Months ago, the OCCC said “we are concerned” when the WFAA’s Jason Wheeler first alerted them to the practice of dealerships refusing outside financing.
DALLAS — There are new dispatches from the “forced funding” frontier. Many Texans who got pre-approved for car financing from their lender in the past few months complain that they faced a serious dilemma at various Texas dealerships when trying to purchase a vehicle.
More consumer complaints
Here are excerpts from some of the dealership complaints that consumers have sent to the Office of the Consumer Credit Commissioner (OCCC), which is the regulatory authority for automobile dealerships in the state:
“…would not accept my pre-approved financing…”
“…would not allow me to use my credit union check. I wanted me to use internal finance…”
“We were forced to use their financing at 7% interest…”.
Months ago, the OCCC said “we are concerned”, when Jason Wheeler of the WFAA first alerted them to the practice of dealerships refusing outside financing and insisting that you use the lenders they deal with. working.
It’s no secret that when a dealer takes out a loan with their preferred lenders, the dealer can increase the financing rate and pocket additional profits.
RELATED: Powerful group exposes the practice of forced financing at Texas car dealerships
It’s not illegal in Texas
To be clear: many consumers find this practice distasteful, but it is not illegal. The OCCC confirms that there is no state law against this.
Yet the OCCC has not only expressed concern, the bureau has asked consumers who experience this phenomenon to report it to the agency so that an investigation can be conducted.
And dealers must respond to OCCC surveys.
In the latest batch of consumer complaints and dealer responses, there was a clear pattern in many dealer responses.
Here are some excerpts from what investigators say were told by the dealers:
“They take… external funding”
“…from cash, bank and credit union”
“…they don’t need to use their funding”.
Time and time again, different dealerships basically said they didn’t do what consumers said they were doing.
And again and again, the investigation stops there if the complaining consumer has no documentation; it was simply a consumer’s complaint against a company’s refusal.
If you can, get it in writing
A few tips: Get their words in writing. Wheeler personally experienced this a few times last summer.
In one case, the dealership said via text message that it would not accept outside financing unless Wheeler’s lender could give it a cashable check to give to them.
Wheeler texted back to confirm he was going to hand them a cashable check and they replied that they would accept that and specified exactly what they needed from him.
Wheeler’s lender was already aware of the phenomenon of “forced financing” at the dealership and was happy to accommodate inquiries made by the dealership.
It may be a good idea to start shopping for a vehicle online. If you find one, email or text a dealer representative. Tell them in writing if you have outside funding. Ask if it’s accepted. If they say no, you have it in writing for a potential future complaint to the OCCC.
If the dealer representative says they will accept outside financing and you go to the dealership and they tell you after you arrive in person that outside financing is not accepted there, follow up with them later by e-mail or by text message to ask him why he did not accept your external financing.
Some sell to the concessionaire and then refinance with their pre-financing
Some consumers say they got around this conundrum by taking the loan from the dealership and then immediately refinancing with their pre-approved lender, who offered them better terms.
If you think you could give it a try, talk to your pre-approved lender first to make sure their refinance rate would be the same as the purchase rate they offered you.
Also, if you use this method of accepting the loan from the dealership knowing that you will immediately refinance with your lender, be sure to read all the fine print of the loan at the dealership to make sure there is no There are no penalties for paying off this loan early when you refinance.
Look here for more information on what you should look for specifically.
How to complain about “forced financing” at the dealership
To file a “forced financing” complaint at the dealership, you can report your experience and send any relevant documentation to the Office of the Consumer Credit Commissioner.