ATLANTA — The brand new Bureau of Consumer Financial Protection doesn't even have a leader yet, but there's one group that isn't concerned about the new agency: Car dealers.
The agency will regulate bank loans but loans at car dealerships are exempt.
Clark Howard Has Warning For Car Buyers
That bothers Rebecca Stringer. She bought a new Kia this year. Before she went to the dealership, she checked her credit. Her credit union pre-approved a loan at a lower interest rate. But she said Douglasville Kia told her they could get her a 4.9% percent loan. She signed the papers and took the car home. That's when the trouble started. Stringer said, "They called me two weeks later over the phone to redo some paperwork and that's all they told me, but when I got there, the paperwork was 8.9% percent.
Clark Howard's Consumer Action Center gets a lot of questions about whether car dealers can do this. Fran Mitchell, who heads up the center said, "They have absolutely every right to do that because if you look through your papers you'll see a bailment agreement."
Stringer said she's sure she signed an agreement, but doesn't remember doing it.
Here's how a bailment agreement works. If someone buys a car and drive it off the lot the same day, often financing is not really complete. The bailment agreement means if that financing doesn't come through at the rate a customer wants they either have to re-sign at a higher interest rate, or return the car.
Clark Howard says 80% percent of people finance their car at a dealership and 80% percent are doing it wrong. Clark suggests getting pre-approved at a credit union. If you then get to the dealership and they have special financing, he says don't take possession of the car until the financing is complete.
WSBTV
