Can dealership's finance dept try to change loan terms after sale? (pay, rate)
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A relative has contacted me in a panic and I don't know the answer so am asking here... She bought a new car at a dealership about a month ago, had a trade-in, agreed to interest rate, signed paperwork, etc. Their finance department contacted her this weekend saying they couldn't offer her that interest rate and said it would be 3 points higher. Nothing has changed with her credit, income, employment. I assume the answer is she needs to read her contract again, but this doesn't sound ordinary or legal. Is it? I assume she can cancel the deal and give the car back, but who knows where her old car she gave them is at this point...
If the contract SHE SIGNED says they can do that, then they can do that.
If the contract SHE SIGNED says she can't cancel and is bound by the higher interest rate, then she can't cancel and must pay the higher interest rate.
Read the contract. (And read every word of contracts before signing!)
Also, since this has happened, tell her in the future to read the fine print on any offer she receives in the mail; credit card applications, cell phone offers, cable TV offers, etc. These things sound like a good deal.*
*But you read the fine print and it is not so good of a deal!
Contracts can have very clever wording I actually had a similar situation a few years back dealership had me sign all the paper work on a brand new 07 Dodge Ram 1 month later got the call that they couldn't get me approved for the amount needed and would have to bring the truck back and find something in the 2-3 year old range for 10k less. I tried fighting it but the contract was worded so they had wiggle room
She's not finding any wording to that effect in re-reading the contract a couple of times, and I've just never heard of such of thing, who in the world would agree to having their interest rate go up after purchase?? I guess her only options are for them to write up a new contract with a lower price to accommodate the change in interest rate, or their contract is null and void and she should return the car. I can't imagine a dealership would want to put themselves in a position to receive a new car back and also compensate her for her trade-in, which the dealership likely already sold.
I'd have her ask the dealership where it is in the contract that they believe they can change the rate.
If there's nothing in the contract and/or they're hemming and hawing, I'm thinking your State Attorney General may be worth talking to. They have a customer complaints area.
Have her keep records of any communications or otherwise with that dealer. She'll want to provide that to the AG's office when she files the complaint.
This is a common problem when you finance through a dealership rather than arranging financing before you go in.
Dealers will often get you on the hook with a rate that they think they can get for you, but if they can't get that rate they will come back and expect you to pay a higher rate. Sometimes they can, sometimes they can't, it depends on the terms of the sale some of which are fairly ambiguous and always favor the dealership since they write up the contract.
One thing she can do is go out and find a bank that will loan her the money at a rate she's comfortable with and tell the dealership she's just going to write a check for the car. If the dealer stands to make anything on the financing they might work with her on the price to make things work out even.
Most likely in order to 'make the sale" they got in a hurry and figured up the wrong interest rate based on a credit report. Later the lender said NO that they would require a higher rate. The car lot doent always control what lenders may do because their goal is to refer people to lenders to get them financed . The sale is all that matters to them.The car lot is not the place to have the legal issues of the contract explained.
See if you can find a pro-bono lawyer - to look over the contract.
If there's nothing in there that claims that they can take the vehicle back, I don't see why she should have to give it back. If they agreed to a price and financing terms, and she signed to those and she is making that payment, the dealership is on the hook for anything above/beyond -- unless their contract specifically gives them the ability to take the car back in this sort of situation.
Basically, I wouldn't turn the car in without restitution over/beyond (at least a token amount) what they took from her.
And no, there's no way she HAS to agree to a higher interest rate (again - unless its there in the contract). She would probably have to go in and sign new documents. Which of course she should refuse to do.
This is a horrible dealership, by the way - not the way you treat customers. Hope she avoids them in the future.
She's not finding any wording to that effect in re-reading the contract a couple of times...
Is there anything about the terms or financing must be accepted by the lender?
Or perhaps a place for the lender to sign and it is not yet signed?
One quick way to find out where such wording is would be to tell the car dealer she has a signed contract for that interest rate, so they MUST honor it. Then see what they come back with.
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