Forced Financing at Dealerships: True Stories from North Texans


Demands from dealers to the finance office frustrate car buyers, who are already facing a lack of inventory and higher prices.

DALLAS – If you repeatedly say, “I’ve never experienced this before”, you may be selling and / or buying a vehicle. After experiencing this firsthand … and repeating the sentence above (and a few others I’m not going to type in here), I recently documented some of what is going on. It quickly became the most watched Right on the Money episode I have ever done.

Your outside financing may be good for you, but not so good for the car dealership

One of the experiences I shared was having to practically force checks into the hands of car dealerships. Giving them money was difficult because I had already secured excellent financing terms through my own lender. But I have met several dealers who wanted me to use their lenders. Dealers can make extra money at a customer’s expense by arranging the financing through their lenders and increasing the percentage, so the dealership gets a discount.

This could be particularly beneficial now, as pandemic supply chain issues have drastically reduced inventories of new cars, costing automakers and dealers lots of money. Some dealerships don’t just push their own lenders; they refuse to take checks when car buyers get their own financing from outside lenders.

RELATED: Never Heard This From A Car Dealership Before, So I Asked A State Regulator About It. They replied: “We are worried”

In the WFAA’s initial report on this phenomenon, the Office of the Consumer Credit Commissioner said, “We are concerned about this practice. In response to the initial story, the OCCC said it wanted to be contacted by consumers who experience it.

“I wasn’t sure what to do until I saw the WFAA article,” one person wrote, as she filed one of several dozen complaints about the practice. Here are more excerpts from car buyers complaining to the state about what looks like forced financing at the dealership:

  • “They actually told a client in front of us to leave because they had their own funding.”
  • “I was turned down as a veteran with the approval of the Navy Federal Credit Union. “
  • “The manager … said it would allow him to make money downstream.”
  • “[Even with an offer of cash]they didn’t want to sell me the car.
  • “The interest rate was about 2.5% higher but I needed a car fast, so I accepted.”
  • “The sales manager told me directly, ‘If you choose to go with the credit union, it will change the price of the vehicle.'”
  • “I gave them a check from my credit union for $ 50,000. The seller … stated at that time that he did not accept financing from credit unions.
  • “How can a business force a client to use their funding? “
  • “When I asked him why, he said, ‘Because the owner can do whatever he wants. “”

There is no law preventing this, but regulators want to hear from those who experience it

In this particular scenario, the owners can sort of do whatever they want. As we have noted, there is no specific state law against dealers refusing external financing in favor of their own lenders. But the OCCC says all of the above complaints (and more) are currently under investigation, adding that they “continue to monitor this issue. We strongly encourage consumers who have experienced resellers refusing outside funding to contact us. “

You can contact the OCCC’s consumer support staff at (800) 538-1579 by sending an email to [email protected], or you can file a complaint through their website.

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