FTC plans a study on car buying and financing

Cars are one of the biggest purchases a consumer will ever make. Researching models and options is only part of the process. Prospective buyers also have to consider price negotiations, trade-in, and financing. Since 2011, the FTC has brought more than 25 cases challenging illegal practices in this area. To learn more about what consumers understand about the purchasing and financing process at the dealership, the FTC plans to conduct a survey of people who recently bought an automobile and financed it through a dealer. But first, we’d like your feedback about the proposed research.

The survey would involve consumer interviews on topics like:  How did price negotiations go? How about the trade-in process? How did the financing go? Did the dealer offer additional products or services? Has the dealer been in touch since the consumer drove off the lot? We’d also review the consumers’ purchase and financing documents during the interview, and explore the consumers’ understanding of them. The Federal Register Notice explains the proposal in detail.

Why are we asking questions before we start asking questions? Before we undertake research like this, there are public comment requirements under federal law – and it just makes sense to get feedback first from interested parties. Consult the Federal Register Notice for information about commenting, including how to file online. The deadline will be 60 days after the notice runs in the Federal Register.


This is an extremely important topic. I am so happy that the FTC is researching this on our behalf. As Consumers, we need an advocate to keep car dealers honest and to educate us on the car buying process.

This car buying experience was terrible. They told me one thing but did not do it. I requested the extended warranty later found out they did not give it to me. The car was overpriced by almost $10,000. The salesperson was rude. I didn't want the car but my significant other did so we stayed there. I had excellent credit and he had the poor credit. I knew it was not the place to go. But the car had all of the features that he wanted.

Yes I support the proposed research. Even though I purchased several cars from Dealers including new ones, ultimately after negotiating with the salesperson a deal, then I meet with other members of the team without the salesperson. At this point the deal is structured a little different.
The deceptive advertising of no interest on certain deals is also questionable. Again even though the Dealer is doing the financing via a financial institution, it appears they tend to charge a higher interest and receive a kickback from the Financing Company.

Need a better understanding on the buying process and the different forms used. The various options available to the consumer and how each one affects the buyer.

Thanks for investigating the process of dealership and other auto dealers selling cars. Though they know the car is not worth the price charged. It needs to be checked out before purchases are made. The dealership will "lie & deceive" consumers. Thanks for checking these dealers who sell cars and other transportation. The consumers are tired of being lied to and deceived. They gets all the monies when an accident occurs, especially when it is not the driver's fault. Many driving cars has no car insurance and no legal license to drive. Good news to hear your office is researching the dealerships and other auto dealers selling cars. Especially when the car is not worth the monies being charged.

I purchased a used car; after driving it for two days,I realized it was too small. When I tried to exchange it for something larger I was told that I would have to trade it in,but I would have to pay for all fees. I paid $29971.17 with balance of $34193.72,but they only offered me $20000.00 to trade it in. When I looked at the numbers I was going to pay more for an older car with more milage. I really feel used.

Would like information from people who leased a car! Thank you!

You should ask people if they know what they actually paid for the car over the finance term...purchase price PLUS interest paid. Too often people are sold more car than they can afford by extending the financing term in order to lower the payment. I think the CPFB ought to require disclosure on car financing similar to what they require on credit card statements about paying only the minimum payment due. The disclosure should CLEARLY state what the purchaser will be paying in interest over the life of the loan. This will make it easier for consumers to understand the difference in interest paid between, say a 3 and a 5 year loan. It will also make it clear how easy it will be to go "upside down" over the value of the car. In any case, I think you should ask questions to see if purchasers 1) know how much interest they paid/are paying over the life of the loan and 2) ask if they got "upsell"---more car, bigger price, but with longer financing terms so payment stayed the same as a less expensive car.

The interest paid is CLEARLY disclosed on every RISC document! So is the total cost of the vehicle and interest combined.

It may be disclosed but, how many buyers actually know how those numbers were calculated or where they even came from? Few if any. I also feel that dealers should be required to disclose the buy rate/discount being offered to the lender for buying the contract, ie; the difference in the rate he is selling for, opposed to how much he is charging you in interest, which equals the kickback he is making for using that lender. Be aware of the shadowy relationships between lenders and dealers because one will turn a blind eye to illegal inflating of the sales price which the dealer will increase to cover that discount he gave the lender due to the lender initially not paying what the dealer has the vehicle priced at, why, because the lender knows the car isn't worth what the dealers asking, therefore, he is making up the difference by increasing the sells price as well as telling you certain coverages or add-ons are required when they are not, all to make up that difference he lost from that lender. This fraudulent practice ends up costing the buyer 1000's more than allowed by law. But again, these fees and such are hidden all over the RISC and unless you read it line by line in that office making them explain everything to you. Your getting burned. Trust me I know. I had no understanding of how things worked in financing and it has taken me 3 plus years of painstaking research to get IT. I'm in the process of suing both the lender and dealer of my latest purchase. It's horrifying.... Imagine a buy rate of 15.38% and my rate at 23.9% .. do the math.. that was only some of his profit, gets much worse.. I'm just saying.................................as they use to say, buyer beware its now Seller disclose!

The research is important. We recently bought a new truck and the salesman gave us papers to sign (reading them first, of course) and he slipped in one blank paper. WATCH OUT for this one. It actually was for a FREE TV that they have and still are advertising when you buy a NEW or USED automobile. Well, that BLANK paper excused you from the $500 gift card at a local store to buy that TV. We bought the auto because the service department has always been good but THEY NEED TO SHAPE UP THE SHADY SALESMAN. It gives SALESMEN A BAD REP because there are REALLY GOOD SALES REPRESENTATIVES OUT THERE.

Yes the research/ investigation is necessary. There are predatorary lenders and dealers out there. For instance recently bought a vehicle(year ago). I was in a panic, my employ involves using my personal transportation. I had been using a vehicle I bought for 2k that had 126k on the odometer from said employer a fleet vehicle. I put over 200k more on that vehicle ran good and strong, but was having electrical issues. Most likely needing a wire harness. So in a panic I dropped by one of 'those' dealers and in my panic state was coerced into a used higher priced vehicle that seemingly has flood damage as well. So now I am tied to a loan vs not having one with a high interest rate. Partly yes my fault but as well the dealer was not sporting and preying on my need for any vehicle. One they brought from around the corner when I was leaving without choosing a car yet. Sigh

i treat my customers the way I want to be treated. i welcome the "investigation" because I do the right thing for my customers.

Dealers need to become accountable for not disclosing problems with the cars they sell. Unfortunately we have no laws requiring dealers to promote honesty when selling a used car. Its only about how much money they can make off the individuals. Jefferson County Used Cars in Ranson, WV is one of these location. They are a complete rip-off to the consumer.

I support this research whole-heartedly. I just rolled my negative equity into a new car lease and the process was a complete nightmare going through multiple dealers until I found one where I could agree to the terms. I know a LOT about credit as I am an employee of one of the big 3 bureaus and I still had issues sorting through everything. I can't imagine how hard it is to deal with pushy sales tactics and complicated rates for those less informed and educated.

Thank you FTC for taking on this issue of deceptive lending practice prevalent at many automotive dealerships throughout the united states. As an employee of a not-for-profit credit union we see and hear these practices all the time. I have also been the victim of deceptive lending practices by a local dealer. From rate-bating to charging certain customers more based off age, appearance, language, ethnicity, etc. There needs to be more regulatory oversight, similar to how we track money laundering, in order to provide a more transparent consumer experience.

I believe this is welcomed. It is evident there is misleading advertising and failure to properly disclose terms in the auto industry. It can easily be determined by using the auto search engines, such as autotrader, to determine there is misleading advertising. When you look at new cars and pricing differs significantly between new car dealers there is a problem. When you inquire about the price from the dealer they tell you the advertised price is reflective of all available incentives (which are highly restrictive) and does not include the freight or delivery fee of $1200. Now the price is $2k to $3k higher than advertised. Plus there is the dealer processing fee that varies by dealers and the dealer tells you it is a mandatory fee they must charge.

J.P.Morgan Chase charged a higher interest rate on a car loan,sent me a refund of a lesser loan rate,I returned the refund,should have been for the entire loan,not for what they thought it should be.Have they been in hot water for this practice,email when you have a chance,Best Regards,C.T.

I think that one area in the automobile business that need to be addressed is the Commissioned Salesperson and how they are exploited by owners in the workplace.

Commission salesman are forced to work a ungodly number of hours and at times with little pay. Commission salespeople work holidays, Sundays, late nights and weekends and leaving little time for family and recreation.
If a survey should be taken I believe that one would find the divorce rate among people in the automobile business to be rather high.

Another area of concern with commission salespeople in the automobile business is commissions are manipulated among many owners and commissions are at times stolen and appear to be paid unjustly.

Many salespersons pay plans are based on units sold and a percentage of the profit over the vehicles cost however, many Dealers will manipulate or add to the cost therefore, the salesperson does not receive his or her full commission.

In many cases the Dealership will adjust the vehicle's cost by adding what is typically know as PACK in the automobile industry however, many Dealers will pack the vehicle's cost two or three times in order not to pay the salesperson his or her proper commission.

Example - If a Dealer trades or purchases a used vehicle at a low price below the wholesale market value he will add to the cost in order not to pay the salesperson his or her full commission.

If a Dealer purchased a vehicle for $20,000.00 and the wholesale value was $22,000.00 he would typically pack the cost of the vehicle $2,000.00 in order not to pay the salesperson on the additional $2,000.00
The salesperson pay plan will normally state that he would be paid a percentage of the actual cost and not an adjusted cost or fictitiously adjusted cost.

Note - Many Dealer include in the salesperson's pay an amount that indicated as pack to cover his or her cost of doing business which is probably however, many will pack the vehicle's cost two or three times with amounts that the sales person is not aware of.

Another way Dealers increase vehicle's cost is by charging increased service charges to the vehicle's cost. When a vehicle is reconditioned and serviced to put on the lot for sale a Dealer may charge erroneous shop charges to the vehicle's cost in order to pad the vehicle's cost also.

If a Dealer packs each vehicle $1,000.00 and the salesperson is supposed to received 25% (this varies from dealer to dealer) of the profit, this means the salesperson was cheated out of $250.00. Think about it. If the salesperson sold ten cars in a months time and this occurred on each of the ten, this would mean that the salesperson was shorted $2,500.00 for that month. Now, figured that times twelve which would total $55,000.00 in shorted commissions. Now remember that this is not the only salesperson. Let's say that the Dealership had employed ten salespeople and the above occurrence took place with each one of them. That would mean that ten salespeople were shorted $55,000.00 each for the year therefore, the total would be $550,000.00 in shorted commissions to a total of ten salespeople.

What is happening with the survey and how can I participate? We just got gypped out of $500 plus on our new vehicle due to them advertising $3500 in rebates but only giving us $2500, If they do not refund us, I'll be writing you tho I've heard the BBB gets better results? Also it is appears to me to be false advertising when they show a car is $25000 minus $3500 in rebates =$21500 BUT that's not how it works as they ONLY take off the rebates you QUALIFY for and then it's AFTER tax and all other fees so U NEVER get the vehicle for $21,500 but more closer to the $25000 price! ONLINE (as neither of the 2 dealers we visited displayed these rebates anywhere!) @ some of our local dealers in San Diego, the ads read "0% and $1,500 on select Dodge models, $3,500 on select Dodge models" (also in the popups all over my computer!) so I asked in online chat of dealerships about how the rebates work but I was asked for my name, etc and told to speak to a manager! At the dealer's, we were told it's one OR the other. I asked WHY they don't say OR in the ads? ANd dont even get me started on how they treated me:(

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