I imagine you drove off the lot in your newly financed used car, stoked about your new ride and relieved you scored a decent rate — 6% interest, manageable monthly payments, and the peace of mind you didn’t get fleeced.

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Your dealer’s sour update probably feels like a punch in the gut. And it should.

This kind of last-minute rate increase is a big red flag, but it’s not always an outright scam. Sometimes lenders genuinely change the terms after taking a closer look at your credit or your co-signer’s history. But shady dealers know that, too, and they’ll use it as cover to pad their profit.

When a rate bump is legit, and when it’s not

Fighting for every penny in a car purchase has rarely been so important. Tariffs on new imported cars and parts are increasing the cost of new vehicles. As new cars become less affordable, more buyers shift to the used market, driving up demand and prices for used vehicles — nevermind the impacts of tariffs on the parts used to repair used cars.

You may be considered fortunate to get an 8% rate, even if it’s higher than what you were initially offered. Credit agency Experian says the average rate in the U.S. is nearing 12% — and that jumps wildly for someone with mediocre credit.

Banks really do sometimes decline a deal or increase the rate after initial approval. Especially in used car sales, dealers often let buyers take the car before final financing is fully locked down. That’s called spot delivery or conditional delivery.

If your co-signer’s credit is worse than they thought, or if your own credit report has issues that didn’t show up immediately, the bank might truly reject the original rate.

But it’s also true that this is a well-known dealer tactic, sometimes called “yo-yo” financing, a problem so bad the FTC has a video on it to warn buyers. The dealer lets you take the car home at a “too good to be true” rate knowing they’ll call you back later with the bad news. By then, they’re betting you’ll agree to almost anything to keep it.

Dealers might also claim the bank rejected the deal when in reality they’re just steering you into a loan with a higher interest rate that pays them more in commissions or markup.

The bottom line? A rate bump might be legitimate. But it might also be a sign you’re being played.

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Pushing back against a rate change

You got that dreaded call saying your 6% deal is now nearly 8%. Don’t panic — but don’t impulsively say yes, either.

Start by asking for proof. A real lender decision to raise your rate will typically be documented. Ask to see the bank’s rejection or counter-offer. A reputable dealer should be willing to show you. If they dodge or stall, it’s a bad sign.

You can also simply refuse. If financing falls through and can’t be secured on the agreed terms, you usually have the right to unwind the deal. You can return the car and walk away. Yes, it’s inconvenient and awkward, but it’s better than getting stuck with an overpriced loan you can’t afford. If the dealer won’t return your down payment and trade-in, you may have to seek legal counsel.

If you’re willing to renegotiate, try to hold them to the original terms or at least minimize the increase. Sometimes just threatening to walk is enough to get them to “find” a better rate.

You can also ask them for the out-the-door price and try to find your own financing from a bank or credit union.

And if you do sign at the higher rate, remember you’re not stuck forever. Refinancing is always an option. Your own bank or credit union may offer a much better deal once you own the car and have some payment history.

If you truly feel misled or scammed, escalate. Talk to the dealership’s management. File complaints with your state attorney general, consumer protection office, the Better Business Bureau, or the Federal Trade Commission.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.