PeachParts Mercedes-Benz Forum - View Single Post - Sub-prime auto loan bubble

DieselPaul · #28 07-22-2014, 02:03 PM

This is true in the state of Ohio, where my father has been a car dealer for many years, your state may vary, but here is a case of "inflated prices" that are justifiable.

In the state of Ohio it is technically illegal to adjust the price when a customer requests special financing, (i.e. buy here pay here, or high risk lenders), it is considered a form of discimination.

When dealers send high risk deals to lenders, the lenders often charge fees of $500 or $1000 to buy the deal. These fees do not count towards the principle, and they come out of the dealers bottom line on the deal, it is illegal to tack that $500-$1000 onto the price of the car once you pull the customers credit report and find a lender who will buy the deal.

SO, cars that dealers anticipate will go Buy-Here-Pay-Here / A high-risk lender, they will price with those added fees and costs in mind.

If you see an early 2000s Taurus for $5,995, whip out $3,500 in CASH and watch the asking price tumble, or a strong credit score where there will be no special finance fees.

When you see dealers advertise two prices, CASH PRICE and the normal price, technically that is not legal in Ohio.

If the dealer has to pay $1,000 on a $4,000 car to get you bought, I really don't think thats slimey under-handed bottomfeeding as some have characterized it. It's the customers poor credit that necissitated that fee, the dealer should not have to eat that.

That is not to say there are not dirty car dealers who take advantage of people, but those are a couple facts from the dealers perspective to think about.

As for the "time shut off" on the cars, I thought that was illegal, some ex-football player turned dealer was doing that, until it shut a car down in traffic and the driver was killed.

Tyler can probably shed light on the laws and practices in his state.