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How much interest can a auto dealer legally charge you?

San Francisco, CA |

I got in house financing on a car that listed at $12900 and put a huge down payment down of something like $6000. I'm realizing that all and all I will end up paying about $30000 all together for this car by the time I'm done with the payments. Is this legal? They never told me how much it would be total. I don't know how I was so dumb but they were very smooth talkers.

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Attorney answers 2


Banks (including their credit card divisions) are licensed lenders and are therefore exempt from usury laws, and can charge whatever their customers will let them. Your car dealer uses its financing arm, which is among those exempt entites.

Your written agreement should have disclosed how much you were paying in interest, but the dealers are clever at using long contracts and giving different names to different categories of payments so you can't easily figure out how they get their numbers.

Moral of the story --never sign anything you don't fully understand.

Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.


Vehicle installment contracts at car dealerships in California are governed by the Rees-Levering Automobile Sales Finance Act, Cal. Civil Code Sec. 2981-2984.6. All the terms of the contract, from the interest rate, to the amount of the finance charges, to the price of the vehicle and amount credited for trade-in and down payments, must be stated clearly in the single written contract. Sec. 2981.9 and 2982. If these are disclosed properly, but you are still unhappy that the interest rate is too high, you should consider refinancing at a bank or credit union or pay off the unpaid balance some other way, such as payment from savings or borrow from family and pay them back.

As long as it is properly disclosed, including the interest rate, they have probably complied with the Act, although violations are pretty rampant at some dealerships. Perhaps you feel that there is fraud or that they lied to you. Below is a link to consumer lawyers, which you can search for attorneys in your area that handle car fraud cases. Please be advised that any claims you may have must be pursued timely, within the applicable statute of limitations period.

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