price was only if we financed through them. I returned the vehicle keys to the dealer and walked out. This is a shady tactic and tells me that this dealership thrives on taking advantage of the fact that most consumers do not realize this is illegal. It tells me that this dealership only cares about profits and will lie and deceive its customers in hopes of putting more money in their pockets.