I recently had a reader email me regarding a scam that he wanted exposed, one that I don’t believe is a scam but rather bad a bad business practice. We went back and forth for a few emails when I realized that perhaps I have yet to write an article about the key concept that we are discussing here. The readers concern was that a dealership had lied to him about his credit score and ability to qualify for a loan so that they could charge him a higher interest rate, so they would make more money on when selling it to the bank. His concern was the fact that they were making money on the loan as well as the car, which to him seemed unfair that he had to pay more because the dealer was making money by lying and therefore called this a scam. I called it reality and therefore we came to a disagreement…
I will expose what the so called scam is, and then explain my take on why I don’t believe it’s a scam at all.
In business there are many tricks in just about every trade. There are bankers who pay some higher interest rates than others or sell loans at cheaper interest rates to people with the same credit. In other fields like car dealerships, there are also other variables like the selling price, the financing and the warranty who all have various prices based on who you are and what the dealership can get away with. I am not going to go into details as to what dealerships do as its already been covered here.
The scam that is referred to here is none other than the dealer charging you 6% on a loan that was approved at 4% and getting money back from the bank for the 2% bump up you accepted to take on without knowing it. In other words, you qualified for 4% but the dealer sold you on 6% cause you didn’t negotiate. This is no different than buying a car for $15000 and finding later on that the car cost the dealer $10,000 and you could have gotten it for $2000 less. In no way this is a scam, it is simply business.
But it will lead me to my next point, which is that these practices in business are simply a way of life for those folks to make money at your expense and in no way are a scam. These may not be business men with much integrity and might make you feel uneasy doing business with them but the reality remains that ultimately the power of knowledge and the power of decision remains in your hands, not theirs. When you get taken for being naive or simply uneducated, you pay the penalty and no one else.
The world around us is full of opportunities for you to get educated on just about anything ahead of time. If you know you are going car shopping, then there are resources like, Autotrader.com, Cars.com and Edmunds.com for car reviews, as well as NADA.com for fair car values. You also have access to millions of financing websites, and banks that can get you a rate and approval in minutes. The warranty is equally simple with millions of websites that do reviews on different warranty companies and their prices, quotes can be generated in minute before or after your purchase. Now, it does take a few hours of your time to pick the right combination, and to get prepared but you will leave the dealership with the car you want, the price you want, and the financing you wont regret for the next 60 months as you pay off your car.
The main point here is that if you get taken advantage of by a business because you pay more for a good or service, or if you get paid less at your job than others in the same field for less time then it is no one’s fault but yours for being uneducated about life and the concepts and theories that exist out there, which can help you self improve so that you never get taken again. That is the simple reality in life and one that none of us can afford to ignore. So if you are being ignorant, or lazy and simply choose the easy way out then don’t whine about the outcome and accept the fact that your laziness came with a price, and one that you once accepted to pay.