Auto Dealer Loan Kickbacks
One of the auto industry’s dirty little tricks is the practice of lenders giving loan kickbacks to dealers for charging high-interest rates for the car loans. A good example of this would be when a buyer has been qualified for an 8% loan rate, the dealer can, and will in most cases, attempt to charge a higher rate.
Many dealers will tell you they have a 12% rate available (a lot of consumers do not know better) and will jump at the deal just to get credit and drive away in a new or used car. Your $20,000.00 automobile over a 60 month period would have had a $433.56 payment at an 8% rate but now because you signed your loan agreement for a 12% rate your payment will be $475.64. Guess who gets the extra $42.09 per month? You guessed right, the dealer who suckered you into the additional rate of interest.
To get the best possible deal on a new or used car or truck, knowledge, and the information is your best bet. Knowledge is always power in these cases. Dealer scams such as the increased interest rate, loan kickbacks, packed payments and other common little tricks can quickly remove any savings that you thought you were receiving. Learn how to calculate your own monthly payments, use the internet to your advantage and learn how to negotiate with dealers.