Scam or No?

[cleorose]

Okay so hubby and I are in the market for a 2nd car. We have shit for credit. And we are in Ch 13 bankruptcy. So we are not ideal candidates. But we do have a fairly large down payment. And a sizable income thanks to the VA and the railroad.

So we go into a legit Ford dealership since thats what hubby wants. This particular one has a guaranteed credit approval. YAY! So we get approved for a Ford Explorer. Nice car. Not great but its in good condition with reasonable mileage. We have been driving suvs for a few years so we are comfortable in them.

The final total is 10 995 price with 3k down at 24% interest. Ya I know its a high interest rate but we are not gonna find it lower with our credit. And we need a good steady credit history during the bankruptcy.

So we take all the paperwork over the lawyer who has to approve the financing, the amount etc. Total bummer but hey part of the deal. So I was like fine go home and scour their inventory and see if I see something I like better.

I was not surprised to find our truck still listed. After all we haven't put anything in stone yet. I was however surprised to find that it was listed at 8,999 and NOT the 10995 we were quoted and charged.

hmmmMmm I smell a fish.

So I called the dealership today. And the cock and bull story they gave me still is like WTF?

Apparently because we our bad credit they have to increase the price on the car to ensure that the loan is approved and that they don't lose any money on the car. Because supposedly that even though the car is financed they only pay about 75% of the finance amount and not 100% like conventional lenders.

Now I have financed cars and that is the FIRST time I have ever ever heard that. I figured well in my 30 years maybe I am just dumb. So I called my FIL who said that is the biggest BS he has ever heard. Then he asked if it was a buy here pay here lot since it was so shady. Imagine his surprise to hear its a Major Ford Dealer. The biggest in town in fact.

So any of you out there with bad credit have a similar experience? Is this the norm or is this scammy?

[Zellie Crescent]

Can't really say about the credit, but the whole 2 different prices thing either way is bullshit. Unless they cut the shit and give you the car for the price it's actually listed for I would find somewhere else to go.

[dendawg]

Honestly, since you're still in Ch. 13, I'd stay away from a car that expensive. I'd personally go to a "buy here, pay here" dealership and buy a beater, then scrap the beater and finance whatever you want when you emerge from bankruptcy. This way you still have a good, steady credit history when you emerge.

[Maria]

I have actually heard of having limitations on car loans, like you have to spend X amount or greater, the car has to be a certain model year or newer, or not exceed a certain mileage. When I bought my most recent car, the loan had to be more than $7500, and the mileage had to be under 75,000. It was explained to me that borrowers whose auto loans have a longer lifespan than the actual auto, tend to just quit paying and let the car get repossessed. So they prefer to set limits to help prevent that kind of problem. Now it's possible that I was being totally misinformed, but it's what I was told and frankly it seems logical.

What makes me feel strange about your situation is -- if the dealer knows your potential lender will only approve a vehicle if the loan is X amount or greater... why not tell you this and encourage you to buy a vehicle that's newer, with lower miles, in better shape, whatever... why jack up the price on "an okay vehicle" instead of helping you make the best choice possible? That's the part that makes me wonder what's going on.

[Javarod]

I've actually heard of this, but in that case, they inflated both the price and the trade into make the deal appeal to the finance company. There's definitely something fishy here though, basically they're lying to the finance company to get you the loan, and that doesn't sound like a good idea to me.

[TheSHAD0W]

It's often not a good idea to get your financing through a dealer. I'd strongly recommend going to your bank or to a credit union and asking them about it.

[Zellie Crescent]

It's often not a good idea to get your financing through a dealer. I'd strongly recommend going to your bank or to a credit union and asking them about it.

This is what I did, I went to a credit union and it worked out great.

[csquared]

Not illegal, and actually quite common. We usually see the flip side of this arrangement. You get a discount for paying cash. This arrangement is more often seen in the mortgage world. You pay points to get a lower interest rate. The sub prime lenders that the auto dealers use do have a hold back. 25% would not surprise me. It is how they make their money with the high number of defaults.

From where I am sitting, it does not sound like a good deal. However, the only way to find out is to shop around. Securing the financing separate from the purchase will give you more leverage in the purchase price. The down side is that standard lending institutions are not as eager to work with you.

I don't think that you are going to find a good financing deal. You will end up paying for it upfront. I would be more inclined to buy something I could pay cash for and set the "payments" aside for the next car. But that is me.

What ever you decide, good luck!

[Jester]

My basic rule for car shopping is: If you're not comfortable with the deal, for any reason, just walk away. There are other cars, other dealers, and other deals.

You are clearly uncomfortable with this deal. Walk away. Keep shopping. But definitely walk away.

[fma_fanatic]

My friend is going through this now. She's got a Ch.13 going and had her eye on a dealership that wants to sell her a van worth about 4500 for 10k if not more.

She finally decided this week not to go with them and with another dealership. Although I wonder if she'll have the same issue. This one will help her, but wants to push her into a 2011 or 2012 car when she knows what she wants and they have it on the lot.

I just hope she can get her hold deposit back from the other dealership. I'm probably going to end up driving her down to that place this week since she has no car and has had to rent since her car died last month and she sold it for salvage a week or so ago. But she needs a car for work. No car, no work. No work, no repayment to Ch.13 plan. She's essentially in a Catch 22.

We'll see how this plays out.

[taxguykarl]

IANAL, but in a BK you have some control over which debts are included/excluded from the case.
Definately shop around.

[Sapphire Silk]

My basic rule for car shopping is: If you're not comfortable with the deal, for any reason, just walk away. There are other cars, other dealers, and other deals.

You are clearly uncomfortable with this deal. Walk away. Keep shopping. But definitely walk away.

This. So this.

Walk away. Even if it is legal, you are getting bent over a rail, F'd up the A, and told to say, "Thank you sir, may I have another?"

It's a horrible decision financially speaking. You will be paying thousands of dollars in interest, more than the car is actually worth, by the time you are done. That's money you could be saving and either investing or waiting to use to buy the car you want later.

You should be able to buy a reliable used car for cash if you have $3000. It probably won't be a truck or SUV, but it will be transportation and right now that's what you really need, especially since this is a second car and not your primary vehicle.

Yes, it will suck having a car that is not what you would usually prefer. But you are in bankruptcy. You have to deal with the fact that until your debts are discharged and you can get a fresh start, you will have to make do with what you can get.

Buying a car for cash with what you have means no car payment and no debt. Then, in a couple of years you can save more money and get something you like better, and even use the car you buy now as a trade in (though you won't get much for it) or keep it as a spare vehicle. You will generate and keep more wealth over the long term if you buy your car this way. If you own a vehicle outright, it is an asset and makes your net worth look better.

This offer is a colossal rip off. I urge you to reconsider.

[cleorose]

Well we did some shopping around and after speaking to numerous dealerships, banks and the lawyer we learned a few important things.

One Ford dealership are total scammers. If we ever get where we want another ford it wont be from them. Ever.

We went to the dodge dealership and the guy who handled us is in bankruptcy his damn self. So he gets it. He put the asking price down on paper, showed me on line what the price was and explained it like I was five.

Let me say our main car right now is not much better than a beater. It has no air, windows don't work, ball joints are going out, needs new tires, and the transmission slipping. It will probably last the winter if we are lucky. But I would rather be covered with a 2nd vehicle just in case.

For the record we did get approved thru dodge now we are waiting for the trustee to approve it. With hubby making nearly 80k year now, we shouldn't have too much issues. Or so we keep getting told.

[Jester]

One Ford dealership are total scammers.

I'm shocked. Thoroughly shocked.

Oh, wait. No. No I am not.

We went to the dodge dealership and the guy who handled us is in bankruptcy his damn self. So he gets it.

And you know this, how? Because he told you? He may be, he may not. But Rule Number One when dealing with salesmen is that Salesmen Lie. Take this from a salesman who is the son of a salesman. Some lie more than others, and some are pretty good guys. But for your sake, you must always assume that they lie, and look at the deal only. Never assume that they are on your side or that anything they tell you about their personal life that makes it seem like they get you is true. Because Salesmen Lie.

(Saleswomen, too, just in case anyone thinks this is just a guy thing.)

With hubby making nearly 80k year now, we shouldn't have too much issues. Or so we keep getting told.

Keep getting told by whom? Salesmen? See Rule Number One above.

Look only at the deal, and ignore the rest of what they say. You have no idea what is true and what is bullshit.

[cleorose]

We actually have the same trustee. And he knew exactly what we needed to take to the lawyer without me telling him. Ford had no idea what I needed for the lawyer.

With hubby working for the railroad he gets a discount. Plus the rebate, plus our down payment.

I assume everyone lies especially sales people. I have good intuition about certain people. I knew right off I didn't like the ford guy. he kept sighing and looking at the clock. And he was pushing a 700 car payment on a 2006. Crazy not stupid.

I know that a new car would be 600 bucks. Not a car already 8 years old. Even the buy here pay here lots didn't want to charge us that high of a payment. The had their own little scam and lies we had to walk away from.

They had a 2006 Dodge Dakota Quad Cab. for $3400. KBB on that is about $6k from a private party. From a dealer it was like $8500. So thats a big leap. Of course my first question was why? Rebuilt title. Fugnuts. And when I asked what part of it was rebuilt ie damaged. The guy couldn't remember. It supposedly came in at 40k miles and they were now selling it at 100k. No thank you. He couldn't explain where those extra 60k miles came from if they have had it all this time. And of course they refused to let us get a carfax.

We have had dealerships tell us they can work with us for 1500 down, then when we had it like a month later, it was no we need 2500 now and now those same dealerships keep calling us to see if we can put 5k down. Could I ? probably. Will I ? No.

We had a dealership in florida (major dealership too not mom and pop shop) take our 2004 ford taurus and 500 cash down payment. they approved the financing. 2 days later they reneged on teh financing saying we needed another 2500. No dice. We went to get our car and money back and they were like NOPE you signed on the dotted line etc. I had a dealership in Indiana that did the same thing when we put money down to hold a car. They refused to give it back. I never ever put any money to hold a car. If its there when we sign awesome. If not we look at something else. Also why we don't do trade ins. I can sell it and get more for it.

Sometimes its takes a bad experience to learn a lesson. Once learned though I never forget. Just ask hubby.