They can "suggest" anything they think you will go for. It doesn't sound like a very smart deal to me. But it will be YOUR credit that gets messed up for a few years.
Legal or not, it's a shady statement. Which tells me it's a shady dealer. Instead of buying a car from them, call your state BBB (Better Business Bureau)and report this, that way if they have already been reported in the past, it can be dealt with accordingly. As last person that answer stated, it's your credit on the line. Do NOT leave it in the hands of the greedy...
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