Sep 19 2008
I received a letter from the dealership demanding that I return the vehicle because they are unable to obtain financing, what are my options? (Alternatively: I received a phone call from the dealership saying they need me to come in and sign another contract at a different interest rate or payment term).
Your options are not as limited as you may think in this situation. This situation is created when a dealer performs a “spot delivery,” which is a sometimes risky venture on everyone’s part. Essentially, the dealer obtains your credit report (with your permission), and you and the dealer agree to terms for a vehicle that you want to purchase. The dealer, wanting desperately to sell you a car, will often just delivery the vehicle and “guess” at the finance rate. If the dealer gets it wrong and the lender requires different terms (which might include more money down, a higher interest rate, and/or a shorter term loan), then they guessed wrong and have to give you the bad news. The letter you received in the mail is referred to in the industry as a “10-day letter,” because a provision in the letter allows the dealer to rescind the contract within 10 days if they are unable to obtain financing on your behalf. When you receive this letter or phone call, you may be getting set up for the “yo-yo contract,” which is a type fraud where the dealer delivered the vehicle at terms that you thought were favorable but the dealer acted in bad faith. In this instance, the dealer may have already sold the vehicle you traded in., and then you get the call telling you they need another $1,000 or more down in order to get you financed. Now you are stuck - either agree to whatever the dealer offers or return the car and be without transportation because they sold the car you traded in. This type of fraud can be difficult to prove and will most likely require professional or experienced assistance, and the worst part is that it is very inconvenient for you because of the transportation situation. Your best defense is to act quickly to get this resolved.
