Auto Lending

[arms]

My jurisdiction is: California

I am trying to finance a used vehicle and have very bad credit in the mid 500's. The car dealership that I went to said that they got a loan approval with certain provisions. I wanted to know if these provisions are normal and or legal. They are offering a 23% interest rate, which is yes extremely high. They are requiring 5 references, 3 post dated checks for the first three months payments, and they are tacking on an additional 10% to the price of the car because we are a high risk. Can they do all of this or require all of this legally?
Any advice would be appreciated!

 

[jalancast]

I can't say for sure (I never managed a dealership in California, only in Colorado), but most of what you're being asked for sounds normal (post-dated checks aren't legal instruments, but they're quite common). The only question in my mind is the 10% addition to the price of the car. A lot of sub-prime lenders will charge the dealership a loan acquisition fee, but I was always under the impression this fee could NOT be passed on to the consumer. I'm pretty sure that aspect of the deal is not OK.

Of course, having said that, if you're being offered a loan in this credit climate, you might want to consider the fact that the dealership may not sell you the car if you decide to challenge the extra fee. I'm not an attorney - but I did work in the car business for a long time. I would definitely challenge the extra cost added to the vehicle, but how hard you want to push is up to you.

NOTE: This is a bad deal if you're looking at a buy-here-pay-here dealership. They don't report to the credit bureaus and they're usually a rip-off to boot.