What Dealer Reserve Interest Is and Why It is a Scam

Dealer Reserve in the car dealer industry refers to the difference between the lowest interest rate a lender approves a car loan for, and the highest interest rate that the car dealer can trick a customer into paying.  Essentially all car dealer in Maryland charge higher interest rates than the customer qualifies for, and do this is as a standard business practice.

This practice of car dealers secretly holding interest points and misrepresenting to customers the interest rate they qualify is an open, dirty secret of the car business.

The “Buy Rate” is the lowest rate a lender will authorize to make a loan, and the higher rate is the dealer’s “Participation Rate.” When a finance manager is able to trick a customer into paying a higher interest rate, the dealer makes an additional profit, and a portion of that extra interest charge is often kicked back to the lender.

Dealers never disclose to a customer that they are secretly charging higher rates than the customer was approved for.

Customers who are cheated into paying a higher interest rate than they qualify for, and who do not have the lowest interest rate disclosed to them, have legal rights and can fight back.

Whitney’s LLP’s attorneys for car dealer problems have experience representing car buyers. Consumers have more legal rights than they realize, and we help buyers fight back against dishonest dealers.  We represent clients across Maryland.

 Click Here to Read about our Top 10 Most Common Types of Cases against Car Dealers.

Click Here to read about past car dealer fraud settlements.
Click Here to read blogs about our other car dealer cases, including settlements and other lawsuits we filed.

We offer Legal Consultations. Call Whitney, LLP at 410 583 8000, or use our Quick Contact Form, to discuss your potential case.  Here is our YouTube Channel  for more videos on car dealer legal issues.

Whitney, LLP’s Video on Explaining Dealer Reserve:

Lawsuit Filed Over Dealer Reserve Inflated Interest Rate

Whitney, LLP recently filed a lawsuit against a Maryland car dealer for not disclosing that the customer was approved by the lender at a lower interest rate.  In this case, our client had hired us after being sold a car that was advertised as “new” but had sustained significant damage that was not disclosed to him.

While reviewing the documents produced in the case, we discovered that the lender had approved him at a rate of 16%, but had charged him 18%.  Of course, like most consumers, if he had been informed that the lender approved him to pay 16%, he would not have agreed to pay 18%.  Instead, the finance manager had deceived him, and simply told him that 18% was the rate he was approved at.  Of course, this was not true.

However, the dealer failed to disclose this information, which is a violation of Maryland’s Consumer Protection Act, which prevents unfair and deceptive trade practices.

Car Dealer Lied About Best Interest Rate

Car dealers and finance managers are not allowed to lie to customers to get them to pay a higher interest rate.  This does not stop them from engaging in the illegal practice of telling customers false information and lying to the customer’s face when they say that the best interest rate available is higher than what it really is.

Customers who are tricked into paying high interest rates have many legal rights.  The lawyers at Whitney, LLP have experience helping consumers with car dealer interest rate problems.

whitney 1 300x178 - What Dealer Reserve Interest Is and Why It is a Scam

Daniel W. Whitney, Sr. and Daniel W. Whitney, Jr. of Whitney, LLP

Lawyer for Help With Car Dealer Interest Rates

If you have questions about the interest rate you were charged, or had other interest rate problems with a car dealer, lender of auto finance company, call the consumer lawyers at Whitney, LLP.  We offer Legal Consultations, and have helped many consumers and car buyers fight back against dishonest dealers.

Call Whitney, LLP at 410 583 8000, or use our Quick Contact Form, to discuss your potential case.


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