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Can dealerships force you to finance?

A Kitchener, Ont. woman discovered that some dealerships didn’t want her cash while shopping for a new car.

Sharon Tanti had her sights set on a vehicle at a Guelph dealership. But she was faced with a roadblock when she went to pay for it in cash.

“The guy was like ‘what’s this?’ And I’m like ‘payment for the car,’” said Tanti, recalling a conversation with the salesman.

She says she told her she had to finance the vehicle.

“He’s like ‘you can’t do that. We get money when we finance the cars.’ And I’m like ‘that’s not my problem,’” she said.

Tanti wanted to buy the car outright and not have another monthly payment, or interest on those payments.

“I said ‘well if it’s a problem, I can leave. You can keep the car,’” she said.

After a heated back-and-forth exchange, Tanti said the salesman told her he’d make a one-time exception, but wouldn’t be able to let her pay cash if she were to buy from them in the future.

“I’m like ‘fine, I won’t be back,’” she said.

Tanti ended up buying the car, but when it came to buying a new one more recently she went to a different dealership.

Now she drives a Mazda, and what she loves most about it actually has little to do with the car itself.

“Put it on my line of credit and paid it off,” she said.


Others aren’t so lucky and fall into the trap of what’s called “forced financing.”

“Forced financing is a sales practice used by some dealerships where they don’t give the consumer the option to pay cash for a vehicle, you have to finance or lease the vehicle if you want to purchase it,” explains Shari Prymak, executive director of the non-profit Car Help Canada.

Car Help Canada says it’s a tactic that has been used more frequently over the last several years.

“Quite simply, dealerships receive a commission or kickback from either, or both, the manufacturer or the lender when they finance a vehicle,” said Prymak.

That can be anywhere from a few hundred dollars to a few thousand dollars.

In terms of whether the practice is legal, it is a bit of a gray area.

But what dealers cannot do is advertise one price, but tell customers that in order to get that price they must finance it.

“The dealership should be advertising the cash price because that’s what the real price of the vehicle is,” Prymak said.

Consumers are advised to pump the brakes and go to a different dealership when they’re presented with no other options.


Car Help Canada found that many car dealerships across Canada have been price gouging consumers who purchased a new car over the last two years.

A recent survey they conducted found dealers have been charging markups or forcing consumers to pay for expensive products, which can add thousands of dollars to the regular price of the car.

The results show the majority of consumers have also had to order their car from the dealer and wait months for it to arrive. Respondents said not all dealers honored the original price that was agreed upon and had to pay a higher price.

Here are some highlights of their Canada-wide survey:

  • 36.6% of consumers were forced to pay a markup over the original manufacturer’s suggested retail price (MSRP). 85% of these profit markups range from $1,000 to over $10,000.
  • 41.3% of consumers were required to pay for dealer products, such as extended warranty plans, insurance, or protection products.
  • Over 60% of these products added between $1,000 to over $3,000 to the final price.
  • 54.5% of consumers had to order their new car and wait for it to arrive. Over 40% had to wait longer than originally promised.
  • The majority of consumers have to wait between one and six months.
  • The majority of consumers believed they paid the right price and felt the dealer was professional, honest and transparent.