218 F.3d 680 (7th Cir. 2000)
Mercedes HOFFMAN,    Plaintiff-Appellant,v.GROSSINGER MOTOR CORPORATION,    Defendant-Appellee.
No. 00-1024
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 30, 2000Decided June 20, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern  Division.  No. 96 C 5362--William J. Hibbler, Judge.
Before Posner, Chief Judge, and Coffey and  Kanne, Circuit Judges.
Posner, Chief Judge.


1
The district court  granted summary judgment for the  defendant, an auto dealer sued for  violating the Truth in Lending Act by  failing to disclose a finance charge that  it levies on "subprime" purchasers of its  used cars. A subprime purchaser is a  purchaser whose credit rating is so poor  that he, or in this case she, can obtain  credit only from or through finance  companies that specialize in high-risk  borrowers. One of these finance  companies, the one that financed the  plaintiff's purchase of a used car from  the defendant, charges the defendant a  flat $400 per car financed, called a  "holdback." The plaintiff contends that  the defendant passes this charge on to  its subprime customers but does not treat  it as a finance charge in computing the  annual percentage rate of interest that  it discloses to them. In a standard  holdback, the money held back is returned  to the dealer if and when the purchaser  pays off the loan. The parties do not  discuss this wrinkle and for simplicity  we'll assume the finance company never  returns the money; nothing turns on the  point. The dealer uses other finance  companies that charge a different  holdback, but, again for the sake of  simplicity, we'll ignore that  complication as well--which is in any  event irrelevant to this plaintiff--and  pretend that the holdback is always $400;  actually, the average holdback paid by  this dealer exceeds $700.


2
Were it true that the dealer tacked $400  (or some fraction thereof) onto the price  of the cars it sold subprime purchasers,  and did not tack the same amount onto the  prices charged its other purchasers, the  addition would indeed be a finance charge  and the dealer would have to include it  in computing the annual percentage rate  of interest charged this class of credit  customers. Walker v. Wallace Auto Sales,  Inc., 155 F.3d 927 (7th Cir. 1998). But  as long as the dealer raises the price to  all its purchasers by the same amount to  absorb this cost, so that the customer  cannot avoid it by paying cash, it is not  a finance charge within the meaning of  the Truth in Lending Act. The Act's  purpose is to enable consumers to decide  whether or from whom to obtain credit,  and a charge that does not affect the  cost of one form of credit relative to  another or to cash is irrelevant to that  purpose. Balderos v. City Chevrolet, 214 F.3d 849, 851-52 (7th  Cir. May 26, 2000).


3
The present case is intermediate between  the two hypothetical variants that we  have given. The defendant does not add a  $400 charge to the price of cars sold its  subprime customers, but there is evidence  that it charges them a higher price on  average than it charges its other  customers, and the difference, the  plaintiff argues, is a hidden finance  charge. There is no reported appellate  case quite like this. Balderos and  Walker, on which the plaintiff relies,  came to us in a critically different  procedural posture. The complaint in each  case alleged as in this one that the  defendant added a finance charge to its  credit sales and not to its cash sales,  but in each case the district court  dismissed the suit for failure to state a  claim and so we were required to assume  that the allegation was true. Here, by  moving for summary judgment, the  defendant forced the plaintiff to present  evidence that this dealer really did  include a secret finance charge in the  sales price to its credit customers  (actually a subset of those customers)  but not in the price to its other  customers. The plaintiff couldn't just  stand on her complaint.


4
The dealer prices its used cars as  follows. (It also sells new cars, but the  plaintiff makes no argument regarding  their pricing.) It takes the cash value  of the car, either the trade-in value or  the price the car would command at an  auction, and adds the cost of any repairs  the dealer has made. To the sum of these  two items--we'll call that sum the  dealer's "cost of car"--the dealer adds a  uniform markup of $5,700. The sum of the  cost of car and the markup is the  dealer's list price for the used car. The  dealer's salesmen are not expected to  sell most, perhaps any, cars at list  price; that price is just the beginning  of the negotiation. The salesman tries to  get as much as he can, of course, but his  commission is a percentage not of the  sales price but of the defendant's net  profit on the sale. The net profit is the  actual sales price (which must be  approved by the defendant's business  office) minus not only what we're calling  the "cost of car" but also $700,  representing an allocation of the  dealer's overhead, and, in the case of  subprime purchasers, the "holdback"--in  this case the $400 that the finance  company charged the dealer for financing  the plaintiff's purchase.


5
This method of computing the salesman's  commissions implies that for him to get  the identical commission on two otherwise  identical cars, one sold to a subprime  purchaser and the other to a prime or  cash purchaser, the price to the subprime  purchaser would have to be $400 higher  than the price to the other purchaser.  Otherwise the dealer's net profit would  be less on the car sold to the subprime  purchaser and so the salesman's  commission would also be less. It does  not follow, however, as the plaintiff  seems to believe, that the price to the  subprime purchaser would be $400 higher,  or for that matter one penny higher. The  salesman will try in every negotiation to  strike the hardest bargain he can,  whether or not there is a holdback. The  plaintiff paid $8,800 for the car she  bought from the defendant. Since she was  willing to pay that much, it would have  been irrational to charge her less if it  were discovered that she wasn't a  subprime purchaser after all. The only  significance of such a discovery would be  to reveal that the sale at $8,800 was  more profitable than the dealer had  thought and that the salesman was  entitled to a higher commission.


6
This example shows how unlikely it is  that the holdback is passed on to  subprime purchasers. If there were no  holdbacks at all, the defendant's cost of  doing business would be lower, and  conceivably this would induce it to  reduce the $5,700 markup or to permit its  salesmen to negotiate somewhat lower sale  prices, since generally the lower a  company's costs the lower its profit-  maximizing price (even if it's a  monopolist, which there is no reason to  think this dealer is). But there is no  reason to suppose that subprime  purchasers would be particular  beneficiaries. The defendant would still  be trying to get as close to its list  prices as it could with all its  purchasers.


7
The only situation in which the $400  holdback would be demonstrably a hidden  finance charge would be where the  defendant would have sold the car to a  cash purchaser for less than $400 over  the defendant's cost of car. Suppose that  cost were $2,000. It would make no sense  for the defendant to sell to a subprime  purchaser for less than $2,400, because  in that event the defendant would net  less than $2,000 and it could get more by  auctioning the car or trading it in for  another car, thus avoiding the $400 cost  that the finance company charges it for  financing a sale to a subprime purchaser.  (We're ignoring repair costs in this  example.) Yet the dealer might sell the  same car to a hard-bargaining nonsubprime  purchaser for between $2,000 and $2,400,  if it didn't think it could get more than  $2,400 from anyone else. For a sale at  any price between these figures would  cover the cost of making the sale, a cost  that, in the case of a sale not to a  subprime purchaser, does not include a  $400 charge by the finance company. The  $700 in overhead costs that the defendant  allocates to every sale is incurred  whether or not a car is sold, and so it  is not saved, as the holdback is, by  refusing to sell the car at a price that  does not cover that cost. See Autotrol  Corp. v. Continental Water Systems Corp.,  918 F.2d 689, 692-93 (7th Cir. 1990).  That is why it does not figure in our  example of the minimum price that the  dealer would charge to a subprime  purchaser and to another purchaser,  respectively.


8
This case is unlike the example, as is  obvious from the price that the plaintiff  paid. That price included a markup  greatly in excess of $400--the dealer's  net profit on the sale to her was  $2,599.15. There is no evidence of a sale  by the defendant to anyone at a markup  below $400. The plaintiff did present  evidence that, on average, subprime  purchasers pay higher prices than the  dealer's other purchasers, after  correction for differences in the cost of  car. But there is no evidence that the  higher price reflects an effort by  thedefendant to stick such purchasers  with a $400 finance charge. We have seen  that such a policy would be irrational  except in the case of a very low (below  $400) markup, of which there is no  evidence.


9
Further undermining the plaintiff's  theory of liability is the fact that the  record reveals that prime credit  purchasers from the defendant pay, on  average, higher prices--before the cost  of credit is computed--than cash  purchasers, even though there is no  holdback in the case of prime credit  purchasers. Although the dealer's average  markup (net of the overhead allocation)  on holdback transactions is $1,800 and on  cash transactions only $900, its average  markup on credit transactions in which  there is no holdback is $1,300. The  implication is that cash customers are  more credible or savvy bargainers than  credit customers, and that credit  customers with good credit ratings are  more credible or savvy bargainers than  credit customers with bad credit ratings  (that is, the subprime purchasers). The  record is consistent with this  conjecture; the plaintiff accepted the  price offered by the defendant's  salesman, with no attempt to bargain him  down, as she very well might have done  since the markup to her (which, net of  overhead, was approximately $3,000) was  more than twice the dealer's average  markup for nonsubprime credit customers  and more than three times its average  markup for cash customers. There is no  evidence that she paid $400 more, or for  that matter one cent more, than she would  have paid had she not been a subprime  purchaser--no evidence, in short, that a  finance charge was "buried" in the cash  price of the car. That kills her case.  See Walker v. Wallace Auto Sales, Inc.,  supra, 155 F.3d at 933-34 and n. 9.


10
Courts in other contexts, notably  antitrust enforcement, have been  reluctant to get into issues of "passing  on." E.g., Illinois Brick Co. v.  Illinois, 431 U.S. 720 (1977). Such  issues tend to be intractable to the  methods of litigation. It is possible  though unlikely that holdbacks influence  the pricing of the defendant's cars to  subprime purchasers, but to explore the  possibility would enormously complicate  the litigation of Truth in Lending Act  claims, would cast a large cloud of  potential liability over used-car dealers  and other firms that use list prices as  just the starting point for negotiation,  and by doing so would make the class  action a truly fearsome instrument of  consumer-finance litigation. This case  began as a class action; the consumer-  finance class action is the specialty of  the law firm representing the plaintiff.


11
This is not a case in which a charge  that is really a finance charge is called  something else. It is a case in which the  plaintiff seeks to track a cost incurred  by the dealer into the prices charged the  dealer's customers. The plaintiff has, as  we have seen, failed to do that. Her  failure suggests the futility of a  "passing on" theory of liability under  the Truth in Lending Act.


12
The complaint charges that the  defendant's failure to figure the  holdback into the annual percentage rate  of interest also violated the Illinois  Consumer Fraud Act, 815 ILCS 505/2. That  charge was rightly dismissed too, because  compliance with the disclosure  requirements in the federal Truth in  Lending Act is a defense under the  Illinois act. See Lanier v. Associates  Finance, Inc., 499 N.E.2d 440, 447 (Ill.  1986).


13
Affirmed.

