Purchasing a car is a complicated endeavor, and the sales price, trade-in value, and financing are all separate and negotiable transactions. This chapter outlines how car dealers have become increasingly reliant on revenues from vehicle financing and insurance, yet those transactions are not transparent and are weakly regulated. As a result, predatory practices have created more expensive and unsustainable loans for consumers. The primary abuses highlighted this chapter include dealer interest rate markups, "yo-yo" scams, and loan packing (via add-on products like insurance), as well as questionable practices at Buy-Here-Pay-Here dealerships.
The chapter also describes the impact these abuses have on consumers--particularly those with weaker credit--such as higher interest costs, loan delinquencies, and car repossessions. It calls on regulators to enact reforms to eliminate these abuses.
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