Fraudulent Practice: Rewritten Contract
Sometimes a consumer will not initially qualify for financing based on the terms of the first contract. In order for the customer to qualify for a new loan, he/she may be required to increase a down payment or APR for the vehicle. In this case, the car buyer is required to go back to the dealership and sign a second contract with updated terms, but the car dealer backdates the second contract with the date of the first contract. This is a common fraudulent practice used by most dealers when the customer is being charged interest for a time period in which the contract is not yet in effect.
This dealer fraudulent practice is known as backdating of the sales contract or rewritten contracts. Often car dealers don’t inform consumers that they do not have to sign a second contract. Car buyers are not aware that it’s a better option to simply cancel the contract and return the new vehicle. If you choose to cancel the contract the dealer is required to refund the down payment and trade-in vehicle.