Dealer Fraud

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.

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.

• Remember that if you have signed car purchase papers, you own the car, regardless of whether the vehicle has been financed.
• Your credit was good or the dealer would not have delivered the car to you at the price you agreed to pay
• A finance document showing payments, deposit, interest rate and other financial items is a binding contract, giving you specific legal rights.
• You own the car subject to making payments only. The dealer cannot change that once you take possession.
• Keep all copies of your paperwork and anything else associated with the sale (including calendars, photographs, advertisements). If the finance manager asks for your papers at any time for any reason, refuse! Keep these documents in a safe place, not the car.
• If you are called back to the dealership to sign additional papers, either do not go or do so in a different car than the one you bought.
• Have a friend or spouse drive you and witness whatever is being told to you. This will prevent the dealer from taking your car as hostage, an all too common happening.
• If a dispute arises with the dealer over the contract and the dealer demands the car is returned, park it in a garage or remote location until the matter is resolved, to prevent it from being taken against your wishes.
• Put together a complete timeline of everything that happened from the time you thought of purchasing the car until the car was taken away. Try to remember specific names of dealership personnel and any statements that were made to you during conversations with the sales and finance staff.
• Keep track of all monies you had invested into the purchase, including registration, insurance, down payment and trade. Never pay cash and always get a receipt!

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