16 CFR Part 455 Used Motor Vehicle Trade Regulation Rule; Project No. P087604
Used car dealers are predators similar to the mortgage industry. They can sell someone with limited or no credit a vehicle at higher than blue book value and get insurance to "fill the gap". They then use tactics that allow them to repossess the car and resale it. Earlier on in my life, I had to utilize a used car dealer to get a car because I had no credit. It was a 95 Ford Explorer, the blue book on the car was 5995 and I bought it at 9,000 with a 2K down-payment and 22% interest. Knowing what I know now, I would have NEVER signed up for that deal but when I did not have established credit that was what I was forced to do. The car had such a high odometer reading that I had to trade it into the dealer every other year at tax season to have something decent to drive. By the way, that also included a new down payment. Later in life, I bought a new car and paid it off 3 years in advance. Because I carry no debt, my credit score is lower than it has ever been so I am forced to continue to work with "b" rated vendors. I could not believe that my decision to be fiscally responsible would actually create larger issues for me. Until this year, I never had a credit card, purchased a house, etc. Our current system does not reward the decision to be fiscally responsible, it rewards those who are willing to over-extend themselves. I think that the FTC should take a look at these used car dealers lending practices in addition to "gap" insurance that allows them to cover themselves for a car that they "over-charged" for. Only in the used car business do you NOT have to consider the Fair Market Value for a vehicle and the sad thing is that their consumers are the ones who need the most protection because they have limited or no understanding of how the credit system works. In addition to that, their options are limited.