DriveTime Automotive: The Used Car Chain That Added Undisclosed Fees and Add-Ons to Contracts While Targeting Buyers With Limited Options

DriveTime Automotive Group Inc., a national chain of used car dealerships that specifically markets to buyers with poor or no credit history through buy-here-pay-here and third-party subprime financing, was charged with embedding undisclosed fees and optional add-on products in vehicle purchase contracts while conducting sales conversations focused on monthly payment amounts that obscured the total purchase price — practices that regulators found particularly harmful given that DriveTime's customers are typically buyers with limited vehicle purchasing alternatives who were not in a position to walk away from a transaction that included undisclosed charges they might have declined if clearly offered the choice.DOCUMENTED

Subprime auto financing markets — those targeting buyers with credit scores below conventional lending standards — present specific consumer protection challenges because the power imbalance between dealers and buyers is greater than in prime markets. A buyer with credit challenges who has been approved by DriveTime after being rejected elsewhere has fewer realistic options than a buyer with good credit who can qualify for financing from multiple dealers and lenders. This reduced option set limits the buyer's practical ability to walk away from a transaction with terms they find objectionable, creating leverage for dealers to impose conditions that the buyer might resist if they had genuine alternatives.REVIEWED

The Payment-Focused Sales Conversation

DriveTime's sales model, like many subprime dealer sales processes, centers on matching the buyer to a vehicle whose payment fits within their stated budget rather than presenting the total price of the transaction for the buyer's evaluation. A buyer who says they can afford $300 per month is shown vehicles whose payments can be structured at that level, with the term length and interest rate adjusted to hit the target payment. This approach prioritizes payment affordability over price transparency, because the buyer who is focused on whether they can afford the monthly payment is less likely to scrutinize the total vehicle price, the interest rate, or the add-on products that are folded into the financed amount.DOCUMENTED

Regulators found that DriveTime's sales representatives consistently discussed vehicle options in terms of monthly payment rather than total price, and that the total vehicle cost — including the vehicle price, add-on products, fees, financing charges, and any other amounts financed — was not presented in a way that allowed buyers to understand the aggregate cost of the transaction before committing. A buyer who approves a $300 monthly payment without knowing the transaction's total financed amount and interest rate cannot make an informed judgment about whether the terms are reasonable.DOCUMENTED

The GPS Tracking Disclosure

DriveTime and similar buy-here-pay-here lenders often install GPS tracking devices in financed vehicles to facilitate repossession if the buyer becomes delinquent. This practice, while legal and disclosed in financing agreements, generated a specific consumer protection issue when the GPS device and its associated subscription were presented to buyers as an optional add-on for their convenience rather than as a lender risk management tool installed for the lender's benefit. Buyers who paid for a "GPS subscription" believing it was an optional service they were choosing were paying for something that would have been installed regardless of their election.DOCUMENTED

The disclosure of GPS tracking in subprime auto financing is required — buyers must be informed that their vehicle can be located and remotely disabled if they miss payments. The enforcement issue was the framing: presenting the GPS-related charges as an optional convenience feature rather than as a lender tool for which the buyer was being charged without meaningful choice. This framing transformed a required disclosure into a revenue-generating upsell, and charged buyers for a product they had no practical ability to decline regardless of what the paperwork said about optionality.DOCUMENTED

DriveTime buyers who agreed to pay for a GPS subscription in their contract were often unaware that the GPS device would be installed whether they purchased the subscription or not — they were paying for the label of optionality on a product whose underlying functionality was not optional at all.

Subprime Market Consumer Protections

Buyers purchasing vehicles through subprime financing should take specific steps to protect themselves from undisclosed add-ons and fee inflation. Before signing any contract, ask for a complete written list of every charge included in the financed amount, including the vehicle price, all fees, all add-on products, and the interest rate and loan term. Refuse to approve a monthly payment number without first reviewing the total financed amount — a payment is only meaningful in the context of how much you're paying and for how long. Know that in most states you have the right to decline any optional product including payment protection, service contracts, and GPS subscriptions without affecting your financing approval, and that representations that certain add-ons are required for financing are often not accurate. The Consumer Financial Protection Bureau's auto loan resources provide information about your rights in vehicle financing transactions regardless of your credit profile.DOCUMENTED

Consumers with credit challenges who are working with subprime auto dealers can also protect themselves by researching the fair market value of any vehicle before completing a purchase. Free resources including Kelley Blue Book, Edmunds, and the National Automobile Dealers Association guide provide estimated values for used vehicles based on make, model, year, mileage, and condition that allow buyers to assess whether the vehicle price they are being offered is reasonable relative to the market. A significant markup above these reference values is a red flag that the dealer's pricing may be exploiting the buyer's limited alternatives. Organizations including credit unions, community development financial institutions, and nonprofit housing and financial counseling agencies often provide access to auto financing for credit-challenged borrowers at lower rates and with more transparent terms than buy-here-pay-here dealers — researching these alternatives before visiting a subprime dealer gives buyers negotiating leverage and genuine alternatives.

Have documents relevant to this story? Reach us through our tips channel.