Dealer Fraud

Many customers are unable to pay the entire down payment at the time the purchase contract is signed. Dealerships will allow customers to make down payments in payments (called deferred down payments). The code recognizes these types of payments and requires that deferred down payments be itemized, including the amount and date due for the deferred down payments. However, rather than disclosing deferred down payments are required by the code, dealerships will have customers write checks for the deferred down payments and then agree not the deposit the checks until an agreed upon date. As part of this transaction, customers are made to sign a hold check agreements that states what date the checks will be cashed and also have additional provisions regarding any returned checks, thus creating obligations that are not included in the single document (purchase agreement.)

Some car dealers have been known to call customers days or even weeks after they signed a purchase agreement to tell them that the financing fell through. “It’s a crock, they can check your financing in 15 minutes.”

The goal of these unscrupulous dealers often is to put you into a more expensive car — another red flag. “If you didn’t qualify for $299 per month, how would you qualify for $420?” To avoid this, you may want to have financing in hand before you head to the car dealer.

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

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]

The Automobile Sales Finance Act (AFSA) provides that all obligations of both parties in a transaction must be contained in a single document (which explains why purchase agreements are so long in the auto industry). Often, however, dealerships will have customers sign additional documents, such as trade-in forms stating that the customer agrees to pay any difference between the value of their trade-in vehicle and the amount owed on that vehicle. Or, the dealership will agree to make payments on a trade-in vehicle but not include the trade-in vehicle in the purchase agreement. Another example is a “hold check agreement” whereby the customer agrees to pay additional money towards the down payment on a later date. Each of these documents violates the one document rule.