As a result of Kansas Senator, Samuel Brownback’s and auto lobbying efforts, auto dealerships are now officially exempt from any of the new financial regulations. What this means is that there are a number of what might be called deceptive lending practices that will continue on unchanged. The best way for buyers to protect themselves is to know more about these less than straightforward financing activities.
One major issue is called the “yo-yo effect.” This is when a buyer signs a sales contract, which is conditioned upon approval by a financier, and the financing does not come through at the originally quoted rate. This means that a person who may have been driving their car for a few days already, and is psychologically committed to it, may have to come in and agree to a much higher interest rate than they bargained for. At this point, the buyer is much more likely to give in.
There are two major ways to overcome or obviate being duped by this practice. The first is to just get your auto loans directly from a bank and financial institution. This way you will know what you interest rate will be definitively from the start. The second approach, is to tell the dealer you refuse to sign a sales contract until the official interest rate quote is in. This makes it much more unlikely that your contact will be changed after the fact.
Auto transport companies are aware of the difficulty in a getting an honest deal when taking out a loan to purchase a motor vehicle. That is why we deem it worth our time to inform our clients and readers of the fiscal landmine out there.