is this bait and switch or what

April 17, 2009 5:42 PM

I bought a new car. I love it. I negotiated a deal that is fair and that I'm happy with. The dealership just called me and said they can't find financing at the terms we agreed to, and now I have to give the car back or renegotiate the terms. Can this be legal?!

I went into a dealership on Saturday night and made a deal on a car I love. I have had poor credit for a while, it turns out that it's been so long that I've had credit that I now have no FICO score at all.

Now the dealership has called me and told me they can't actually get financing at the terms we agreed to, and we need to renegotiate for more money down and a shorter term. This is unacceptable to me, I already put a hefty chunk of money down. This seems like typical bait and switch to me. We signed a contract -- it's not like I have the right to suddenly say that the terms we agreed to were not going to work for ME.

What are my options here? Has this ever happened to anybody here? Is this even legal?

posted by anonymous to work & money (32 comments total)

This is a scam. Walk away. You'll be suprised how fast they decide to offer you the original terms!!
posted by saradarlin at 5:46 PM on April 17

IANAL but I would review the contract and I would be surprised if there is not a provision covering this very situation. (i.e. there is a provision that states that if financing is not available at the terms you agreed to, that the financing must be renegotiated.

If I were you, I'd call their bluff. Return the car, but not before you get every penny refunded. And that means cash, a cashier's check or credit on the credit card you used.

Then find another dealership, and make sure that the financing is taken care of before you agree to purchase the car.

ON PREVIEW: By calling their bluff, I mean what Saradarlin says.
posted by cjets at 5:48 PM on April 17

What does your contract say with regard to financing?
posted by Majorita at 5:54 PM on April 17

This is an extremely common tactic. They let you keep the car for a bit (it has to be under 10 days) to give you a chance to bond with it, then say you have to come back in and get raked over the coals again. If you really do have no FICO score (please check it yourself; don't take the dealer's word for it), they will likely give you a new loan with extremely bad conditions. Watch out for yourself, and if they really screw you with a high interest rate or a 72 month loan, walk away and get them to refund every penny.
posted by zsazsa at 5:54 PM on April 17

Yes, this is a deliberate scam. It's probably not illegal, as such, but warrants a call to (or a threat to call) your local Better Business Bureau (not that they can do much about it). If you had a trade in that you now can't get back, this scam is called unhorsing. If you know a lawyer in your jurisdiction who'd help you out, or can afford to pay one, it's worth an ask (in any case, a don't-try-this-on-me letter on law firm letterhead probably wouldn't hurt your cause). Short of that, you don't have much choice but to call their bluff and give the car back, then see if you can't find the same deal at another dealership. Giving in and paying more will leave a bad taste in your mouth for a long time.
posted by willpie at 6:01 PM on April 17 [2 favorites has favorites]

[IAAL, but IANYL.] Based upon (and only upon) the information that you have provided, I would agree with Saradarkin and cjets that you should call the dealer's bluff, demand your money--every last dime--and state that you will be returning the car immediately. If the car was brand new when you left the dealership, then they will not want it back and will, if they are smart, honor their original agreement. As it is almost always a safe assumption that car dealers have much more experience with car sales transactions than do car buyers, I would be very skeptical right now if I were you.
posted by applemeat at 6:03 PM on April 17 [3 favorites has favorites]

wow... thanks for your post, I have never heard of this type of dealer scam, they seem to have jumped the shark!

I agree with all of the above comments....take the car back to them, this is not a company that you want to do business with.

Good luck on this... we'll all show up and stand behind you when you do this!
posted by HuronBob at 6:10 PM on April 17

By the way: I'd be inclined to tell them on the phone that you will bring the car back, but they have to have a check ready when you get there, and ask when the check will be ready.

As others have said, they will probably follow through with what they agreed to. But if not, you don't want to sit there "waiting for a check" while someone high pressures you to cough up more money. If the check isn't ready, and they are not going to honor their agreement, leave immediately and tell them to call you when the check is ready.
posted by The Deej at 6:13 PM on April 17 [3 favorites has favorites]

I agree with what's already been said. Make sure they have your check ready and waiting for you - every penny you put down.

As an aside - this is why the car industry is dying. Who wants to go through this is kind of crap?
posted by kbanas at 6:17 PM on April 17 [1 favorite has favorites]

I just googled "car dealer scam" and this page came up -- you're not the only one this has happened to. Their suggestion is to seek other financing to preserve your deal, and report it to the State AG.
posted by katemonster at 6:21 PM on April 17 [3 favorites has favorites]

BTW, it's called the "spot delivery scam" for easier googling.
posted by katemonster at 6:22 PM on April 17

Thanks katemonster. I know that I've heard this story many times before (always a scam) but I could not google it. There was a very similar askmefi post recently but I cannot find it...
posted by saradarlin at 6:33 PM on April 17

Fuckers. This seems to be happening a lot lately, most likely because of the credit crunch. There was another AskMe about it a few weeks back.

What happens is they have to find someone to buy that contract you agreed to. Sometimes it's easy and you know before you leave the dealership. Sometimes, they need more time to find a financier for the terms you agreed to. And apparently in your case, they can't, or at least that's what they are saying.

Read the contract. When you left, they should have gave you a copy of the contracts you signed. It's the giant yellow piece of paper and it's likely folded in the "glove compartment wallet" with your vehicle handbook and all their crappy business cards and pamphlets. What does the contract say on the flip side of the sheet? Specifically look for a provision that says the seller has a right to cancel the contract within X amount of days. It's usually 10 days but make sure they are within their timeframe to cancel. That provision is going to govern this whole thing.

Couple things though:

They can't force you to sign anything else. Do not let them pressure you on this point. They do NOT want that car back because you've put miles on it.

Also, they cannot charge you for mileage on the car. They could try to get you for dings/dents/scratches, but if they do, fight them.

But don't let them push you around. Call their bluff, return the car. Whatever money down or a trade in down, get it all back and tell them the damn check better be there when you get there. Time to be an asshole, unfortunately. And if they give you shit or hedge on the check return, tell them you found this entire process extremely off putting, that your next call is to the state Attorney General, after that the Car Maker Headquarters, and the Better Business Bureau and then hang up on them.

I'd almost guarantee that they'll call you back pretty damn quick asking for another change to find a backer for the contract.
posted by jerseygirl at 6:38 PM on April 17 [1 favorite has favorites]

Not having a FICO score at all sounds weird and unlikely. Check it here - you can sign up for a 30 day trial, get your score free, and cancel in a couple of weeks.
posted by zinfandel at 7:38 PM on April 17

Better yet, go to annualcreditreport.com for your free credit score from 3 companies, no strings attached. This is the government provided report.
posted by idiotfactory at 7:50 PM on April 17

"Sure, I'd be happy to renegotiate. See, the thing is, the terms I agreed to were for a new car. If I negotiate on this car, well, it's already used. So if I was gonna keep this car, it'd have to be on better terms. Otherwise, I'll just take the full amount back for the check and you can have this used car back, and I can keep shopping around. Guess you guys shouldn't have promised something you couldn't deliver."

I mean, you paid more for this car because it was new, but new cars lose a significant chunk of their value just driving off the lot. A new negotiation starts out at the point where that car is already used. Sure, by you, but that's their fault. How much you're willing to alleviate that depends on how they treat you.
posted by klangklangston at 7:54 PM on April 17 [11 favorites has favorites]

Basically the same thing was asked about here -- some good responses there that are worth reading. These guys are all hurting - don't let them screw you over like this.

Did you trade in another car for this one?

Have you checked your FICO score yourself?
posted by barnone at 7:57 PM on April 17

You don't have a FICO score at all? Seems unlikely. Even so, I would call their bluff. I can't imagine a car dealership being like, "Ok, well bring back the car and we'll refund you" instead of giving you your original terms. Do they want to sell cars or not?
posted by fructose at 8:03 PM on April 17

You might want to read this as well, about a whole slew of tricks the financing guys at auto dealerships pull.
posted by TedW at 8:05 PM on April 17

idiotfactory--annualcreditreport.com only provides the reports for free, not the score. You still have to pay or sign up for some credit watch service (cancel within x days) to get the actual scores. There is no government requirement that scores be provided for free.
posted by peanut_mcgillicuty at 8:06 PM on April 17 [1 favorite has favorites]

A) not having a FICO score is totally possible if you have not had any credit cards or loans in a long time (or ever) because there would be nothing for them to base the score on. Once you do get a new loan or credit card, it takes about six months for there to be enough data that a score is generated.

B) annualcreditreport.com gives you your credit report, NOT your score. Though you can confirm via pulling your report if you even have anything on there which would generate a FICO score, so in this instance it would amount to the same thing (assuming you do not in fact have a FICO score).

Finally, this exact same scam happened to me when I was young, had bad credit, and didn't know better. They let me have the brand new car for a week, called and told me to return it because they couldn't get financing, and I ended up with a used car and a 25% interest rate (from the dealership who took the new car back). I remember doing research on it when it happened, and it was called something else, not unhorsing or spot delivery scam, when I looked it up. So it seems to go by lots of different names -- that's how common it is.

If I had it to do over again, knowing then what I know now, I would have gone to my local credit union and secured financing before going to the dealership. Of course it is very hard to give a car back once you've bonded with it; in fact, this incident is what prompted me to clean up my credit. I totally sympathize. Good luck.
posted by rabbitrabbit at 8:20 PM on April 17

A legitimate dealer will secure actual financing at the time of the sale, they would never send you off with the idea you had bought a car that they were actually just loaning you while they shopped around for the deal they said they could get you. The best but hard advice is drive a beater and work on your credit.
posted by nanojath at 8:32 PM on April 17

What everyone above said; I'd also suggest that you tell them that since the mistake was theirs you don't want to deliver the car to them, tell them to come and pick it up from you and they can have when they hand you a cashier's check for the full amount you've paid, plus signed paperwork voiding the deal.
posted by George_Spiggott at 8:41 PM on April 17 [7 favorites has favorites]

This site, Credit Karma lets you check your credit score for free as frequently as you wish, and is perfectly legitimate (as far as I can tell, but judge for yourself).
posted by miscbuff at 8:47 PM on April 17

"You have my address, Mail me the check for my deposit and when it clears, we can make arrangements for you to come and pick up the car."
posted by delmoi at 3:59 AM on April 18 [2 favorites has favorites]

I did a little googling and the catch with Credit Karma seems to be that they're not giving you the "real" FICO score, but a clone based on similar factors. Should be good enough to tell the OP whether he has a score or not though.
posted by Lentrohamsanin at 4:08 AM on April 18

And, if you traded-in a car, demand it back. If they no longer have it, mention "lawyer" "fraud" "felony theft" and "attorney general." Toss in a mention of the local tv news consumer investigation team, too. All businesses love it when a news crew shows up unannounced.
posted by Thorzdad at 5:37 AM on April 18

This thing strikes me as odd.

Every car I've ever purchased that involved financing, I had to wait until it was "funded" before I could take the car home. In other words, the dealer wouldn't release me the car until the finance company either guaranteed payment to the dealer or went ahead and wired the money accordingly to the dealer. The fact that they let you take the car [em]without securing funding[/em] is what makes this weird.

Now - I have seen it before where a buyer had less than stellar credit, and what happened was that the sales contract read one thing, but the financing app/paperwork read something a little different - mainly because the dealer makes more money on the financing side - they get cash incentives for higher interest-rate customers and "lie" a bit to the financier to get the deal done.

Gotta remember that the dealer rarely owns the cars (the new ones, anyway) on the lot - rather, their bank does, and they finance the inventory. They're losing money every single day on a vehicle that sits on the lot more than x-number of days.

So in this case, I wonder if something like that happened: they fudged your credit paperwork to the finance company and got caught. Now they're sweating. All of them.

It's just a guess, but in light of your description, sounds plausible.

And...for what it's worth - if you had enough for a decent down payment, and you have limited credit resources, maybe consider buying a well-maintained but very used car for a LOT less money to minimize your debt exposure and build good credit standing. Just a thought.
posted by Thistledown at 8:08 AM on April 18

Didn't get a chance to read all the other answers but I believe you are entitled to see a copy of any credit report pulled on you by the person pulling it.I would ask them to see it. And call your state's AGand report this. Sounds like a scam to me.
posted by murrey at 9:29 AM on April 18

Please let an admin know the results and have them post it here in a follow-up.
posted by deborah at 8:05 PM on April 18 [1 favorite has favorites]

[This is a followup from the asker.]

After the excellent advice here, I called the dealership on Friday and told them I'd be returning the car, and that they should prepare a cashier's check and have my trade-in ready. They told me they couldn't cut me a check until Monday, but I should come in to talk. I said no way, I'm not interested in negotiating. He continued to try and pressure me to come in, I said I'd see them Monday.

Sunday morning I received a phone call from the dealership telling me to hold tight, they'd try harder to get our original terms approved by a bank, I said, well, good for you.

He said they'd be sending me a letter because of the 10 day window, but I haven't received anything in the mail yet. I can't find anything in my contract about our deal being dependent on financing, or there being a 10 day window in which the dealership has the right to re-negotiate, but I am taking my contract tonight to a local coffeehouse where you can talk to a lawyer for 30 minutes for a small fee, so I know my rights a little more clearly, and they can help me decipher the contract.

I've also contacted the credit union available to me through my company -- and applied for a potentially better loan.

As of Tuesday evening, 10 days will have passed since the original deal's negotiation. I am hoping the lawyer will be able to clarify what my rights are a bit. If I'm still confused tomorrow, I'm insisting on getting my trade-in and my downpayment back and returning the car by Tuesday night. If I do give it back, I will be sure to raise an epic stink -- notifying the BBB, the state attorney general, and any local news organizations who might be interested. This is an obvious scam, and I'm furious about it.

Thanks for all of your help everybody, additional suggestions for moving ahead are more than welcome, I will be sure to report back how this whole thing winds up.

posted by cortex at 2:17 PM on April 20 [2 favorites has favorites]

How's it going?
posted by Maisie Jay at 11:00 PM on April 27