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Supreme court upholds congresses intent to rip off consumers


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Supreme court upholds congresses intent to rip off consumers on auto loans at dealers.


Until Truth in Lending Act gets rewritten it is advisable to NEVER get a loan at a new car dealer and NEVER NEVER let them spot you a car.

Detroit Free Press, Dec 1, 2004

Penalties capped on car dealerships

Supreme Court: $1,000 is limit for shady lending

"The new ruling limits only the amount dealers and banks might have to pay to individuals as a penalty for violating the federal lending law in a transaction. It does not cap actual damages consumers might suffer or those alleged in class actions. . . .

"You still have the same recourse if they violate the Truth in Lending Act, but the amount of the penalty is a slap on the wrist," Rubin said. "It's unfortunate for everybody who buys a car or participates in the credit culture." . . . .

"The car selling business is the only business where caveat emptor," or buyer beware, "still reigns," Rubin said. "It doesn't make any sense that we put up with this. People know there are dishonest car dealers out there. It's time to step in and do away with the dishonesty.""


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Here is more on the case:


It looks like this ruling applies to both new and used vehicles. Under the law the penalties for ripping off a consumer when a consumer gets direct financing for purchasing a vehicle are very weak. So basically the law will not adequately help out a consumer. So if an unscrupulous dealership wants to take advantage of a consumer, they can do so with little worry of financial ruin.

Now where this is really a problem is when consumers with less than stellar credit have a car SPOTTED to them. They drive off the lot with the new car and perhaps leave the trade in car at the lot. A few days later the dealer calls and lets them know that the original lender would not provide financing and they the customer needs to come in a and sign a different and less favorable contract.

A consumer may not know what interest rate they could have gotten elsewhere like a credit union or a bank. They may also end up signing a contract for a loan that in not a SIMPLE INTEREST loan. The types of loans have early pay off penalties. Some loans are also governed by the rule if 78's. (http://www.obre.state.il.us/CONSUMER/Tips/RULEOF78.HTM ). The third area that a consumer can get in trouble in is added on services or guarantees.

In situations where a consumer has perfect credit and is dead set on taking advantage of 0% financing and is capable of reading and understanding the contract, then a dealership might be a good place to get a deal. Just remember that the legal protections are scant compared to other types of transactions like using a credit card or purchasing a house.

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