Watch out for this dirty dealer deed
Most dealers are on the up-and-up. They sense the stiff competition from online car buying services and have cleaned up their act for the most part. This post isn’t about the good guys, however.
Learn how to recognize a yo-yo sale, the go-to dirty trick for sleazy car dealers.
It finally happened. Your old car reached the point of no return. The cost of repairs exceeds your car’s value…by a few thousand dollars, no less. You’re tight on cash, but you also have a postcard from a local dealer running a “we can help anyone!” campaign.
You found a car that you love. It’s perfect. Not too expensive, but it’s not a beater, either. You sign on the dotted line and take the car home. The dealer assures you they will be able to find financing at the terms you negotiated with them. Cool. You hop in your new car and head home. Your #ICantBelieveItsMine selfie hits your social media feeds within seconds.
Not so fast. A few days or even a few weeks later, the dealer calls. They were unable to fund the loan at the terms and interest rate you agreed on when you got the car. You’ll need to go back in and renegotiate the loan.
Even worse, the dealer informs you your deposit is non-refundable, and/or your trade-in has already been sold. They’re hoping you’ll back down and either walk away altogether or accept their new loan at a much higher rate than you can afford.
Dealer Deeds Done Dirt Cheap
What happened? Chances are, the dealer had you sign a conditional sale form instead of a final sales agreement. A conditional sale essentially means that the car is yours on the condition the dealer is able to find financing for you, or that you are able to secure your own financing.
There’s a ton of excitement when you’re closing on a car. Mountains of paperwork, insurance forms, and fending off the finance rep. who insists you need clear coating and other extras you really don’t need.
You found a car that you love, you want out of the dealership ASAP and you’re ready to hit the road. It’s a shock to receive that “bad news” phone call a week or so later.
Your recourse: You have the option of securing your own financing, either through a bank or a credit union. An ethical dealer will cancel the deal outright, without strong-arming you into accepting the “new” loan at a much higher rate.
If you’re not able to secure your own financing, you just might have to walk away. You do have the right to have your deposit/down payment refunded. It might be tougher to get your tax, title, and registration fees refunded. A dirty dealer will put up a fight, so be prepared to dig in and advocate for yourself.
At the very least, it will be a hassle to return the car and either secure your own financing or walk away altogether. At the very worst, the dealer had defrauded you and you do have legal recourse. Some states such as California have the Car Buyer’s Bill of Rights.
Unfortunately, if you have little to no credit, poor credit, are low-income, or have just started a new job, you’re more at risk for yo-yo sales scams. If the dealer manages to rip you off even when you’ve asked the right questions and have done your homework, seek legal recourse.
Contact your local Legal Aid chapter, or contact the Bar Association office in your county and ask for an attorney referral.
You may not have much money, but you worked hard for what you do have. Don’t let anyone scam you out of money that is rightfully yours.