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I’m looking to purchase a used vehicle today and when I finally found one I called the used car dealership to see if it was available.

I showed up to the test drive, without even asking for the price (I saw it online for $14,995) and decide to run credit. Fast forward, I get approved and they tell me I need to put $2000 down since the price goes up to $16,995 since I am financing. However, nowhere on their website or other websites show fine print “cash price”. CarGurus and other websites even show the price $14,995.

Is it legal to switch the advertised price?

I was under the impression of $14,995 and therefore why I ran credit as this was in my price range. This was done in the state of Arizona.

Community
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Christopher Gonzalez
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    Did they say they would honor the $14,995 price if you didn't finance through them? As one of the answers states, getting your financing somewhere else may be an option. Watch the paperwork carefully; they have already shown they are shady and they could try to add additional cost. Always be ready to walk away from the deal; there are too many cars out there to fall in love with one and overpay. – spuck Mar 23 '21 at 15:30
  • So they said that if I was paying cash it would be that 14,995 price however there would be sales tax and doc fees which I understand. – Christopher Gonzalez Mar 23 '21 at 15:46
  • I think they need to give you a trust and hassle discount and sell the car for 13,995 or you take your business elsewhere – Christian Mar 23 '21 at 15:49
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    If you are bound and determined to buy this car, get a written statement of exactly what the price will be, take it to a local credit union and return with a cashier's check for that amount. This switcharoo they are trying to pull would be the final red flag for doing business with them for me; I would walk away. – spuck Mar 23 '21 at 15:54
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    Usually the sale price is higher for cash sales because car dealerships make a lot of their money off financing. – MikeyC Mar 23 '21 at 16:56
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    With questions like these I'm always wondering if we have the correct story or if wires just got crossed somewhere. of course used car sales is notoriously scammy but sales tax is going to add on $840 on its own. This calculator estimates ~$2,200 in total fees for a 15k car so I'm not even sure if there is an issue here. https://www.carmax.com/car-financing/car-payment-calculator – eps Mar 23 '21 at 17:38
  • If you are buying in Phoenix you are looking at $1500 in taxes, and the other 500 is probably license plates, titles and stuff like that. Buy outside phoenix and you save 2.5% right off the bat. – eps Mar 23 '21 at 17:57
  • The key phrase is to agree on a price is "all-in", and clearly specify that the price is either all-in with taxes and fees or all-in plus taxes and fees. Then if the price drifts up, walk away. – Codes with Hammer Mar 24 '21 at 13:54
  • The cost of the car is the cost of the car. You didn't show up to buy a car, though, you showed up wanting a car and a loan. The loan costs money too. Why do you expect them to give you a loan for free? You can ask, of course, but you have to be prepared for them not to agree. – J... Mar 24 '21 at 14:43
  • I believe the legal term for this is "bait and switch" and the laws vary by state. You might get some more detail on what Arizona law says about this on the Legal stack. – JimmyJames Mar 24 '21 at 20:46
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    @JimmyJames There's no bait and switch - the car and the loan are two completely separate products. If OP doesn't like the loan terms offered by the dealer they can go to their bank and try to get a better deal there. The cost of the car doesn't change. OP is objecting to the additional cost of the loan. Just because new cars are often listed with the loan price baked in doesn't mean that used cars or any other commercial product should automatically be expected to come with free financing. – J... Mar 24 '21 at 22:19
  • @J... Are you saying that OP is paying $2K+ for the right to finance? It's not typical to charge the financing cost up front. I've done that before on 0% rates but I don't see anything suggesting that here. If the financing costs are on top of the new price, then the price has changed. The interest you pay on a loan and the amount of the loan are 2 different things. The amount of the loan is the cost of what you are buying. – JimmyJames Mar 25 '21 at 14:22
  • @JimmyJames The lender can set whatever fees or schedule they want - it's up to the buyer to agree to the terms or not. I'm not trying to defend this used car dealer's pricing, I'm just saying that OP can't agree on a cash price and then decide to take the offer with a unilateral change of terms - namely free credit. That's a different transaction entirely. – J... Mar 25 '21 at 14:48
  • @J... IANAL and some details are missing here like the exact wording of the advertisement and financing terms but I think that this would not be legal in my state. If you have a different 'price' for a vehicle that is financed, then you have to advertise that. If it's a fee as part of financing in addition to an APR, it could run afoul of usury laws. Unless you are know AZ law, I don't think these generalizations you are making are generally true. – JimmyJames Mar 25 '21 at 15:24
  • Generally, that seems like a swindle but legally, how is it not about some combination of small print and local trade regulation?

    If all your doubts were confirmed, why would you even think about buying from those guys?

    How would you feel if you had to go back to guys like that with even a minor, let alone a huge warranty problem?

     – Robbie Goodwin Mar 26 '21 at 01:57

5 Answers5

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It doesn’t matter whether it is legal or not. What matters is that this car dealer is trying to rip you off, so you tell them where they can stick their car and buy your car elsewhere. You definitely don’t want to deal with a car dealer that tries to rip you off, you will have more problems with him.

PS. There is no reason why financing the car should make any difference to the dealer, quite the opposite. If you finance the car, the dealer still gets cash (or a cheque or whatever). If you finance through the dealer, they usually get some money from the finance company, so buying cash is often worse for them.

gnasher729
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    They make most of their profits, if not all of it from the financing side. You want to have everything ready to go, defer any discussion of financing untill you have a quote in hand (including all costs, fees and everything) and then you produce your cash. – Stian Mar 23 '21 at 17:21
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    @StianYttervik see that's where i'm wondering if there is even an issue. As I commented on the OP, 2k is not an ususal amount of taxes/fees for a 15k car. Carmax estimates it at ~2200 for AZ. https://www.carmax.com/car-financing/car-payment-calculator – eps Mar 23 '21 at 17:40
  • @eps Well, AFAIK, fees and such tend to only be on the table if you don't select the in-house financing. Thats why they ask what financing you have early and often. It is hard to get them to talk about the damn car even before they start asking/telling about their wonderful financing options. (Though, taxes apply anyway, it is so many kinds of illegal to misrepresent taxes) – Stian Mar 23 '21 at 17:49
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    @StianYttervik sure, but it's unclear there is even an issue. Ads never include taxes (or fees) so that is hardly unusual and if the OP is in phoenix that's 1500 in taxes alone. Then there's titles and all that other stuff, maybe 500 is slightly high and there's some bogus "lot fee" thrown in but there's no obvious red flags to me. – eps Mar 23 '21 at 17:55
  • i had the exact same thing happen. dealership 1 said x. i show up and ask first question what is out the door price they say y (about $2-4k higher). i say that is not what your website says. i am sent the manager immediately. he explains that the price on the website has fine print and only applies if you are: first-responder, graduated college recently, veteran, etc etc. so i leave after agreeing that i was the one that didn't see the fine print. i bought from dealership #2 who had a real price online. p.s. dealership #1 said "hey what's $2-4k for such a great car?!". – syn1kk Mar 23 '21 at 18:07
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    The OP said the extra 2000 was specifically because he was financing rather than paying cash. Taxes and fees still apply either way. The only difference here is that the dealer never stated in their online ad that this was a cash-only price (in which case maybe they were adding in those fees and taxes as part of a cash deal). Arguably such failure, if proven intentional) could be considered "bait & switch". – RiverNet Mar 23 '21 at 21:14
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I had a dealer try this stunt on me once. I had offered $17K, they had agreed. Then they brought paper work that pushed the price up to almost $18,500. I told them my deal was for 17K and I didn't give a crap about their extra charges. I left them my phone number and told them to call me if they were ready to sell it for the price we agreed upon.

2 days later, I got a call selling the car for 17K (delivered). Because they pissed me off, I made them deliver the car and send a second driver to take their guy back to the lot. At this point you have nothing to lose if you just walk away. They can either honor their price or you can find a car elsewhere. If you walk off the lot, there is only an 8% chance they will ever close you and they know this. Negotiate from strength.

boatcoder
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    Where do you get the 8% from? Not that I doubt it, but a reference would be nice. – Polygnome Mar 23 '21 at 20:00
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    Can you clarify a bit? Did they agree to a $17k sale price and then present you with paperwork for a total bill of almost $18,500? Or did they change the sale price from $17k to $18,500? It's entirely normal for the sale price to NOT include tax, title, and similar fees. Depending on location an extra $1,500 from the 'sale price' and the total amount you pay is not a stunt. It's like buying a $1000 TV from BestBuy and being charged $1,093.86 on your credit card. – Rob P. Mar 23 '21 at 20:02
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    Yes the salesman agreed to 17K verbally then went to get the paperwork and reappeared with the price increased. There was no "advertised" price on the car so I made an offer at the start of negotiations and the salesman left to get approval for the price and on this second return, the price had all these other pieces added to it. – boatcoder Mar 23 '21 at 22:36
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    I got the 8% number from a book on sales I read quite a bit ago. It talked about how how a customer on the phone or in hand was almost impossible to recover once they were out of sight and used #'s from the auto sales industry. I don't remember the title of the book though. – boatcoder Mar 23 '21 at 22:38
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    @RobP. Only Americans would find this normal :-) But OP is in the US so you are ok. – quarague Mar 26 '21 at 11:01
  • I trained to be a car salesman when I was young. That 8% is pipe dream stuff in the car business. There is so much window shopping for such a high priced and heavily negotiated item that I would be showing people the door within minutes if I knew 8% would come back and buy from me. We were told 3-4%. But after I looked at the customer numbers and did the math in my head (dealership I was training at was large/nice/normal)... the number had to be less than 2% or right at 2%. – blankip Mar 27 '21 at 02:42
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Gnasher is 100% on point.

One option, that is far better than accepting the dealers financing is to obtain your own. Go to your bank or credit union and ask for an auto loan. Often times their rate will be much better.

My recommendation would be to play them at their own game. I will pay 12,995 for the car and not a penny more because you guys are being frauds. After some battling I would be okay if we landed at 14,995, but I would at least make a pretense.

If you are going to finance a car, please shop around for the best local bank/credit union. they have far better deals than what you can obtain from the dealership most of the time.

A far better option would be to pay cash for a car as once a person gets on the cycle of car payments it is very difficult to get off. Do you really want to commit to this kind of dishonesty for a significant portion of your life? Buying your cars with cash gives one a lot more options and negotiation power. It is tough to get started, but you will save a ton of money.

Pete B.
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  • Not that I disagree with anything here, but what's the dishonesty in car payments? Irresponsibility, sure. If we're talking dishonesty in used car shops, that's due to the seller, not the financing. – obscurans Mar 24 '21 at 20:09
  • @obscurans I read "commit to this kind of dishonesty" as "have a commitment to these dishonest people" while still on the hook for car payments. – Andy Mar 25 '21 at 12:48
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Financing can include all taxes and fees, which according to https://www.carmax.com/car-financing/car-payment-calculator is estimated at around ~$2,225 for a car sold in Arizona. Of course used car dealerships are notorious for unethical sales techniques, but it's not clear that there is anything unusual going on beyond standard taxes and fees being added in.

Note: These taxes and fees can be significantly different from state to state, with Arizona being on the higher side. Buying in Phoenix will really boost that up since the city has a 2.5% sales tax in addition to the county and state tax.

eps
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If your buying a car, the dealership doesn't honor your agreement, or adds extra charges, then its ok to walk away, in fact its the best thing to do. They think that you will go spread the news that they might have "ripped you off" and will try to get you back. The trick works every time and they know it.

Joseph Casey
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