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My daughter recently purchased a car from a dealer, trading in her car as down payment. Apparently, prior to the sale, the dealer was having difficulties securing a loan so he asked my daughter if she had any other income. She told the dealer that she gets sales commisions but they are sporadic and not guaranteed income. She told him that it is usually under $20.00 per week... maybe a bit more at Christmas time.

Based on this information, the dealer raised her yearly income by $8000.00. They secured a loan. After several weeks my daughter received a call from the dealer requesting a copy of her W-2 (she submitted a months worth of pay stubs at the time of the sale) The dealer said that the income didn't match the amount on her paystubs. The original loan was refused/didn't go through and now they are trying unsuccessfully to secure her another loan (with a different company)using her correct income.

We spoke to the dealer today and they seem to be stalling. . I asked him what would happen if they couldn't secure financing the credit manager said that she would get her car back. When I asked him directly if they still had the car she traded in he wouldn't answer.

What can she do?

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That's because they probably already sold the car. This "sign and drive" scam is quickly being shut down state by state - but not fast enough. They put you into a vehicle with NO guarantee it's going to be yours, and they sell your trade. Then, they TRY to make the financing work - either by drowning you in inquiries, or by (as in this case) commit fraud.

The reason why the dealership is hesitating is because they screwed up bigtime.

I would suggest bringing your state Attorney General in on the matter.

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Yes definitely is a fraud!!! Doc is right, get in touch with your Atty. General, and let your state's antitrust division via the Atty. General take them on. They probably also added many fees and unneccessary warranty that will expire the same time the original warranty expires. Good Luck in getting this problem solved. BTW how much did they allow her for her trade in?

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Not to mention the fact that your daughter is driving a vehicle that is not legally hers - which means if anything happens to it, you're going to owe the dealership $ for damaging what is still legally their property....

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Thanks for your help Doc Don and NativeChild. The dealer is stalling telling my daughter that they need a few days to "get the paperwork back from the bank" before they can do anything. They gave her $1500 trade in value for her car. They charged her $500.00 for some type of insurance. What a mess this is!!

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Which is why many starts are finally getting around to making this practice illegal. Imagine how many consumers there are who are now 1) out of a new car they thought they had financing for and 2) there old mode of transportation because the dealership already sold it to a wholesaler.

DO NOT let them get away with this - the only way you can help make a difference is if you file a formal complaint against them with your state AG.

They committed fraud on 2 levels here - also, there's no "paperwork" to get back from the bank - it's all faxed over to the bank - the dealership has the original docs. What they're probably trying to do is get your daughter's car back.

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I just noticed this on the back of the purchasers agreement there is something called a "Spot Delivery Agreement". Is says that the dealer is allowing the purchaser to take possession of the vehicle even though financing has not been finalized. It also states that if the dealer cannot obtain third party financing approval within 10 days of the date of the agreement the purchaser has to immediately return the vehicle or pay the dealer the balance in full.

Does this change anything?

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Thank you. It's called "Spot Delivery". That's what I meant to say. :oops:

Some examples of where "Spot Delivery" is heading....

Arizona AG's office on "Spot Delivery":

http://www.azag.gov/press_releases/may/2004/052504b.html

State of Michigan consumer info on spot delivery:

http://www.michigan.gov/documents/cis_ofis_spotdeli_23752_7.pdf

South Carolina Dept. of Consumer Affairs:

http://www.state.sc.us/consumer/material/news/consumeralert/spotdelivery.PDF

New Hampshire Dept. of Justice:

http://doj.nh.gov/consumer/sourcebook/autos_new.html

What doesn't change is you were scammed. The salesperson tried to defraud the bank. Your daughter's car may be gone. Somebody's credit is taking a dive while they scramble to "make the sale".

Just file a formal complaint with your state AG. You're not going to get anywhere taking on the dealership by yourself.

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I found out that it may take up to 90 days to get a response from the Attorney Generals Office once a complaint is filed. In the meantime my daughter, as you pointed out, is driving a car that she doesn't own and is responsible to the dealer for any damage etc.

What is she supposed to do with the car in the meantime?

Also......do we confront the dealer with the information we have to try to force their hand? Insist that they take the car back? I doubt that they can return her trade in because I think they have sold it. Assuming they paid her loan off ... shouldn't they give her back the amount they allowed her for trade in? ($1500.00) At this point they own her trade in and she owns nothing.

In all the years I have purchased cars (I lived in NY not OH) I have never seen such nasty dealings before.

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Take the car back, and state the matter is being forwarded to your State Attorney General.

The salesperson committed FRAUD by making that erroneous claim to the bank. That's serious stuff.

The deal was a FRAUD. Please read the links I posted for you.

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Thanks Doc.....I did read the links that you posted. After being at the car dealer for 3 hours today they took back the car she "purchased", gave her a free rental car until they get her trade in back. Apparently they "wholesaled" her car. It is on a used car dealers lot somewhere for sale! They haven't paid her loan off on this car yet (we checked) so how can they sell it?? Naturally, I couldn't get a straight answer out the manager of the dealership.

He was questioning my daughter trying to get her to admit that she mislead them in regards to her income. He pulled out a paper that my daughter never received a copy of where her monthly income was altered. She didn't alter it.....they did. I told him that without her initialing the "change" it isn't valid. Not sure if I was right on that but that's what I said. I stopped him dead in his tracks and told him not to go there. I told them that THEY committed fraud and not to even try to blame my daughter.

Although this deal seemed very fishy...without your help we wouldn't have known that they had actually committed fraud. I can't thank you and Nativechild enough.

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Sim thing happened to me @ Honda. I stopped in late in the evening test drove a car, filled out an app. The guy came back and said I can get you approved @ 3. something or other. That raised a flag with me because at the time my credit was down in the 420-450's??? So as I was signing I came across the " Sign here drive tonight, finance tomorrow contract " and I asked what would happen if they couldn't get my financed at the already discussed interest rate.. I wanted to know if I would get a call tomorrow saying my rate is 19.00%...

He said

" We aren't like here, we are honest people "

I said well.. I would like to just stop in tomorrow once the financing is all arranged and I will pick the car up then.

The next day I called and they said they couldn't get me financed at the 3.x rate thru Honda America. So I said well then I am not interested. Luckily I did not sign that paper and take the car. BE VERY CAREFUL!!!!

To my dismay they continued to send my app to every friggin finance company on the planet.. 7 inquiries in total.. Dropped my score another 20 points! Oh well.. better then have a new car with a 35% interest rate.

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  • 1 month later...

Yes this prsctice is called in the car world "spotting", and believe it or not it happens all the time. I work for a high risk financing car dealership, we finance our own cars and report. I have customers all the time who have been caught up in the spotting fiasco. The thing is, financing is generally never secured in that short of time, it usually takes a day or two-BEWARE!!!!

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Same thing happened to my sister in Savannah, GA. She drove the car home on Friday, and on Monday the dealer said they couldn't secure financing. Thankfully, she didn't have a trade-in so she just took the car back. Still, it wasn't right because she got attached to the car. It was dishonest, cruel and fraudulent to pull something like that, and yes, it happens alot.

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