How To Avoid Being Mugged

Getting Educated Before You Buy

There are tons of YouTube videos, research papers, government actions and online gurus giving advice about how to avoid discrimination and fraud when purchasing a car. Two Nissan employees were recently arrested and charged with multiple counts of fraud, including forging customer signatures for products and services they did not agree to buy. It’s certainly useful to be familiar with the ways in which a car dealership may attempt to take advantage of you, but just how much time do you have to spend in “car buying school”? And if I told you how to avoid getting mugged, would you care about how it might go down? Wouldn’t you rather simply avoid it altogether?

Pay the Middleman

For decades in the car industry, the indirect lending model has been the standard. Simply put, this means that the car dealer represents the manufacturer–with the exception being Tesla–while also representing the lenders. This means you’re not buying the product from the company that made it, nor are you getting financed from the source of the money. This is the indirect model.

The Goalie in the Middle

To complicate matters, there are two behemoths sitting in between the dealer and the lenders, and credit applications are routed through them. The dealers pay for their services, as do the lenders. And those pass-through companies are paid per credit inquiry. In other words, paid on volume. So the more banks pulling credit on your application, the more money they make.

While they are paid to play goalie in the middle, the objective of finding the best lender for your application is hindered by a process that is designed to be slow and ineffective. Wouldn’t they want to point you to the best lender in the least amount of time? Ask yourself, would they rather get paid by five banks pulling your credit or just one? Now you know why you get to sit half the day in the dealership, only to end up with loan terms that cater to someone else’s needs, not yours.

Compound this with the fact that the lenders often pay fees to the dealers for contracting the loan. Those fees vary wildly, so do you think the dealer’s priority is to have you pay less, or to pair you with the lender that will pay them more?

Does it help to know all of this? Sure. Are their 40 other ways you can be “mugged” at the dealership? Definitely. Discrimination comes in many forms. As does fraud. Will more legislation be passed to try and shift this behavior? Absolutely. And yet, 10 years after the creation of the Consumer Finance Protection Bureau, it’s still happening.

Am I One of the 80% who Overpaid?

We could go on for days about the details. In fact, we could get you thoroughly educated in the ancient ways of the car buying shell game. You could spend months learning the secrets behind the curtain. Perhaps a semester-long class in college would help. In the end, how much will it help you in getting a loan with the deck stacked in your favor, and not someone else’s? We will have done nothing to change the system, or improve its efficiency. Nothing. We have decades of data to prove it, including the fact that it takes nearly 50% more time to purchase a car today than it did in 2006.

We can educate car buyers about the process, and yet they still end up sitting for hours, and usually overpaying for the loan. And when it’s all done, after signing the paperwork, you will still be left wondering, “Could I have done better”?

You Can Do Better

The auto finance industry has worked diligently to maintain this indirect lending model. You can’t blame them. They control every aspect of the process, and they make a tidy profit doing it. Ultimately, however, who wins in the end? SPOILER ALERT: It isn’t the customer.

Until now, there has not been another option. Now there is.

BankHunter is a free platform that puts your priorities first. No need to go to car-buying school. No need to take a course in how to avoid getting mugged in the process. Honestly, does anyone truly care about the 50 hazards of getting a car loan when you can avoid them altogether?

Use BankHunter and put our 30 years of car finance experience to work for you.