Home » Don’t Let TikTok Fool You: Down Payments Are Not Illegal

Don’t Let TikTok Fool You: Down Payments Are Not Illegal

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You gotta hand it to ByteDance. The algorithm for TikTok is an incredibly powerful thing. No matter what part of society you occupy, TikTok will curate a near-endless time suck of extremely watchable, borderline addictive stream of bite-sized videos. Notice, the keyword “watchable,” not “good,” because for every well-crafted piece of content, there are hundreds of videos that are, really, really bad. These videos go beyond the space of unfunny, unkind, or cringe, and veer straight into the misinformation territory, as the app seems to have a unique penchant for funneling misinformation straight into its users’ brains.

Its latest bit of misinformation is a trend amongst car TikTok that somehow, down payments for vehicles are actually illegal. If you’ve paid a downpayment for any vehicle, you’re legally entitled to get your money back and keep the car, they say. Uh, what?

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Learn your rights! Protect yourself from fraud! ???? Instagram: therealfatdanny #generationalwealth #financialliteracy #financialfreedom #wealthconversation #consumerlaw


When I saw the first video featuring what I would quickly learn was a trending idea, I thought it was a biting satire in which auto finance is mixed with Sovereign Citizen-esque antics. I thought it was satirizing the folks who want absurd terms for auto loans and deploy made-up “gotcha” scenarios trying to get free stuff from a dealership. Yet, when I read through the comments, I started to get the gist, that no, these folks espousing this in earnest, and he wasn’t the only one, either. 


It is against the law to have to put down a down payment for a vehicle #consumerlaw #fyp #howtobuyacar #carhacks #newcar #nodownpayment #foryou

♬ I’m Blessed – Charlie Wilson


Through the magic of ByteDance’s scary good algorithm, it has been injecting doses of random car videos amongst edits of Pinkpantheress, and Terri Joe in my For You trending page. Nearly every third car-related video the algorithm sends me had something to do with the “down payments are illegal” trend.

TikTok content creators are citing a specific federal statute called 15 U.S. Code § 1662 – Advertising of downpayments and installments. Specifically, section 2. “No advertisement to aid, promote, or assist directly or indirectly any extension of consumer credit may state….that a specified downpayment is required in connection with any extension of consumer credit unless the creditor usually and customarily arranges down payments in that amount.”

Then, they’ll cite another statute (often 15 U.S. Code § 1635) claiming that it’s illegal for dealerships to ask for cash at all, and if they do, you’re entitled to get that money back and keep the car. It’s very reminiscent of the idea that “if you give birth at Disneyland, your kid gets a free lifetime pass.”

Like choosing to respawn at Disneyland, what you’re seeing on social media is all a bunch of made-up nonsense, based on something that isn’t true. These TikTokers are ignoring the second part of the statute, which says that down payments are fine if it is customary for the creditor to do so. Many banks that work with lower-credit customers traditionally will require a certain percentage down on the car. Also, outside of subprime customers, oftentimes down payments aren’t part of the vehicle’s loan contract. If the bank’s approved financing for the vehicle’s final purchase doesn’t cover the full amount, the rest of that cash is coming from your pocket, bucko. Putting money down toward the vehicle’s price to either pay the difference left by a loan that can’t satisfy the balance or putting a big down payment so the bank issues a smaller loan with a smaller payment—you know, what most of us would call just “car buying”—is a concept that seems to be lost on these folks.

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Now, almost anyone with an iota of common sense, or anyone who took eighth-grade Junior Achievement financial literacy classes knows that these folks are speaking complete untruths. For many prudent internet denizens, videos that sound too good to be true, complete with random smiling folks who can’t really explain their processes or show proof of it working for them shouldn’t pass your smell test. Most of these folks who make these crap videos are selling get-rich-quick courses on their pages, so I’m not even sure if they even believe their own bullshit.  

But, it seems like the trend, alongside ByteDance’s algorithm, has done a great job getting this terrible misinformation to the most vulnerable people. Pawing through the comments, the promises made by this misinformation attracted folks who may have been the victim of a bad deal, like a spot delivery gone wrong, which has left car buyers in embarrassing and sometimes terrifying predicaments. It has migrated out of TikTok, into Youtube, and even Twitter. It’s made real people make a complete fool of themselves, in real life. A woman has gone semi-viral on TikTok trying to outfox a salesman, claiming down payments are illegal. Obviously, that doesn’t work, and she asked to leave the Honda dealership. She’s been stitched, duetted, and lampooned on the app, but that hasn’t stopped the misinformation, or commenters who are hog-headedly defending her logic.

Listen, car dealerships and auto lenders can definitely be predatory places, saddling good people with needlessly bad loans and shit vehicles. However, this ain’t how they screw you over. Down payments are not illegal, and they’re beneficial to reducing your credit burden if you choose to buy a vehicle with a loan. 


Don’t take financial advice from random content creators on TikTok, because they are sure as hell ain’t giving out any good advice on how to hold your head high and come out with a good deal when buying a car. 

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1 year ago

So it’s turning into Fakebook?
In the past up to three quarters of all things passed around the site were outright lies or half truths.Thankfully that’s dropped off a bit lately.
Now there’s a ton of the ‘i bet most of my friends wont pass on the following *insert stupid or annoying* message

1 year ago

Maybe the Autopian should do an auto loan/financing/lease explainer with calculators. Could bring traffic to the site as it would be a source for that information that isn’t a bank or a dealer, and there’s clearly a lot of people in the world that need the help.

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