Check out the auto dealer and financing – before you sign

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You want to buy a car and need financing, but your credit isn’t so great. Most dealerships have a Finance and Insurance (F&I) Department that will tell you about their financing options. To get the process started, the F&I Department will ask you to complete a credit application, which includes your monthly income and information on current credit accounts, including debt you owe.

At least that’s how it’s supposed to work. But there have been reports that some dealers inflate your income information for the financing without your knowledge. That can cause you serious financial harm. You could be saddled with car financing that you can’t afford to repay. That means your car could be repossessed and your credit score could take a hit.

The FTC has a few tips to help you avoid unscrupulous finance deals:

  • Consider your options for financing. You might be able to arrange financing directly with a credit union or finance company before you pick a car. This will also give you a sense of what credit terms might be available to you, so that you can compare them with what a dealer is offering you. If the dealer’s offer differs vastly, make sure the offer is based on accurate information about your income and employment.
  • Research the dealer before visiting the sales lot. Check the dealer’s reputation online by searching for the company’s name with words like “scam,” “rip-off,” or “complaint.” Research the dealer with your state Attorney General and local consumer protection agency to make sure there are no unresolved complaints on file. Also, ask family or friends for recommendations.
  • If a dealer encourages you to overstate your income, take it as a sign that the dealer is not reputable, and leave the dealership.
  • Ask to see the credit application — completely filled out — before you sign it. Make sure your income and other personal information is correctly listed.
  • Make sure to get a copy of your paperwork before you leave the dealership.
  • If you find out your dealer has falsified your income or other personal information, complain to the FTC online or call 1-877-FTC-HELP.

To learn more about buying a new or used car, visit Buying & Owning a Car.


Blog Topics: 
Money & Credit


I just presently purchased a car a 2008 HHR SS they told me that it was the only car they would sell me because my credit score was too low for anything else. They charged me 26% interest and payment is 510.85 is a 2008 model I know they through me under the bus but I had to go to the doctor regularly as I'm on disability from a cars accident.Can anything be done the payments are a third of what I make in a month.

Yikes...they took advantage of you. You should have done your homework first.

I went to a dealership to trade in a 2010 SUV with 96552 miles on it they took my disability income checked my credit status. I told them my dad was listed on contract from purchase of SUV but my name wasn't put any where on contract. We ask for it too be added cause he was cosigner for me his daughter whom is the primary driver pays monthly payment 378.99 plus full coverage insurance it was too build up my credit score
Instead my dad gets the credit. The dealership I recently visited suggest I need 1500.00 down speak with my dad about surrendering the vehicle back to the credit Union. I called the credit Union they said they would auction the SUV off and get the higher amount from buyer and the remaining balance would be my dad's responsibility. I don't want too make his credit a negative. I need too get out this vehicle yes we got thrown under the bus by Merrolis Chevrolet Michigan and stuck with a Jeep liberty Chrysler. I'm so willing to return the ASAP I can't afford this gas guzzler any longer! ANY SUGGESTIONS FTC and Consumer protection. Physically I'll !!!

We traded in a 2011 truck for a 2014 truck. They said they would pay off the current loan on the 2011 and get the new one financed and our payments would be right around $40 higher monthly.

2 weeks later, they called and said they could not get the financing to go thru and we would have to put $2000 more down and the payments were going to be higher, and they already sold our 2011..

We were stuck! In addition, it has been almost a month now, and they still have not paid off our 2011 and our payments are still being autowithdrawled .. Is this acceptable and normal for a dealer to sell my trade in before paying it off, and then take this long to get the financing finished?!!

Thank you for sharing your experience. You could be the victim of what's called "yo-yo financing." That happens when a dealer lets a buyer take possession of a vehicle before the financing is complete. But a short time later, the buyer is pulled back to the dealership when the financing falls apart. The buyer has to pay higher interest rates and fees. Sometimes the dealer demands a larger down payment, too.

Handling some of the issues you described depends on your contract and state law.  Please review your current agreement, and know that you are not required to sign a new agreement.

You can file a complaint with the FTC at The FTC doesn't resolve individual complaints, but your complaint helps law enforcement detect patterns of wrong-doing and may lead to an investigation.

You also may want to contact your state and local consumer protection agencies for more information and assistance.

If you want to talk to a lawyer, you can use these lists to find a lawyer in your state. There is a state-by-state list from the American Bar Association and a site from the State Bar Associations.

Rating and review of every finance company must be checked before signing any auto loan. Sometime they cheat to their customers.

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