Hot Car Buyer Beware: Sticker Shock & Shot Gun Loans

Not only are many car dealers charging more than sticker price but refusing cash & pushing their loans on customers to squeeze a few more bucks out of them in today’s hot & supply chain challenged market.

The WSJ reports that a number of car buyers interviewed told once astonishing stories of dealers telling them to keep their cash and even tried forcing them to borrow “by quoting higher prices for cash sales or refusing to sell if they couldn’t arrange the financing.”

So, dealerships have the “upper hand” and are pressing home their advantage since “financing is a key profit center” for them, i.e., dealers “collect a portion of the interest rate or a fee when they arrange a loan on behalf of a bank, auto company or other financial firm.” Such “incentives” can amount to $2K or more per sold auto. Anyone having financed a car through a dealer also knows it makes it easier to be assailed with high margin ad on products like insurance. One auto maker’s spokesman warned: “There is nothing we can reasonably do about a market clearing price” that results in the vehicle selling for more than the suggested retail price. Presumably, same goes for the shot gun loan?

Davd Soul