In today’s challenging car market, buyers face more than just inventory shortages – some dealerships are now refusing outside financing, pushing customers toward their in-house options. Following recent investigations by WFAA, Texas regulators have received multiple complaints about this concerning practice.
Why is this happening?
With domestic vehicle inventories at historic lows and allocations slashed by 80% due to ongoing chip shortages, dealerships are leveraging their limited inventory to maximize profits. While dealership financing can be convenient, being forced to use it instead of your pre-arranged loan raises serious concerns.
Here’s what you need to know:
While dealerships can legally decline any financing arrangement, understanding why they prefer their in-house financing options can help you navigate the situation. Dealerships often make significant profits through their financing department, which helps offset reduced inventory-related revenue. When they have offered competitive vehicle pricing, they may push their financing to maintain profitability.
Smart Shopping Tips:
- Get pre-approved by your credit union before shopping
- Research current market rates and loan terms
- Keep your pre-approval as a bargaining chip during negotiations
- Consider how dealership financing might affect other aspects of the deal, like trade-in value
Remember, you’re in control – you can always walk away if the terms don’t feel right. Being well-informed about financing options strengthens your negotiating position, whether discussing the vehicle price, trade-in value, or loan terms.
Have you encountered a dealership refusing your outside financing in Texas? The Office of Consumer Credit Commissioner wants to hear from you. Contact their Consumer Assistance team at 1-800-538-1579 or e-mail consumer.complaints@occc.texas.gov.
Bottom line: In today’s complex auto market, knowledge is power. Understanding your rights and options regarding dealership financing helps ensure you get the best possible deal on your next vehicle purchase.
We’re Here to Help!
Has a dealership tried to steer you away from your pre-approved financing? Don’t let them take you for a ride! Together, we can ensure you’re in the driver’s seat of your car buying journey, not the dealership’s finance office.
If you’re interested in getting preapproved for your auto loan before you visit a dealership, we’re ready to help. Please stop by any of our convenient branch locations or call 1-800-531-8456 to speak with a team member today.
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Each individual’s financial situation is unique. We encourage you to contact United Texas Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
