GMAC denies charges of racial discrimination

(cont'd)


In recent years, most captive auto lenders, including GMAC, have capped markups at 3 percent.

Farmer said dealers are allowed to charge the markup, which he said is not disclosed to borrowers, because they provide a service - saving car buyers from having to shop for a loan.

"They're doing a service," Farmer said. "They're doing your credit check. They're doing all the administrative paperwork."

But Shahan said unless they have qualified for a zero-percent APR deal, car buyers should never finance with a dealer.

"If you finance through the dealer, they're looking at the loan as another profit center," she said. "It's like another product for them."

Lorie Smith, 30, who was shopping for a car in Buena Park on Saturday, said she did not know dealers mark up car loan interest rates from the rate a finance company authorizes.

"It's just difficult for people who are trying to get their credit and their life back on track, and you want what everybody else has," she said.

Wanting what everyone has might be just the problem, said her friend Chuck Moreno, who came to help Smith navigate the finance process.

"It's just the way that dealers' people operate - but you need a car, so there's not much you can do," he said.