Car Dealerships – Bad Credit: Buyer Beware

The Trump administration has neutered the government's consumer watchdog, the Consumer Financial Protection Bureau (CFPB). Since taking office, Trump has repeatedly attempted to shut down the CFPB, but federal judges have thwarted his efforts.

Trump has turned to Project 2025 author Russell Vought to lead the CFPB, sidestepping its responsibility to protect consumers and leaving us without the protections established by Congress after the 2008 financial collapse.

Take, for example, CFPB dropping the case against a predatory lender, as reported in mid-June of 2025. Here is what this predatory lender was doing to hard-working folks:

Here's how consumers are being ripped off in the auto lending process:

1. Overpriced Cars: Consumers are sold cars at prices far above their true value.

2. High-Interest Loans: These overpriced cars often come with interest rates that exceed 20%, making it almost impossible to pay off the loan.

3. Repossessions: If the borrower can't keep up with the payments, the car is repossessed, but the debt doesn't disappear.

4. Remaining Debt: After repossession, consumers are still on the hook for the remaining balance, even if the car is sold for far less than what they owe.

5. Lawsuits: Consumers are then sued for the remaining debt, leading to financial distress and even bankruptcy.

The goal of this post is to help you and your partner make informed auto lending choices and avoid getting sucked into the above-illustrated cycle of financial ruin.

The Basics of Borrowing for a Car

Buy Here Pay Here dealerships sell and finance cars on their lot. Interest rates extended at these dealerships are traditionally much higher than at traditional dealerships. At traditional dealerships where loans are extended, they are done so through a traditional auto lender.

Buy Here Pay Here dealerships frequently extend deep subprime auto loans to folks with poor or no credit. The interest rates on these loans are much higher than those with prime or super prime credit scores.

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Listen to Experian's Senior Director of Public Education and Advocacy explain how you can manage your credit with your spouse on the Modern Husbands Podcast.

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To put this in greater perspective, see for yourself how the interest rate would affect the cost of borrowing to purchase an average priced new car in 2024, $47,433.

84 Month Auto Loan at Sub-Prime Rates

84 Month Auto Loan at Super-Prime Rates

The total cost of borrowing to purchase the exact same car is $24,774 more for a spouse with bad credit.

Using this calculator, you can calculate your circumstances by interest rate or credit scores. The loan cost is only one of many cost factors to consider.

When Depreciation Outpaces the Loan Reduction

As we shared in a previous article, vehicles can depreciate faster than loan balances are paid, leaving the vehicle owner upside down on the auto loan. This means the borrower owes more for the vehicle than the vehicle can be sold for at that time. This is particularly common when folks take out high interest longer-term loans on used cars.

Auto Loan Options in Marriage

It is very expensive for someone with bad credit to borrow to buy a used car. If this is the case with your spouse, you should consider the alternatives first while on a Money Date with your spouse.

Talk to Your Partner

Discuss with your spouse alternatives to owning another car. Can you think outside the box and devise a plan that could include public transportation, carpooling, sharing one car, and the stray Uber ride?

Check Your Credit

You should each check your credit scores and discuss options if one of you has a much higher score than the other. It could make sense to finance the loan under only the borrower with the higher score.

Each of you should go to annualcreditreport.com and pull your free credit report. One in five people has errors on their credit reports, meaning there is something negative that should not be reported. If this is the case for you or your spouse, follow the process explained by CFPB (a guide that pre-dates the Trump administration) to repair your credit report. This could improve your credit score, improving the interest rate of your auto loan.

If you have time, improve your credit score by paying down debts. You can use a couple of primary strategies to do this quickly.

Comparison Shop Lending Rates

Shop around for interest rates at banks, credit unions, and other lenders in advance of purchasing a vehicle. Interest rates can vary from lender to lender, just as the price of a vehicle can from dealer to dealer.

Save for a Car (if you have time)

Wait until you have more money saved for a larger down payment, which will also reduce the cost of the loan. If you or your partner struggle to save, consider taking advantage of our free Money Marriage U Save online course.

Pro Tip: The older the vehicle, the more costly the maintenance will be, so be sure to budget for these costs in advance.

Support for Your Future

Contact me if you need further guidance. I support couples and individuals who want to better manage money.

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