Dealerships can do a lot of scummy things and get away with it because their lobby is so powerful. One thing that happens is that Customer A can be approved for some APR on their car loan at say 4%. However, the finance company can say “Hey send them back this loan at 4.5% APR instead and we will send you (the dealer) some extra money” since they are making more money on the loan by hiding their real approval rate. The dealer is ultimately who decides what loan to take since they are incentivized to maximize their own profit and not do right by the customer. This is not illegal. The dealership holds most of the power but the finance companies get some benefits too.
Dealerships can do a lot of scummy things and get away with it because their lobby is so powerful. One thing that happens is that Customer A can be approved for some APR on their car loan at say 4%. However, the finance company can say “Hey send them back this loan at 4.5% APR instead and we will send you (the dealer) some extra money” since they are making more money on the loan by hiding their real approval rate. The dealer is ultimately who decides what loan to take since they are incentivized to maximize their own profit and not do right by the customer. This is not illegal. The dealership holds most of the power but the finance companies get some benefits too.