Dishonest car dealers might fiddle with your financing as a way to jack up their profits. The most popular way of this car scam involves calling back car buyers into the dealership a week or so after purchasing a car. Once you’re back, the car dealer tries to renegotiate the interest rate based on whether you buy extra services, accessories or warranties. They might also try to focus on the amount of the monthly payment to divert attention from the fact that the total amount being financed has gone up. Another variation of this scam involves dealers letting you drive off the lot without finalizing the loan papers, promising that they’ll work it out. But when they call after several days, the terms of the loan have changed or the monthly payments are more than the buyer can afford, which opens the door for the dealer to “refinance” the vehicle and increase his/her profits.
Warning Signs
Dealers who offer to let you take a car home but don’t finalize the loan terms might not have your best interests at heart, especially if you have already agreed to leave your trade-in with them. If you get a call about a problem with a loan several days after signing an agreement, be suspicious. Also, a dealer shouldn’t lower or increase the loan interest rate based on whether you’ll buy extra warranties or dealer services.
How to Protect Yourself?
Before going to a dealership, line up your own financing. Compare the interest rate of the loan you already have with what the dealer offers and go with whichever one is better. When negotiating with car dealers, it is recommended to focus on the total cost of the car, not the monthly payment. Dealers may sometimes monkey around with the total amount being financed if you’re too focused on the monthly payment.
If you are already involved in such a car scam, try to find an experineced dealer fraud attorney to asset your rights.
Hello,
I think I have been financed scammed from a dealer and dont really know what to do? I traded-in my vehicle that i currently owe on and when I traded in my car they were suppose to pay it off and tack on the negative balance onto my current loan. My trade car was never paid off, and I have the bank currently calling me trying to get me to pay for a car that I no longer have. The dealership is finally trying to get a hold of me now to get this resolved because the bank has threatened to call the police to get the vehicle I traded in back. The dealership was un-able to get me a loan and now they are telling me that they sent me a letter 10 days after I purchased the car. Which I never received. I was reading my contract and there is a section on the back that states that the seller has the right to cancel. Am I in a screwed position, If I cant get a co-signer I get my old car back that I dont have the money to pay off for the bank so it gets repo, and my credit is screwed, So I feel like I’m screwed no matter what I do, any suggestions ? also I purchased the car back on aug.8th and it is not 11-11-09
Thank you for the comment. Please call my office in the morning to discuss your options. I would first request that the dealership provides some kind of evidence that they notified you within ten days of the initial deal. If they sent you a letter on the tenth day then that letter would not even get to you in time. Let’s discuss when you call. 818.990.0418. If the notice was after the ten days then the dealership has to honor the contract and payoff the loan on your trade-in.
I recently purchased a car and then was told that they could not get me financed. I had to return the car which I did. They have not returned my deposit and are now calling me to tell me that they have found financing and that I can pick up the car. There is no change in the original terms in fact they want me to act as if they never asked for the car back. Please advise
In California the dealerships reserve the right to rescind the sales agreement within ten days of the sale if they are unable to get financing for the buyer. After the ten days they are obligated to honor the terms of the loan. If you are asked to return after the ten days then it is up to you do decide if you want to do so or not. Once the vehicle is returned you should be given a full refund and release of liability documents indicating that you have transferred possession and ownership back to the dealership. In your case if they have not processed the release of liability documents they might claim that they never took your vehicle back or that you returned it for some other reason. If you want the car the solution is simple – go pick it up. If you no longer want the car tell them so and get a release of liability form from them. However if they are shady they might insist that you are still obligated to take the car and make the payments. In reality you are not but on paper you might be if they never properly documented your return. These cases are common and very frustrating because there is limited potential to getting money from the dealership to pay attorney's fees if we get involved. Thus if we were to handle this matter for you it would costs you directly out of your pocket (something we try to avoid in dealer fraud cases). Decide what you rather do (take back the car or leave it), then inform them so and if they do not cooperate then call my office. Thank you and best of luck.
- Hovanes Margarian, Attorney At Law
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