Buying Advice What is going on here?

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This isn't real estate. It's fraud.

fake down payment to build loan equity....you betcha it is

 

[AndyMA]

It doesn't matter what his reasons for doing this are, it is fraud and I'd politely tell him the price much match the real price. The tax consequences mentioned by mburke121 are enough reason to refuse to deal on a contract like this. If the dealer does this on a sale, do you think he would think twice about misrepresenting something else? My "red flag alert" would be flying high, and I suspect yours is too and why you posted about this.

While I agree iit seems somewhat fishy in a cash/finance deal it is very common to overstate the value of a trade both in tractor/auto sales to make it appear that the deposit to amount financed ratio is higher. More skin in the game as they say. The finance companies defiantly look at both deposit % and amount. I would expect that finance companies are wise to this practice. On the financing I do do my customers I need to certify on each loan application that I am not doing this.

Andy
Antec Energy LLC Home Energy Saving Services

 

[VitaBene]

Newuser, I think like many of the people that responded here with solid answers I can't understand why you don't ask the dealer. When he/she tells you the answer please do us all a favor and post the rationale behind their scheme.

 

[oneillmj]

Sometimes used car dealers will use just the the opposite approach. They might offer you a reciept for less money than they recieved from you for a vehicle, so you can in turn pay less tax when you register it. This gives them the difference in price off the books. The catch is they like do this when they are offering a return warranty on the vehicle. When the vehicle breaks down or for any other reason you return it to the lot, they gladly return to you the price on the receipt you have in hand. Since my Dad is gone almost twenty years now I think he'll forgive my revealing this one trade secret. I sure hope tractors sales aren't as fishy as used car sales. Trust your sense of smell on this one, or if the deal smells too good as well.

Mike