Skip to main content

Imagine this: customer A comes in and wants to buy a car for cash. Customer B comes in and wants to buy the same car on credit. How much are you charging each customer for the car? Even though it is tempting to charge the customer paying credit more, you should never do it.  In this article, we’ll discuss price discrimination as well as how to navigate it in the dealership industry.

If you prefer an audio-visual version of this blog, click below. 

What is Price Discrimination?

Whether a customer is a cash or a credit customer, federal law requires car prices to be the same for both customers. Obviously, a credit customer is going to pay interest so, over the course of a loan, they’re going to pay more, but the price of the vehicle must be the same. If s dealership charges one price for a cash customer and a higher one for a credit customer for the same vehicle, this is illegal and what economists have coined “price discrimination”.

How is Price Discrimination Discovered?

Variance in cash and credit prices for vehicles is typically discovered through secret shoppers. For example, a secret shopper will come in as a cash customer and the dealer says it’s $19,999. The following day, another secret shopper will come in as a credit customer and the dealer will say it’s $21,995. The only distinguishing factor between the two customers is the method of payment: credit versus cash. Federal law requires the cash price of the vehicle to be the same, regardless of whether a customer is a credit customer or a cash customer.

Nuances to Understand

Now, of course, credit customers require down payments and the down payments can change depending on the creditworthiness of the customer, but the actual price of the vehicle must remain the same. What we would call cash price on the bill of sale, cannot change based solely on the fact that it’s a credit customer versus a cash customer.

What Dealers Should Do

At Lefkoff we have seen far too many cases regarding cash vs. credit pricing discrimination. Such cases can set a dealership back quite a bit in legal fees and deteriorate a dealer’s reputation. The best course of action is to maintain consistent pricing for cash and credit customers. If a dealer is worried about processing fees for a credit transaction or other related fees for a credit-paying customer, those fees need to be considered in the price for both the cash and credit customers prior to the sale.

How We Can Help

If you are looking for more support when it comes to understanding cash vs credit pricing or you are currently navigating this issue, you can book a strategy session with us here. We’ll personalize your counsel and guide you through everything to ensure your business is protected. You can also find more information at

Looking for more legal know-how to protect and empower your business? Join The Driveway, our monthly legal membership program. Check it out here!

Leave a Reply