Vehicle Financing Fraud
Dealers know that the dealerships receive a significant percentage of their income through markups on vehicle financing. This is the main reason why car dealers try to convince their customers to arrange financing for the vehicle through the dealership. In most cases, the financing is not provided by the dealership. What dealerships do is to assign the contract to a finance company and receive a certain percentage of the contract as markup. This practice of the dealership is quite legal.
However, most customers don’t know that it is not mandatory to finance the vehicle through the dealership. Customers can pay cash, or, alternatively, find financing through a local bank or credit union. Beware of dishonest dealerships that say you must obtain vehicle financing. If you are told that you must finance the vehicle to obtain a certain price (or to buy the car at all), contact the Department of Consumer Affairs and the Better Business Bureau.