Deal Isn't Done
Date: Mar 28, 2005
Contributor: Lilia Silverberg
Car Buyers Get Keys, But Deal Isn't Done
Lawsuits, Bills Target Dealer-Arranged Loans
After Maggie Young drove off a Damascus auto dealer's lot with a Chevrolet Silverado in July 2003, she learned that her dealer-arranged financing fell through, presumably because of her less-than-perfect credit history.
The dealership, which had already sold her trade-in, demanded she return the 2000 Chevy or find financing elsewhere. When she did neither, it repossessed the truck, towing it away in November 2003 from the parking lot of the Mount Airy Safeway where Young is a cashier.
"They gave us the keys and let us drive away" with the car, said Young, who remains locked in a legal battle with the dealer. "They told us it was a done deal."
For decades, dealer-arranged financing has helped fuel automobile ownership by making the car-buying process more convenient and by promoting sales with low- and even no-interest loans.
But cases like Young's show the other side of the process and demonstrate what consumer advocates say is persistent confusion among consumers about how auto financing works and when the transactions that put them in new cars are actually complete.
Though many customers assume the process is finished once they fill out the paperwork, sign a contract and accept on-the-spot delivery of the vehicle, that is only an intermediate step. The dealer must still send the customer's financial information to a bank or lending agency, and the transaction is not complete until the lender has approved it.
Though that can happen almost immediately in the cases of people with clean credit reports or with dealers wired directly into a lender's computer system, some deals can take days or weeks to be completed.
Meanwhile, buyers who drive away in their dream cars can be subject to a rude surprise, particularly if their job status, income or credit record falls short. They may fail to be a "qualified buyer" for purposes of the low promotional rates that car companies advertise, and thus be confronted with higher interest charges, or they might be rejected outright and forced to return the car.
Such cases have spurred dozens of lawsuits and regulations in recent years, including legislation before the Maryland Senate that would require dealers to provide better disclosure about financing terms. Consumer advocates say tight competition in the auto industry may exacerbate the problem because salespeople want to push through as many deals as possible.
"For the low-income person, the effects can be devastating" if transportation or a trade-in vehicle is lost or repossession is added to a credit record, said James W. Speer, a staff attorney at the Virginia Poverty Law Center. "They lose days at work, their already poor credit gets worse, and their finances unravel. . . . They're living on the edge, and it doesn't take much to push them over."
For more information relating to "Deal Isn't Done", please visit our Deal Isn't Done page.
FREE LEMON SEARCH -
LEMON LAW BASICS -
STATE LEMON LAWS LEMON
ABOUT VIN NUMBERS -
LEMON BUYING TIPS
LAW HELP -
LEMON RESOURCES - ABOUT
BOOKMARK US - RESOURCES
© '02 Free Lemon Search.net