Dealer Fraud

If you don’t want to pay for a perp fee there’s one simple thing you can do. Tell the car dealership to credit you the amount of the prep service fees on your contract. Simply refuse to pay it. If they don’t just get up and walk out. It won’t have cost you anything more than a little bit of you time and if the prep fee is $500 you will have to work many hours just to cover it. Remember, it’s completely legal for a car dealership to add these prep fees to your final bill but if you go into the dealership fore-warned you can save yourself some money.

We all know what it means to be upside-down in the physical sense. The blood rushes to your head and it’s hard to breathe, all because it’s not the natural state of the human body. In vehicular terms, being upside-down is a completely different, yet equally unpleasant phenomenon. When it comes to your car, truck, minivan or SUV, being upside-down in your car loan is not a physical problem, but a financial one.
In car dealership slang, it simply means that, late in the life of your auto loan, you still owe more money to your car financing organization than the vehicle is now worth.

Here’s an example. You buy a $30,000 car with $2,500 down, finance it over a common 60-month term, but in three years you decide you want to sell it. Your payoff on the auto loan is $18,000, but your car is only worth $15,000 at this time. This means you are $3,000 upside-down, because in order to pay off your original auto loan, you would need to make up the difference between what your car is worth ($15,000) and what the car loan payoff is ($18,000).
Being upside-down in an auto loan isn’t all that uncommon these days, although there are no published industry figures. Jim Moynes, vice president, automotive marketing for Ford Motor Credit Company, one of the world’s largest auto finance companies, says that “negative equity,” or being upside-down, depends to a great extent on how you structured your purchase in the first place.
He says, “A large portion of the vehicle’s depreciation occurs in the first two to three years of ownership, regardless of make or model. Loans amortize over the term of the loan you took out, and typically there’s a period there where the depreciation outpaces the amortization. When you’re in that period, you’re in a position where you have negative equity. Once your amortization crosses over that line of the depreciation curve, which typically flattens out as the vehicle gets older, you get back to equity.”

If you think that you’ve been the victim of an auto financing scam you should immediately report the car dealership to your state’s Attorney General office. You should also contact the Better Business Bureau to report a dishonest dealership. You can also try to find better financing and get a better interest rate as fast as you can. Going from 18% to 9% could mean savings of hundreds of dollars a month and save you thousands over the term of the loan.

It never ceases to amaze us how cunning some car dealers are — they seem to constantly think of new ways to take advantage of car buyers. One of the most recent car dealer ploys is Spot Delivery.

Spot Delivery: You’ve chosen the car you want, filled out all the paperwork (including the car loan application with the car dealer’s finance department). The car dealer tells you that although your loan hasn’t been “officially” approved yet, you can drive the car home anyway.

Don’t.

Here’s what can happen if you do: A few days later, you’ll get a call from the car dealership saying your loan wasn’t approved at the interest rate you discussed. However, you were approved at a higher rate.

This means that you’ll likely pay thousands of dollars more than you expected.

Further, if you try to call off the deal, the car dealer will either tell you that they already sold your trade-in so you have no options, or they simply will say they’ll sue you if you don’t agree to the new terms.

The worst part is that you probably are stuck, because the loan agreement included a “writ of rescission,” which means that you agreed to pay a higher interest rate if you did not qualify for the loan at the original, agreed-upon rate.

Be careful. And don’t take your new car home from the car dealer until all the i’s are dotted and the t’s are crossed.

Many car dealership customers are unable to pay the entire down payment at the time the purchase contract is signed. Often dealerships will allow the customer to make a down payment in payments (called deferred down payments). Although the vehicle code recognizes these deferred down payments, they must be itemized in the purchase contract, including the amounts and due dates for the deferred payments. Some dealerships, however, will have customers write checks for the deferred down payments and then agree not to deposit the checks until an agreed upon date. The customer is then made to sign a separate agreement that lays out the dates on which the checks will be cashed and additional provisions regarding any returned checks – thus creating additional obligations that are not included in the purchase agreement.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]

A family bought an SUV from a new car dealership. They expected to get a good price, because it was last year’s model and it had 225 miles on it. Everything they were told indicated that the car was “brand new” and it had been taken for a few test drives, which accounted for the miles. Unhappy with having to return the vehicle to the dealership for repeated major repairs, the owner finally took it to an independent mechanic to check a routine problem. The mechanic advised that the vehicle had been involved in a major rollover accident prior to it’s purchase. Investigation revealed that not only had the vehicle been involved in an accident, the vehicle had been stolen and was still listed in the crime computer as a stolen vehicle. The Defendant dealership contested the definition of “new vehicle”, stating that the fact that the vehicle had never been titled, constituted the vehicle as “new”.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]