Son's car loan problem

[JoAnn]

A couple of weeks ago our DS called and said he had bought a 'newer' truck. Traded in a big Dodge truck for a Toyota Tacoma, 2 yo. very clean. Then this week he called me and said that either the loan company or the Used car dealer told him he needed $2500 more, and would get a better interest rate. He told them he didn't have that much. Seems as though the sales man wrote down that Dave made $15 an hour at Publix, when DS told him he makes $10. Now the bank wants more money, because of Dave's hourly pay. Dave did agree to pay them $500 more and get a lower rate, but we don't think this is a done deal yet. They are threatening to come and take the truck back. DH & I think the lying salesman (sort of like a TS salesman) should pay the difference or????? since he is the one who falsified the record. What recourse would our son have? (he is way over 21)

 

[Dave M]

I don't know for sure what the contract says, but that language is probably controlling.

It's almost certainly your son's word against the salesman's word regarding whether your son said $10 vs. $15. But more importantly, since it's likely that your son signed an agreement that includes the $15 rate, the bank should hold your son responsible for including that $15 hourly rate.

Employees of businesses often fill out such contract forms when we are in a face to face meeting with them, but it's our responsibility to check those forms/agreements for accuracy before we sign them.

 

[dougp26364]

Does the dealership still have his old truck? I'd tell them I'm dropping off the new vehicle and coming around to pick my old truck and see what happens. Since the financing wasn't finalized, I think if I were the dealership, I'd be hoping I still had his trade in.

Have your son contact the states AG and see if there's anything that the dealership might have done wrong that can be leveraged against them. The AG might not be able to help but I bet they can point him in the correct direction.

 

[bogey21]

I don't know for sure what the contract says, but that language is probably controlling.

It's almost certainly your son's word against the salesman's word regarding whether your son said $10 vs. $15. But more importantly, since it's likely that your son signed an agreement that includes the $15 rate, the bank should hold your son responsible for including that $15 hourly rate.

Dave is right. Read all the documents carefully including the loan application. Then read them over again and again. After doing so you will know where you stand and what you need to do.

George

 

[PigsDad]

A couple years back the local TV news ran a story on this "scam". Car dealers make a deal w/ a buyer, but in the fine print is says the deal basically is not complete until the credit application is approved by the lending institution. All the buyer is signing originally is a loan application, not the actual loan agreement. In the fine print, it states the terms of the loan are subject to change based on approval.

Of course, by the time the loan is approved, the buyer has been driving around their new vehicle for a week or so, and not eligible to simply return it w/o paying for usage / depreciation / etc. Not to mention that they have already turned in their trade-in vechicle to the dealer, and that may be gone / sold already (and you can bet the contract states that the dealer can do that legally as soon as the buyer turns in the trade-in vehicle).

According to the story, there was very little legal recourse for the buyer since it was all spelled out in the contract (in the fine print, or course). Their suggestion is that when you are getting dealer-sponsored financing, you should never take possession of the vehicle until the loan is finalized. Or better yet, come in with your own financing.

I hope that I am wrong, but it sounds like your DS fell into this trap. You need to read the fine print to see what (if any) recourse he may have.

Kurt

 

[JoAnn]

Thanks for all the advice and suggestions. Our DD (whom Dave lives with) has said there is no paper work that she has seen. She is very willing to 'help' Dave out with the extra money. I'll be talking to him later today or tomorrow.

 

[Mosca]

"Bailment agreements" (what Kurt described) are not legal in some states. When you sign the documents in the dealership, you are not signing loan papers; you are signing an installment sale agreement, between you and the dealership. They in turn assign the contract to someone else. In some states (Pennsylvania, for example), the original installment contract is valid regardless of the dealership's ability to find an assignee.

Or to put it bluntly, the car is his, the loan is theirs, and he shall then make the payments to the dealership instead of to any other financial institution, and under the original terms.

But remember, the law varies from state to state.

 

[krissydee]

this is a typical sales tactic, they give you the truck then ask for more based on you not meeting financing needs, they count on you falling in love with the new car and not wanting to go back to the old one and ponying up the money. I would call their bluff... take it back and get the old truck, I bet they'll work out a deal... if not, then you can always find another truck.

Something very interesting to read is the "Confessions of an Auto Finance Manager", you shouldn't buy another car without reading this first
http://www.edmunds.com/advice/buying/articles/125308/article.html

 

[ondeadlin]

This is the type of situation where the $200 to $400 it will cost to hire an attorney is well worth it. My guess is the problem will quickly be resolved once the attorney looks at the paper work and calls the dealership.

 

[Nancy]

Similar problem

Our son and wife had a similar situation when they purchased their first new car. Sort of a bait and switch. His was a loan with a higher percentage rate. Of course they no longer had his old car and by then he and wife had fallen in love with new car. He's older and wiser now.

Nancy