‘Greeds have taken over’: why forced financing turns some consumers away from buying a vehicle
After months of waiting to find an electric vehicle, Vancouver residents Dan West and Bryan Balmer thought the search was finally over.
They saw an ad for a used 2020 Volkswagen E-Golf and came to the local dealership to take it for a test drive. However, the joy of getting behind a new set of wheels was quickly dampened when they were offered to pay cash for the car.
“We had the money and it didn’t make sense to fund something we didn’t need to fund,” West said.
However, West and Balmer said the dealership declined the cash offer and told them their only option was to finance the vehicle.
“They wanted us to fund it or some part of it, but something had to be funded,” West said, noting that nowhere in the ad did he state that the cash offers were not accepted.
“The car fits us like a glove. It’s what I wanted, but we wouldn’t do business with a dealer like that.’
Consumer Affairs: The fight to protect prices
The non-profit Automobile Protection Association (APA) said Consumer Affairs forced funding is a deceptive tactic.
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“It’s a hidden charge that’s not in the advertised price for the customer. The customer is asked to pay interest so that the dealer can collect the lender’s commission. That is not correct if the client does not need the loan,” said George Iny of APA.
“The APA’s position is that if they’re going to do that they should make you whole because you’re paying interest on that loan whether you like it or not for at least three months and in many cases six months.”
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Iny said APA has heard several reports of strained financing across the country and supply chain pressures are worsening.
“What we have seen with the subsequent shortages is that greed has taken over,” he said.
The Vehicle Sales Authority, BC’s auto sales regulator, said Consumer Affairs in a statement: “There is no legal requirement for a motor dealer, or any merchant in BC as far as we can determine, to advertise that they do not accept cash payments. Subject to specific law to the contrary, a motor dealer (or any merchant) to sell their goods or services may place terms, conditions or restrictions. This includes how they are paid.’
So what are vehicle buyers to do? The APA recommends trying to negotiate a discount equivalent to the interest penalty you’ll pay on the vehicle if you finance the vehicle.
The other option is to walk away, like West and Balmer, if the deal doesn’t feel right. “It didn’t feel face to face. It felt like a shadow. It felt like a fraud,” Balmer said.
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