January 25, 2024

Do I have to finance a car through the dealership’s preferred lender?

Dear Consumer Ed:

Do I have the choice to finance a car independent of a dealership’s choice of financing? If I sign an agreement consenting to dealership financing, am I obligated to honor the agreement?

Consumer Ed says:   

You have the choice to finance a car independent of a dealership’s choice of financing.  The decision of whether to finance the purchase of a car through a dealership or through another source is one that deserves serious consideration by consumers. It is beneficial for consumers to research rates and lending options before visiting a dealership. Financing independently through a bank or credit union may yield lower interest rates compared to dealership finance options. While dealerships are often able to help coordinate loan pre-approval with lenders, or in some cases may make their own loans in-house, they typically act as middlemen in financing the loan, which may result in marked-up interest rates. Dealerships may also add products or services to the amount financed, some of which are optional. Always review the entire contract before signing, and be sure you understand which products and options may have been added to the purchase.

Many shoppers focus solely on their monthly payment. Low monthly payment offers can be tempting, but sometimes a deal with a low monthly payment will cost much more over the life of the loan because of a longer repayment term or higher interest rate. Make sure you understand all terms of the loan before you sign.

If you agree to finance your vehicle purchase through a dealership, and you sign a contract to that effect, you are generally bound to the contract’s terms. If you believe that you signed a financing contract that did not properly disclose material terms such as the amount financed, your interest rate, finance charges, and the total amount of payments, or if you did not sign the contract the dealer says you signed, you can submit a complaint to the Attorney General’s Consumer Protection Division by visiting consumer.georgia.gov/resolve-your-dispute/how-do-i-file-complaint or by calling (404) 651-8600.

For more about financing a vehicle, visit: https://consumer.ftc.gov/articles/financing-or-leasing-car.

Submit your own question to Consumer Ed.  Remember…we do not give legal advice. Always consult a lawyer about legal issues.

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