!!!!SHADY DEALER!!!!! Need professional/factual response. Not opinions.

[Anonymous]

This is extremely important. I am purchasing a (1 previous owner/pre-owned certified) car for the first time, from a dealer. The car is listed at $14,683.00 (2008 Mitsubishi Lancer GTS). My credit score is 685. I am unemployed, but I do have a consistent income. The dealer refuses to budge on the price, after initially stating that he would go down to $14,200.00. After spending over an hour waiting for them to get a response from the bank I went home. Today they called me and told me I was approved and wanted me to come in to discuss the results. I told the dealer that I was not coming all the way back there in my condition (I am disabled) just for him to tell me something I was not going to agree to. I convinced him to tell me that I was approved for a $188.00/72month payment plan @ 10.29% interest rate. However, he stated because I am unemployed (even though I receive $2,400.00 a month consistently for life), he has to charge me $994.00 for a 10 year warranty that I did not request. He stated that under these conditions I HAVE to buy the warranty; the bank will not allow it any other way. I forgot to mention that I am putting $6,000.00 down plus an additional $1,000.00 for my trade-in. Is this right? I have never purchased a car before, thus having no experience. My question is, can he legally make me purchase a warranty I do not want in order to get the car. Furthermore, I honestly believe that when we (my brother and I) were at the dealership and asked the rep to leave us alone so that we can discuss our options, he pushed the intercom on the phone and went into another room with the manager and listened. Have no proof, but 97% sure of this. I know that I could go to another dealer, but I want to know if they have the right to tell someone they have to buy an additional warranty in order to get the loan. I only want the facts. Thank you.   P.S. I live in NJ.

Message Edited by MsMoeFro on 05-06-2009 10:28 PM

[Eager2Learn]

A lender cannot make an extended warranty a stipulation for approval of a loan.  Period.  If the dealer continues to say it is a "must" then tell him it is a deal if he reduces the selling price by the same amount.  The dealer gets a commission from selling the extended warranty, they are also getting a kick-back for arranging the financing.  You should evaluate your credit history and determine if you would qualify for more amicable terms from your local bank or credit union.   With a 685 FICO and close to 50% down you should have a much better rate in my opinion.

As far as the numbers you have provided....  +$1,000 trade and +$6,000 cash down

$188/mo for 72 mo @ 10.29  = financing an amount of $10,068.  

No idea what your state sales/excise taxes are, but if there are no additional doc or registration fees it works out to 5%.   

My long winded advice ends up with my suggestion to walk .... no, run away from this place. 

[Anonymous]

ty

[Anonymous]

I suppose it is "possible" that if your loan is borderline, that the lender wants the loan protected with not only insurance, but some type of warranty on the vehicle to protect from large repairs.

It is a known fact that when a used vehicle has break downs or major repairs, there is a higher default associated with those autos.

But, they cannot force you to buy an extended warranty if you don't want one.  But the lender can insist that they will only loan money on a vehicle with a minimum length warranty.  If the original manufacturer warranty does not cover this, then possibly the only way to meet the lenders criteria would be the addition of an extended warranty.

If you have a fixed budget, part of your purchase decision should be the service record, the manufacturer warranty, the reputation of the make/model for longetivity, etc.  The last thing you want is to buy into a continual repair project on top of a loan payment.

[moondog7324]

You do not have to buy any extended warranty as a condition of purchase. The bank may make a final decision on lending to you, based upon whether or not you elected to purchase the extended warranty. Call the bank and see if in fact the seller is telling the truth. There are other ways around this.

1) Pay Cash

2) Get pre-approved loan before going car shopping.

3)Don't buy the car

Borrowing money is not a right, it's a contractual agreement based on your financial situation and the risk the lender is willing to take. 

Message Edited by moondog7324 on 05-07-2009 09:11 AM

[Anonymous]

A dealer can not make you take a warranty.

A lender CAN make that a stipulation on a car purchase.  It is not uncommon for (especially on a used car and/or a borderline credit/income profile) for a lender to be more willing to lend if there is gap coverage as well as a warranty that lasts as long as the financing (or close to it).  This seems to be more in the case where the bank's initial though is to deny the loan but the loan officer gives them the added assurance that the warranty/gap will be purchased.

Again, this also only usually happens on files that the bank's initial reaction to is to decline the loan but the LO talks them into it.

I don't know if the dealer is a scam or not...Check the local BBB.  As far as the listening part, who knows.  It is unlikely that happened, but it may have.  They really get nothing out of doing that except possible lawsuits.  In the end you will take the deal they offer you or you will not take it so why take the chance by listening in. 

[Anonymous]

You have a lower credit score.

You are disabled so you cannot work/supplement your income. 

You have an income of 2,400 a month that really is not going to increase much over the years. Will there be COL increases? If not you are looking at declining real income every year.

I actually can see a lender saying they only want to do business with you with a warranty as stipped- as how are you going to pay for car repairs?

Is it a manufacturer warranty or some shady fly by night warranty?

The intercom thing? I have no idea. You could have unplugged the phone. Unless it is a restroom, or youhave specific state laws, you have no expectation of privacy.

If you do not like the dealer why would you still do business with him?

[Anonymous]

ty, but no opinions.

[moondog7324]

 You are not entitled to credit, and lenders can make conditions to protect their risks, they are not charities.

Message Edited by moondog7324 on 05-08-2009 05:57 AM

[Anonymous]

Absoutely NOT! a bank tried that same stunt with me and I told them to go you know where! BTW your score arent bad at all 685 is a decent score I have seen people with a lower score than that and get better deals! If i was you i would keep shopping  and take your time cause no matter the dealer tells you , you are the one thats going to be making the car payment NOT THEM!