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I have bad credit, but need to get a newer car. I'm not buying new, but used. I shopped around and was turned down at 2 places, but approved at a Hyundai dealer @ 21%. We found a car we like under $9,000 with $2-3,000 down.
Since I need the car & can afford the rate I agree to the terms, but when I sit down to sign the papers the finance guy tells me I have to purchase an extended warranty @ $1,600 or I won't get the 21% interest rate - instead it will be 26% - I'm told the lender is making the requirement, not the dealership.
Needless to say I leave without the car. So, is this a new trend in dealing with sub-prime car loans or a complete dealer scam?
BTW - at first I said I would sign the documents if he put in writing that I had to purchase the warranty to get financed at 21% and a non purchase would result in the interest rate to jump to 26%. I was scheming that I would then show it to the states attorney (I live in IL) and sue if it was illegal. Finance guy said he would do it, but I was so irritated that I wound up leaving so I could do some research to see if this is what is going on with others.




Generally the dealers try to sell an extended warranty because it earns them more commission as it is often grossly over priced. But it offers no benefit to the borrower. I'm sure that you search a little hard you would get a car without extended warranty plan.

Sub: #1 posted on Thu, 01/21/2010 - 22:05

SC SC
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have you considered buying a very used car for the 2-3,000 until you save enough to get another car, there is an awful lot of good deals out there 21% is just to much, as for jumping up to 26% probably has to do with the amount being financied the higher amount you borrow the less the interest, probably why interest would go up if you did not buy the warrenty as well

Sub: #2 posted on Sun, 01/31/2010 - 14:09

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Twenty-one percent!???

Holy crap, that's rediculous! If they're soaking you that hard, either your credit's in the sub-sub-basement of sub-prime, or they're just sticking it to you because they can. What I'd do in your place, is buy an older vehicle that I could pay cash for. Then drive it around until I could save enough to move up.

Try this: Go talk to the reputable, independent mechanics' shops in your area., In person, preferably. Not the car dealers. See whether they or any of their customers have a used car that they're looking to move cheap. If you see something you like, grab it. You'll likely have to invest some time and effort, but that's cheaper than spending money.

I buy my cars this way, even though I can afford to buy new. Most times, I save enough on insurance alone to pay for the car. Not counting tax, interest, and all the rest of that stuff. And I get decent cars, not beaters. My last find was a '91 Ford luxury conversion van, absolutely loaded and in extremely good condition, with 60k on the odometer. Owned by a little old lady, for real. I met her. Including paying the mechanic to change filters and fluids and stuff, it's mine for less than $1,500. Not bad, considering that I was looking at new vans and small RVs in the $75k-and-up range. Now, I have something to take the kids to Grandma's in.

Sub: #3 posted on Mon, 02/01/2010 - 16:00

unclewulf unclewulf
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Duplicate post...

Sub: #4 posted on Mon, 02/01/2010 - 16:06

unclewulf unclewulf
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