Consumer complaint received 2016-02-08
Company: TOYOTA MOTOR CREDIT CORPORATION
State: TX
Product: Consumer Loan
Sub-product: Vehicle loan
Issue: Shopping for a loan or lease

Complaint:
NEVER IN THE HISTORY OF THIS GREAT NATION THE CONSUMERS HAVE BEEN CHEATED, EXPLOITED AND SWINDLED LIKE THEY ARE BEING DONE TODAY AND THERE HAS NEVER BEEN A GREATER NEED THAN TODAY, FOR NEW CONSUMER PROTECTION LAWS. - " VOICE OF AN AVERAGE AMERICAN '' On XXXX XXXX, 2015, I with my nephew went to Texas Toyota of XXXX of XXXX, Texas. After some negotiation with the salesman, my nephew was able to negotiate the price of the car, but the salesman was not willing to go below 2.9 % interest on the pretext that although I have excellent credit, but there is no past history of car loan, so this makes me a first time buyer for car loan, and hence I am not eligible for 0 %. Since I had checked the interest rate with my bank which was offering 3.9 % interest and comparatively the dealership was offering me 2.9 %, so I decided to go ahead with the dealership. The salesman left us for few minutes and returned back and told us that I have been approved but the total interest amount {$1600.00} (@2.9 % X 60 months ) will be rolled into the total price of the vehicle and that amount will be financed by Toyota Financial @ 0 % and this will not change my monthly payment which will still remain {$380.00} per month and the 60 months terms will not change too. I am an average American with no financial background or education and like most average American I understand or have aptitude for basic maths only and based on this I felt it is ok since my monthly payment amount and 60 months terms does not change. 
Later, I had an acquaintance with financial background to review the documents the sale. The review by this person revealed : 1. It seems very unusual and unheard practice adopted by the finance company and or the car dealership, when a buyer have been approved for 2.9 % interest for 60 months term and then the car dealership prepares the financing contract based on 0 % interest for the Finance Company, and having the total interest amount {$1600.00} (@2.9 % X 60 months ) rolled into sale price of the vehicle and then include this interest amount into the total amount financed, and do not itemized separately, the interest amount in the Purchase Agreement, so apparently it can pass off undetected. 
2. In the event I paid off the loan earlier, I will be paying the interest even for the period I will not be in financing and at that point the rate of interest will result into much higher rate of interest and not 2.9 % as it seems today. This will not happen if the the financing contract documents had been prepared based on 2.9 % interest. 
3. By rolling the interest amount into the sale price of the car, has resulted into an about additional {$100.00} sales tax overcharged to me, whereas the interest is non-taxable. 
So to get further clarifications, I contacted Toyota Financial. The CSR of Toyota Financial informed me that based on my credit, I was indeed approved and financed for 0 % interest for 60 months term, and in the event if I was approved for 2.9 % interest then the financing contract documents would have been prepared at 2.9 % interest and not 0 % interest and when I make my monthly payments the interest would be paid first and then the balance amount would be applied to my outstanding principal amount each and every month and in the event I paid off the loan earlier I do not have to pay the interest for the remaining months I am not into financing as I have paid off the outstanding balance and this is the practice followed by Toyota Financial and moreover the CSR informed me that Toyota Financial do not have the practice of having the car dealership to roll into the sale price of the car, the total interest amount for the whole term of financing period and then financing the interest. At this point it was indeed very clear to me that I have been a target of deceptive financing practice by this car dealership during this transaction. 
Thank you.

Company response to consumer: Closed with explanation