Dealership offering $500 cash if they can't approve you for financing

I saw an ad for a used car dealership that not only says they will finance almost anyone, they will give you $500 If they cant. Are they up to something sketchy or is this legit? Would they ever pay out, or would they just make horrible financing offers to everyone?

79.9% apr and I’ll finance anyone.

They’ll find SOME kind of financing, sure. Some terrible 30-40% interest rate loan. The dealership doesn’t care, because they get the money for the car, and by the time the buyer is onto the financing stage they’ve already agreed to make a purchase. The dealership can’t really lose in this situation.

You’ve never heard those sketchy car commercials? “Low credit?! Bad credit!? No credit!? No problem, you’re approved!”

I used to have a friend who worked for a medium term loan company. He said that they considered loans on cars the safest of all because the ‘average guy’ would sell his mother before he would allow anyone to tow his car away.

I have a friend who is a car salesman at one of those “no credit, bad credit” car lots. You will receive financing, but at terrible rates on a very overpriced car (14k for a 15 year old buick with 200000 miles). He almost always will have to tell people they will not be getting the car they want, but they will get a car of some sort. If you choose to turn down the car they have available for you, that isn’t there fault since they did approve you for financing.

There are quite a few repo guys around so there are guys who get their cars towed for lack of payment. In some cases they might have trouble finding the car to tow it.

I ran across one guy who specialized in finding hard to find cars on a plane flight once. He was flying down to the Rio Grand Valley to take possession of a BMW for a dealer in Houston. This was years ago, but he said his business was brisk.
He would fly to wherever the repo was and drive it back.

I think boffking hit the nail on the head when we brought up the horrible financing they’d provide.

I’ve actually asked my friend about this too, and he mentioned that all the cars they sell have GPS tracking and they can also beam signals to the car via GPS to shut it down at any time. The moment the customer stops paying their bill, the car is bricked (think that Bait Car show).

I’m sure there are ways around this that a determined person could figure out, but it seems to work for nearly all their late payment accounts.

Yes, and they want you to default. They then repo the car and sue you. They can sell the same car over and over this way.

It’s a scam.

trmptgn is exactly right that you will be offered some car even if it’s not the car you want. There is another element to this particular tactic. You will go in to look at, let’s say, a nice 2012 Honda Accord for $15,000. The dealer start negotiating a price. You get them down to $14,000 and they ask how much you can put down. You respond with what you think is a reasonable down payment for a $14,000 car, perhaps $2000. Then you authorize them to run the credit report. They will tell you that they can only finance a $5,000 car for you with a $2,000 down payment. Then they will show you the cars they have for $5,000. They are 12 year old cars with high mileage in reasonable but not great shape. That is, they are cars that can be purchased from a wholesale auction for less than your $2000 down payment. The sellers can’t lose on this deal even if you never make a single monthly payment. And that’s not counting how if you fail to make timely payments, they can brick the car or repossess and resell it for another round of profits.

Besides the obvious ‘credit’ <> ‘anything remotely acceptable’, the second obvious one is to get a sucker onto the lot.

The big ad for a “BRAND NEW (or close) CR ONLY $1000!” now have are required (yes, some places) to state ‘one at this price’. The other shoe being 'we just sold it 5 minutes before you got here".
Mr. my-credit-is-rotten sees the tag line and figures he can pick up a quick $500.
That is one more potential sucker on the lot.

A really good salesman can turn that sucker into a paying sucker.

Yeah, we’ll finance you - purchase price is 3x what the car is worth, and you need a 30% down payment.
Now do you see what ‘can finance anything, including the dead’ means?

If you see a big sign at a dumpy used car lot: “We Carry Our Own Accounts” - it means they will find some way to extract money from suckers.
‘With these terms, any actual monthly payments he makes are pure profit’.
This is also a common con on ‘Rent to Own’ - you pay $1200 for a TV available at Wal-Mart for $400.