‘Scare tactic’: Northern California car buyer offered an unbelievable deal. Then he reads the fine print and wonders — is this legal?

A Northern California first-time car buyer recently shared a cautionary tale on Reddit that has many consumers asking: When does a sweet financing deal turn into a trap?

In the post, the first-time buyer described how an apparently generous car financing deal unraveled once he read the fine print. According to his account, the finance manager at the dealership quoted him a solid out-the-door price for a new vehicle and mentioned a 1.9 percent promotional interest rate, contingent on his credit.

With a score over 780 and no prior car loans, he expected to qualify easily. The monthly payment, he added, would have been less than eight percent of his income.

Things changed after his credit was run. The finance manager told him he only qualified for roughly a 7 percent APR, but could lower it to 0.9 percent if he agreed to include optional warranties and add-ons in the purchase.

The buyer says he assumed that “included” meant free, not added to the total cost. “I am very happy with the way he sold me on this ‘deal’,” the post said, and so they signed the contract.. “This was my stupid mistake.”

“Free” warranties and add-ons equal thousands in additional charges

When he left the dealership that night, he did not receive copies of his paperwork. The following week, he discovered around $10,000 in additional charges added to the out-the-door price, all related to warranties and optional coverage. When he called to ask about the discrepancy, the dealership said he had opted for those products.

The buyer decided to cancel the warranties and add-ons, knowing they can typically be canceled at any time. But when he returned to the dealership, the finance manager gave him a warning. If he canceled the extra coverage, the manager said, the dealership might rescind the 0.9 percent interest rate because he would be “going back on the deal we made.”

The buyer found that hard to believe, particularly because the manufacturer was advertising the same 0.9 percent promotion to all qualified buyers that month. “So I have a hard time believing they are breaking their back to make a deal for me,” he said.

What is “tied selling”?

Based on this account, the story fits the definition of tied selling—a practice where the sale of one product or service is made conditional on buying another. The Federal Trade Commission notes that such arrangements can violate antitrust laws. On Reddit, one user emphasized that “making a rate dependent on a secondary product is the illegal part.” Another wrote, “That’s actually how we would do our clearance discounts… we all knew it was very illegal to tie warranty to financing. As in ‘you have to get the warranty to get this rate.’”

California law also forbids tying arrangements that restrict competition or exploit consumers, and a dealership that conditions financing terms on unrelated add-ons could face penalties or refund obligations.

In this case, the finance manager’s statement that the rate would change if the buyer canceled the warranties is a potential red flag. One commenter called it a “scare tactic.” Another urged the buyer to take immediate action: “Go in and request they cancel everything on the spot.”

And if the buyer gets pushback, the comment said, “immediately request the general manager and tell him you will be reporting them to the AG for tied selling and ensure you see the report through to completion.” While the buyer called his experience “a lesson learned,” this story highlights an important lesson for inexperienced buyers: deals that seem too good to be true often come with strings attached.