A woman claims car salespeople are scamming you out of your down payment. Viewers are split. Is she right, or is she spreading a conspiracy theory?
In a viral video with more than a million views, personal finance and credit score influencer Diam (@dimedocs) shares a public service announcement about what she says happens when you put a down payment on a car.
“If you ever paid a down payment for your car, you got scammed like hell,” Diam, who has nearly 65,000 followers, says.
She says her boyfriend’s dad was a manager at a car dealership, and he told her that when you put a downpayment on a car, the car salesman pockets it as commission.
“You think that you just put $10,000 on your car loan when your interest was adjusted to $10,000,” Diam says, leaving us a bit confused.
In her example, you put down $5,000 on a $20,000 car. This would bring your amount owed down to $15,000. But what she’s saying some salesman do to steal your money is keep the same amount owed ($20,000) and lower your interest rate, say from 15% to 7.5% to make it seem like your monthly payment went down because of the down payment.
“You didn’t even pay attention to the interest; you just paid attention to your monthly payments going down,” Diam says.
“Because this went right over your head, he pockets your whole $5,000 as commission,” Diam goes on, adding that people need to do better when it comes to reading financial documents and understanding what’s going on.
These are really serious sweeping allegations that, if true, could cause someone to lose thousands of dollars that they likely spent months or years saving up.
Now, to be clear, a down payment is supposed to go toward the sticker price (or principal balance) on a car. While lenders may give you a lower interest rate for putting down a down payment, that isn’t the primary role of the down payment. If you pay $5,000 on a $20,000 car, you should only pay $15,000 (plus whatever the interest rate on your car loan). Legally, car salespeople are not entitled to that down payment and would have to do some shady stuff to be able to pocket it.
But Diam is right. It does happen, though likely not as frequently as she’s implying.
Upcounsel, an online market for legal services, wrote that this kind of fraud does happen and salespeople take advantage of people by inundating them with paperwork and confusing explanations so that they won’t catch on to being swindled. It tends to happen most with car leases since the numbers are easier to fudge than on a purchase.
If caught, dealerships often claim that it was just a clerical mistake, not premeditated theft. Upcounsel offers tips to avoid getting scammed out of your hard-earned money, like asking for paperwork before you mention the down payment and then new paperwork after so you can accurately compare numbers and terms.
@dimedocs Replying to @Nicole | Black Hair Stories ™️ ♬ original sound – Dime • Financially Conscious
Commenters were conflicted about Diam’s video and how credible her information was.
“This is absolutely wild and completely incorrect. If this were the case I would make 500K a year,” a commenter wrote.
“People who give incorrect info always wanna be the loudest,” another chimed in.
“I put 5k down on a car that was 11k. My loan financed was still 11k. They DEFINITELY pocketed my down payment,” a person shared.
The Daily Dot reached out to Diam for comment via Instagram direct message.
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