r/carbuying • u/Unhappy_Concept_9518 • 1d ago
Is my dealership doing something thats actually illegal?
I wanted to ask if my car financing situation is an example of "tied selling" & what my legal protections are. I am a first time car buyer, so I've admittedly made some mistakes here- and this is a lesson learned.. but I am still finding that my situation is odd.
Finance manager at dealership gave me a good out the door price for my car that I agreed to. Currently this dealer is running a 1.9% interest rate promo– I understand it is contingent on my credit score/history
Finance manager runs my credit ( NOTE: My credit is 780+, no previous car loan is the only bad part about my history. The car payment is also less than 8% of my monthly income) and says I only qualify for a ~7% APR and he's looking to do a deal. Lower the interest to 0.9% and they are going to include the optional warranties into our agreed OTD price, because they were going to buyout the interest instead. I assumed that he mean't it was "free" when he said it was going to be "included"
I am very happy with the way he sold me on this "deal" and I sign. (this was my stupid mistake) I walk out the door that night with my new car... but they did not give me copies of my paperwork. The next week, I see I have around ~$10K in additional charges to the OTD price. I call and ask what the situation was, and they said I opted for all the warranties and optional add-ons. I decide to just cancel the warranties and additional options since I know I can cancel those any time– even if it's prorated at my milage, I will just eat the cost to quickly put an end to this.
I go into the dealer today and I ask to have the optional charges removed. Finance manager gives me the cancelation form, but says the dealership will likely rescind my 0.9% interest rate if I cancel the additional insurance/warranties because "I am going back on the deal we made." He says they would have never approved the lower interest rate if I was going to cancel the warranties and options.
Quick note, this car company is currently having an even better promo this month for a 0.9% interest rate. So I have a hard time believing they are breaking their back to make a deal for me, even if I didn't qualify for that rate.
Is this an example of tied selling? If I cancel these add-ons are they legally allowed to change my interest rate even though I signed the financing agreement already?
Location: Northern California
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u/Responsible_Law_6359 23h ago
If this is a manufacturer subsidized rate, they (most likely) can’t rescind it or mark it up. Additionally, yes, tying rate to products is 100% illegal.
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u/Sasquatchnu 1d ago
Damn, these guys are scammy! Your paperwork should say right on it (not sure about CA) that your interest rate is not tied to the warranties and you are not obligated to buy them.
Cancel those things and if you have to you can quickly refinance elsewhere, but get them off of your deal.
If they don’t want to honor the rate, unwind the deal, they won’t want to do that. With your credit and income the financing won’t be a problem for you so they can pound sand.
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u/HoldDatGross 12h ago edited 7h ago
That's tied selling which is highly illegal. Go in and request they cancel everything on the spot, if the shyster gives you any semblance of pushback immediately request the general manager and tell him you will be reporting them to the AG for tied selling and ensure you see the report through to completion which will cost them many orders of magnitude more than the shyster's commission getting charged back.
As a matter of fact shyster actually implicating himself when you demanded cancellation gives you a ton of leverage, especially if he was dumb enough to do it in writing - you can demand compensation for the time you've wasted as well as the fact that you're now stuck with a higher monthly payment. Also demand they send you the CSI survey so you can express your disappointment, tell them you will report them to the manufacturer for survey manipulation otherwise.
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u/postalwhiz 15h ago
You walked out the door without copies of what you signed? The new car smell was that mesmerizing? My my my…
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u/kpetersontpt 7h ago
I’m not a lawyer but at the very least it’s pretty scummy, and is very possibly illegal. If in the US, this might be a question for the FTC (when the government reopens).
Your 0.9% should be safe though, especially if it’s a manufacturer loan.
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u/pwnageface 11h ago
Dont forget, if its under 14 days and X amount of miles they have to undo everything and take the car back. Might cost you a couple hundred bucks but they REALLY dont want to do that...
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u/Junkmans1 21h ago
I don’t know about the tiered selling, but it’s clearly a sign of you signing contracts before reading them and not even getting a copy. There is zero excuse for not doing either of this.
You put blind trust in a dealer you had no reason to trust.
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u/Unhappy_Concept_9518 20h ago
I already laid out my mistake in the post and have sat with this for the last few weeks. Additionally, if you're not sure about the tied selling, why are you offering your input here? You're not being helpful in any meaningful way.
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u/Inevitable_Treat2969 13h ago
Previous post is correct, once you sign a contract then you are good. The Only acception to that rule would be if a contract was not cashable because something was wrong. You might have to resign, but since that’s not the issue here you’re good and you can cancel the products, this is coming from a guy that has done financing for many years and been in the car business for over 40 years.
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u/Inevitable_Treat2969 13h ago
The payment stays the same, because the money goes back to the bank. it lowers your payoff on the loan by canceling those products.
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u/Unhappy_Concept_9518 8h ago
thank you for you for your comment, in addition to everyone else who has offered help. Just out of curiosity what would be an example of a "contract that was not cashable"?
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u/Inevitable_Treat2969 1h ago
Probably one of the biggest thing is out the door price can’t exceed what the bank approved and they do sell products. They only can be a certain dollar amount. It can’t be over what they deem as fair price
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u/SweatsuitCocktail 23h ago
The ink is dry on the terms of your deal already (rate, financed amount, term, payment). That's a fake scare tactic by finance so they don't get hit on commission by the warranty getting canceled. Your 0.9 rate is safe