The Dealer Doesn't Care If You Can't Afford Your Car

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I know a few good salespeople who would rather lose a sale than put someone in a car that is going to strain the buyer financially. But that level of ethical sales is rare in the industry. There are far too many stores that will do whatever it takes to get you to sign that contract, even it means crushing debt.


People are borrowing record amounts of money to buy a car, and many are getting saddled with payments that are far beyond what they can actually afford. It’s not just your shady buy here, pay here car lots that can be somewhat predatory in the way they structure their deals. New car dealers that supposed to be representing a major brand in the market are sometimes just as guilty.

Unfortunately, for a lot of folks having a car can mean the difference between paying your bills or not, and there are stores that will feed on the desperation of folks that are just scraping buy often with subpar credit scores to make a sale.

I recently heard a local radio commercial from a Kia dealer (shocking, I know!) guaranteeing up to $30,000 in credit towards the purchase of a car as long as the buyer makes $350 a week. It’s the classic “if you have a job, we can get you approved!” tactic. The implication here is that these customers were likely turned down by more legitimate operations due to lack of finances and/or a bad credit profile.

The sad part is that when you look at the math, this is a recipe for disaster. If someone makes $350 per week or a total yearly salary of $18,200, this means they can possibly qualify to purchase a car at $30,000. Let’s assume for a moment that they got this loan with their meager salary and qualified for a five-year term at 5 percent APR (which is being generous given the likely credit profile.) That would mean a payment of $566 per month, or about 40 percent of this person’s monthly income.


While many of us would reel in shock with a payment like that even on a more sustainable income, these types of transactions happen all the time and there is an entire subsect of dealerships whose very existence depends on desperate people with poor math skills.


I was recently talking to a man from New York who wanted to buy a used Mercedes for his limo service. He had a fairly healthy budget for a quality example, but when I asked him about his credit score he said: “Not great, maybe in the low 600s.” That is when informed him that most of the Mercedes dealerships that would be selling certified pre-owned models would not likely be able to get him approved. That is when he told me, “Well, there is a dealer in Queens with a car and they said they can get me approved.”

There are numerous dealers around the city that will sell fancy rides to people with bad credit. Usually problematic cars are sold with loans that come with massive interest rates. My advice was to save up for a larger down payment, try to get his FICO score up and find a credit union that could get him pre-approved for a loan at a reasonable rate.


I’ve gotten dozens of emails from folks who have ended up with a bad car and a worse loan only to find out they can’t make the payments, and somehow expect the dealer to either take the car back or modify the terms of the agreement. While there are some cases where a dealer misrepresented the terms of the contract which may be able to be remedied by legal means, more often than not these folks are stuck.

While I’m not excusing the predatory sales practices of some dealerships, the fact remains the only way for people to protect themselves is to take a moment to really understand the terms of the agreement and walk away if it’s a bad deal.



Tom - I was the finance director at Bob Bell Chevrolet in Bel Air Md. for a few years in the early 2000's. A very young, uneducated couple with hourly wage income and beacon scores in the 500's wanted to buy a used Cavalier. At that time, the GMAC rep used to camp out in the sales tower underwriting applications on the spot. After much pressure from the used car manager, he approved their loan at “E” tier which was 24% apr at the time. They may have had a few hundred dollars down payment. When they came to my office it quickly became obvious they were in way over their heads. The stripped out payment (buy rate, no add ons, minimum profit for the u/c department) plus their rent and car insurance exceeded their monthly income by $150. And that was before they paid for heat, groceries and gas. I suggested they save up, come back in a few months (years?) and refused to complete the finance contract. The GM was furious and fired me a few weeks later which turned out to be the most positive turning point in my career - I left retail and haven’t looked back. The GM still works there and sadly, it’s business as usual.