Bought a new car -- can't keep it; can't return it
April 27, 2012 11:27 PM   Subscribe

I've been denied for a car loan retroactively. What are my options? There are complications.

I leased a Honda Civic last Saturday for my son to take to college and was so excited because I thought it meant that my hard work rebuilding my credit over the past 4 years had finally paid off and that my bankruptcy of 2008 was no longer going to be a hard no on any loan I tried to get. My son drove it all this week and then on Wednesday managed to slice his tire on the notoriously pothole filled streets of our city, necessitating a brand new tire. My ex-husband bought him a new tire - not the same brand because the tire store didn't have that tire, because the tire store didn't have that, but one of equal quality.

On Thursday I got a call from my salesperson saying that the dealership needed me to come back in to sign another paper for the bank and that I need to talk to the business manager but that he was out that day but that I needed to talk to him asap. Today, I spoke to the business manager and he told me that my bankruptcy hadn't shown up on the credit check they had done at the dealership, but that honda had run one and it had shown up there and that all they could offer me in terms on financing was some terrible deal where they sold me the car at list price and financed it for 6 years at 7.75%, which ends up with a payment of $100 more than I was planning on paying. This is more than I can afford, and, based on my calculations, more than i would have paid if I had leased for 3 years and then gotten a 2 or 3 year loan to buy the car at the end of the lease.

When I said I didn't want to take the deal, he told me that then they would have to charge me for the mileage my son has incurred and the fact that car was no longer in new condition. This strikes me as extremely unfair in light of the fact that I explicitly asked the finance manager if there were any more steps or if we had a done deal and he told me we had a done deal.

It also seems like the manager is probably bluffing since I don't see exactly how he could get that money from me without taking me to court. However, taking me to court would undo everything I've worked so hard to build up in the last 4 years. In short, I'm panicked, unable to think clearly, don't have enough information and need the rationale thought and experience of the hive mind. Oh! And I have to give them an answer by tomorrow morning because they must have a done deal by the end of the month, which is Monday.

An added stressor is that I work in high-tech and a software product I'm working on is going live Monday so taking time off on Monday to go down to the dealership to deal with this would be looked up unfavorably to say the least and I'm unable to go down there on Saturday because I'm 200 miles away at an ice skating competition with my daughter. They are closed on Sundays so that they may worship the Lord. The dealership is 25 miles from house and 50 miles from my work and I picked them because my sister told me they were the only place that had ever treated her right. Oh, the irony.
posted by robotyoshimi to Work & Money (21 answers total) 1 user marked this as a favorite
this has actually come up a couple times and there was some pretty good advice.
posted by nadawi at 11:46 PM on April 27, 2012

I'm a lawyer, but I'm not your lawyer -- and anyway, this is a very specific field which will vary depending on your location, so you need to speak to a lawyer in your area who deals with consumer law.

But if I can try to give you some general reassurance: the first thing to remember is that you have made a contract with him in the original terms. You presumably signed papers to that effect, and they gave you the car. So don't let them push you into a bullshit deadline. They messed up, so you are in the driver's seat here (sorry about the pun). Stand your ground -- this is not your fault. Take your time, and make any payments under the existing contract while you sort this out.

There might be something in the deal that makes it conditional on a credit check, and that's why you need to speak to a lawyer. But you haven't done anything wrong, and their internal deadlines are not your problem. Again: take your time, and don't let them push you into anything until you are very clear about your rights.
posted by robcorr at 11:48 PM on April 27, 2012 [2 favorites]

IANAL. I've seen many news reports of tactics like that, in general trying to raise the interest rate and/or price a few days after the contract, after the car has been driven, when they can claim it isn't "new" anymore, using various excuses.

If your bankruptcy didn't show on your credit report, how did they find it? It certainly did show on your credit report originally. Check and print all three of your major credit reports right now, free, through the government link through the FTC website. This FTC link gets you to the one and only official free credit report link, and then the commercial companies linked from there will each try to upsell something with their free report - but don't get anything but your free report from each company - do not pay for anything.

If your three free credit reports show the bankruptcy, you will have proof that the dealer is lying. If so, call your State Attorney General office and file a formal consumer complaint.

If this happened to me, I would tell the dealer they can hold to the original deal, or they will give me back my money and take the car back and they're not getting any money for mileage or the tire from me, and I would tell them where to put the car.

But IANAL and this has never happened to me.
posted by caclwmr4 at 12:07 AM on April 28, 2012 [1 favorite]

Wow! Eye Opening. Thanks so much for posting these answers. i couldn't find anything similar on metafilter, but wasn't searching using the right keywords. The tire complicates things in my mind, but I think what I'll do is not go down to the dealer since I'm out of town but stop payment on my down payment, call the dealer and tell them to come get get the car out of my driveway and ignore any blustering or bluffing and get a different car with an independent loan. I originally went with a new car for my son because I wanted a reliable car that could last him 10 years but I've had my eye on a used car that's quite a bit less and I noticed that they've dropped their price in the last two weeks so perhaps this stress may end up for the best. I've got to get up in an hour and so this whole thing has kept me up all night so I really, really appreciate all the good advice and more than that, the calming down. Otherwise, I think I probably would have caved.
posted by robotyoshimi at 12:44 AM on April 28, 2012

I'd be careful with the stop payment as that might seem as if you did not hold up your part of the contract. Just be careful.
posted by Vaike at 12:49 AM on April 28, 2012 [11 favorites]

Good advice - thanks. I'm just concerned they'll keep to pay for what they'll perceive as "damages" to the car. Can they do that?
posted by robotyoshimi at 12:56 AM on April 28, 2012

When I was buying a car and they wanted paperwork but I couldn't make it to the dealership, they'd send someone out to me.
If there really is a deadline, they can send someone to you.

(OTOH, that someone was fairly useless - didn't really understand the paperwork, and couldn't answer questions in much detail.)
posted by -harlequin- at 1:07 AM on April 28, 2012

I would say keep up your payments until you actually take the car back to them. If you break the contract they will feel (and probably legally will be) justified to take the car and try to charge you penalties, hurt your credit score, etc.

Check your contract to see what it says. It'd be a shitty contract that commits you to pay money under various penalties while they can cancel the contract and charge you penalties whenever they want.

The fact that it's no longer new will in fact be expensive for them, and they'll want to charge you a lot to offset that. I think you should offer to give them the car back but make it clear that since you still need to get a car, you can't afford to and have no intention of eating the cost of their mistake. I'd be prepared to negotiate up to some reasonable mileage fees, or a pro-rated month worth of the lease, or something. This seems fair, since your son did get a week worth of use out of the car. However the benefit he got from that is a lot less than the amount they'll want to recoup because of the new->not-new effect. Your goal is to not pay for more than you got, not what it cost them.

Car rental places don't charge extra when you wind up renting a new car for a week.
posted by aubilenon at 1:23 AM on April 28, 2012

When I say give them the car back, I mean for a full refund.
posted by aubilenon at 1:24 AM on April 28, 2012

I'm just concerned they'll keep to pay for what they'll perceive as "damages" to the car.

It really is a bad idea to replace only one tire with a different model. Both front tires need to match. Both back tires need to match. Your ex-husband should've gone to a different tire store. But, you need to keep your eye on the ball here. The cost of the tire is nothing next to the thousands of extra dollars the dealer wants you to pay for the car. Like robcorr wrote, you have the upper hand so long as you are abiding by the terms of the original contract. Stopping payment would only strengthen the dealer's hand. The tire is a distraction.

Get a copy of Don't Get Taken Every Time and read it. Among many other useful things, you will learn that a problematic credit history is like a sign around your neck saying "take advantage of me." Scummier dealers know that someone in your position is going to be nervous about getting a loan and nervous about further damaging their credit, and thus much more willing to accept high interest rates and other bad terms because they assume that they have no other options. Do not assume the dealer is being honest or has your best interests at heart; neither is likely to be true. Fake deadlines (OMG you have to come in and sign this ASAP) are just another tactic used to get you to act emotionally instead of rationally.
posted by jon1270 at 4:23 AM on April 28, 2012 [4 favorites]


If you can't be there on Monday, I would send them a priority mail certified letter with a return receipt requested that states that you will fulfill the original contract or return the car to them, but you will not enter into a different contract for that car. Make any payments that you are required to make under the existing contract. Document everything that you do and all communications with the dealer, including writing down everything that has happened already with dates, times and names of people you spoke to, everything you can remember. If they take the car back and try to keep part of your down payment, you might have to take them to small claims court to get it back. That's a lot easier if you have documentation.
posted by jefeweiss at 4:24 AM on April 28, 2012 [1 favorite]

I'd be prepared to negotiate up to some reasonable mileage fees, or a pro-rated month worth of the lease, or something. This seems fair, since your son did get a week worth of use out of the car.

Car dealers let people test drive cars for a week all the time. You shouldn't have to pay anything.

I like the suggestion up thread that if you return the car, make them come get it, and tell them exactly what they need to have (cashiers check for full amount you paid, etc.). Have another car parked behind their car and only move it once they've satisfied your demands.
posted by jayder at 6:02 AM on April 28, 2012

(or maybe that suggestion was in another thread.)
posted by jayder at 6:03 AM on April 28, 2012

Car dealers let people test drive cars for a week all the time. You shouldn't have to pay anything.

When I bought my last car (coincidentally a Honda, too) I ran into something like this. They had two of the model I wanted with the options I wanted; one had 600 miles on it and the other almost zero. They told me the one with 600 miles had been driven by the owner and never titled and I replied that unless they wanted to come off the price a little I would take the one with no miles on it. So unless your son put an inordinate number of miles on it and/or a title has been issued, they will still sell that car as a new one. Don't worry about that part of your situation.
posted by TedW at 6:45 AM on April 28, 2012

Grrrrrrrrrrrrrrrrr this same thing happened to us at a Honda dealership.

Good luck. They know you're vulnerable and likely to take any deal that will give you safe, reliable wheels. I sincerely hope competent legal advice advises you to tell them to go fuck themselves.
posted by spikeleemajortomdickandharryconnickjrmints at 6:56 AM on April 28, 2012

Ugh. This is a well-known tactic called "yo yo financing." I seriously doubt they did not see the bankruptcy on your credit report. Without seeing your contract though, it is impossible for anyone here to tell if you are liable for mileage and damages.

You might want to report this to the FTC and the CFPB.
posted by yarly at 7:39 AM on April 28, 2012 [2 favorites]

Next phone call, very calmly suggest that you simply don't understand how there was any confusion over your credit reports as you have them in front of you and they look accurate. Remind them that they have a contract with you. And let them know that because this falls into contract law that you have contacted a lawyer and the state's attorney general to look into the issue. Then hang up the phone and please do those things -- you have worked hard and it's worth it to you to get this resolved. Because, here's the thing: if you un-do this deal, then what? Getting the proper counsel now will help you go forward with a better understanding of your future options.

And sideline the tire issue. I think it would be a good idea to take the car in to a second tire shop and get their opinion on whether the tire is truly equivalent. If it's not, suck it up and get that fixed. You don't want that silly issue hanging over the deal. And make sure your son knows that this isn't "his" wheels -- it belongs to the dealership. He's on the hook for any issues when it comes time to return what is, essentially, a rental car.

Lastly, take a deep breath. If you have to un-do this deal, it's not back to square one. There are other options out there for getting your son a car. You will be able to figure something out. I know it is so frustrating and demoralizing but do your best to not let that muddy your thinking. Bankruptcy happens and it doesn't make you a bad person unworthy of ethical dealings. My husband and I once leased a car, trading in two cars to get it. We picked it up Friday, drove it all over the place on that weekend and then he got laid off from his job on Monday. They hadn't processed our check yet and we had to call them up and un-do the deal. What took an entire day to do, took ten minutes to un-do. We dropped off the car, they handed us the keys and un-cashed check and we were off. It was embarrassing but, in retrospect, the lease deal wasn't great and we got more when we sold those cars later. Best of luck to you.
posted by amanda at 7:39 AM on April 28, 2012 [1 favorite]

You know, now that I think of it and as an additional anecdote, it happened to a friend of mine as well. It was a Honda as well. I know he still has the car, think he kept it with the original contract. You might be able to google some support from other people. It might help you raise a stink with them.

(and I loove my Honda Element. This makes me sad.)
posted by Vaike at 8:35 AM on April 28, 2012

I have heard this before from a friend. They are trying to screw you, because they think they can get away with it. Let them know that you will either keep the car with the original agreement, or they can come to your house and take it back for a full refund, and there are no other options. If they refuse, tell them that you have no other choice but to report them to the Better Business Bureau and that you will be consulting a lawyer. This will likely get them to shut up about it, and if not, those are the things you should be doing anyway. I would not mention the tire in any way shape or form.

Car dealers are hired for two qualifications: Being able to sweet talk the people who need to be sweet talked, and being able to strong arm the people who need to be strong armed. They are trying to do this to you purely to make a buck at your expense. Don't let them do it.

Whatever you do, though, keep professional, and keep up with all of your payments. Always be polite and don't ever mouth off to them. You don't want any of them to try to make this a personal vendetta against you, because they have a lot more experience with this kind of thing than you do. If you stick to your guns but are nice about it, at some point they will likely just give up and move on to someone else.
posted by markblasco at 9:21 AM on April 28, 2012

When I bought a new car last month late on a Saturday evening I signed something that very clearly stated I would return the car on demand if Toyota did not fund the loan on Monday. And the finance guy at the dealer was very careful to make sure I understood they could ask for the car back. I have good credit, so there was zero chance that Toyota would not fund the loan. If your dealer didn't do something similar it tells me that they they are either incompetent, or were planning something like this. I have a very hard time believing that this took a week.

Review your paperwork - I would think agreeing to return the car if a loan falls through is fairly standard and you probably did sign something to that effect. However, many states have some fairly specific laws consumer protection laws in place specific to car sales. The dealer pushes hundreds of car loans a month to his sources. Even if Honda really did fail to fund it, the finance dealer should be able to twist the arm of a loan vendor to match the deal, or something very close.
posted by COD at 4:14 PM on April 28, 2012


This is the sort of scene where early missteps can mess with your legal rights. You really need a consumer lawyer to advise you about things like what to do with the car (as in, the physical car), etc. I would call your state bar's lawyer referral service (they all have one), get the number for someone who does consumer law, and at least get a phone consultation where these immediate "what do I do now, under time pressure" questions get answered. (And the answer may be "actually, you're not under time pressure, they're bluffing -- but you can't know this until you get competent legal advice.) Usually these preliminary consultations ate cheap, much cheaper than screwing up here would be.

(I am a lawyer, but, obviously, not YOUR lawyer.)
posted by paultopia at 10:20 PM on April 29, 2012 [1 favorite]

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