How To Handle Forced Dealer Financing


Purchasing Your Next Vehicle: Seven Steps to Buying with Confidence

Beware of Forced Dealer Financing

With the nationwide shortage of new vehicles due to the chip shortage caused by the COVID-19 pandemic, auto dealers are pulling out all the stops to get business. This includes some dealers requiring car buyers to take dealer financing over outside financing. Not just preferring it…outright refusing to sell a vehicle unless the consumer uses dealer financing. While this is not necessarily illegal, it is very concerning to First Service.

The Office of Consumer Credit Commissioner (OCCC), the Texas regulator over auto dealers’ motor vehicle sales financing, has told our state trade association that, “The buyer should have the option to bring in their own financing, pay cash, or finance through the seller.” The OCCC was also quoted recently on a Dallas area news website saying: “The Texas Finance Code does not directly address this issue. However, we are concerned about the practice you described.”

How Can I Avoid Being Forced to Take Dealer Financing?

The more prepared you are when you walk into the dealership, the better your chances are!

  • Get Pre-Approved for a First Service Vehicle Loan.
  • Don’t negotiate at the dealership. Do all your negotiating via email.
  • Take the emotion out of it, think logically, and think of it as a business deal. Otherwise the dealer may get the best of you.

What Happens if I'm Forced to Take Dealer Financing?

If you’re buying a new or used car from a dealership, there is a high chance that this could happen to you. Here are some of your options.

  • Be firm with the dealer. Let them know that you are getting the best financing available through your credit union, First Service, and that’s how you want to finance your vehicle.
  • Walk away. You may miss out on purchasing that vehicle, but a dealer finance contract will likely include many additional charges that you don’t need or could otherwise get at a lower price from First Service.
  • Bite the bullet. Take the dealer financing, and then refinance with First Service. Regardless of what dealers tell you, you do not have to wait 90 days to refinance. Dealers tell consumers 90 days because that’s the threshold to keep their commission.
  • Pay attention. If you do arrange financing through the dealership, please read all the fine print on your Purchase Agreement and Finance Contract.

How Can I File a Complaint?

If you are experiencing denials for outside financing, First Service, as well as the OCCC, encourages you to file a complaint through the OCCC website at

We feel it’s important for you to pick the best way to purchase a vehicle for your life and your financial situation – whether it’s through First Service, paying cash, or financing through the dealership. Requiring you to take dealer financing when it might not make financial sense is not something we advocate.

Contact us online, give us a call at 713-676-7777, or stop by a branch if you have questions on forced dealer financing and see how we can help in your individual situation.