Walk away if dealer demands financing

Dear Terry,
I saw a car I want to buy from a used car dealer. The price is excellent, but the dealer says he cannot sell the car to me unless I finance $8,000 of it.

I'd rather pay the whole cost of the car ($13,000) in cash. The dealer says he is selling the car at a lower price than he paid when buying it from the bank. He wants me to finance the car for at least four months before I repay the loan. Does this sound fishy to you?
-- Bruce

Dear Bruce,
Many independent used car lots make their money on the sale price of the car and the money they make on the financing. Does the deal sound fishy? Yes. I find it hard to believe that a dealer would sell a car for less than the dealer paid. I think he is simply looking to pad the profit by tying you into a loan.

Here are this week's reader questions:

• Bargain autos unlikely to catch on • Should I refinance my auto loan? • Why would a dealer insist on financing? • How can I escape crushing payments?

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.