Lawyer Help - Car Contract Question

[DegenerateDish]

Last Friday, I bought a new Honda Accord Hybrid at Honda of Kenosha. I'd been waiting a while to find a deal that I liked, was hoping for some good year end incentives, and in shopping around the Midwest, the Kenosha dealer had a very good cost.

I'm used to the car buying negotiating game, and gave hard no's to them trying to bundle in an extended warranty, paint protection, security system. I was steadfast in only agreeing to the lowball price for the vehicle itself that they offered me via email.

They ended up agreeing to the price without any of the extra crap, and they had agreed to 2.9% over 60 months for financing. Which I thought was funny, because Honda wasn't offering anything better than 4.9% on the Hybrid model.

I had secured third party financing before going to the dealer. I'm in the 800's for my credit score, and secured 2.24% through a credit union. My plan was to most likely to take whatever financing the dealer gave me, make one payment, and then re-fi through the credit union.

I have a signed contract for 2.9% at 60 months on the vehicle, and walked out with the new car on Friday. This afternoon, I got a call from the dealer saying there was a mistake, and they need me to come back into the dealership because the finance rate was incorrect. It should have been 3.2% instead.

I don't know much about this, but am assuming this is considered a Spot Delivery? The contract went into agreement at 4:30 pm that Friday, and as mentioned I have great credit, so I wasn't a risk. I "believe" in Wisconsin, dealers who spot a vehicle and can't secure financing are required by state law to finance the purchase themselves (?).

I didn't know who else to ask on this, and there's a lot of good/smart people on this board, so any recommendations? I want to tell them to get bent, but want to know legally what's right here. Thanks in advance.

[jesmu84]

Dish - I picked up my hybrid touring a month ago. Love it. Outside of the legal contract stuff, any questions you might have, I could probably answer - tech, driving, MPG, etc

[#UnleashSean]

I believe that once you signed the contract, they have to honor whatever they put into it. My advice would be to tell them to pound sand if there's any actual legal things you'll hear from a lawyer and can then continue without repercussions

[reinko]

Last Friday, I bought a new Honda Accord Hybrid at Honda of Kenosha. I'd been waiting a while to find a deal that I liked, was hoping for some good year end incentives, and in shopping around the Midwest, the Kenosha dealer had a very good cost.

I'm used to the car buying negotiating game, and gave hard no's to them trying to bundle in an extended warranty, paint protection, security system. I was steadfast in only agreeing to the lowball price for the vehicle itself that they offered me via email.

They ended up agreeing to the price without any of the extra crap, and they had agreed to 2.9% over 60 months for financing. Which I thought was funny, because Honda wasn't offering anything better than 4.9% on the Hybrid model.

I had secured third party financing before going to the dealer. I'm in the 800's for my credit score, and secured 2.24% through a credit union. My plan was to most likely to take whatever financing the dealer gave me, make one payment, and then re-fi through the credit union.

I have a signed contract for 2.9% at 60 months on the vehicle, and walked out with the new car on Friday. This afternoon, I got a call from the dealer saying there was a mistake, and they need me to come back into the dealership because the finance rate was incorrect. It should have been 3.2% instead.

I don't know much about this, but am assuming this is considered a Spot Delivery? The contract went into agreement at 4:30 pm that Friday, and as mentioned I have great credit, so I wasn't a risk. I "believe" in Wisconsin, dealers who spot a vehicle and can't secure financing are required by state law to finance the purchase themselves (?).

I didn't know who else to ask on this, and there's a lot of good/smart people on this board, so any recommendations? I want to tell them to get bent, but want to know legally what's right here. Thanks in advance.

Def not a lawyer, but have bought plenty of cars over the years, and I would play hardball.  This sounds like a pretty large dealership, and this type of mistake which I guess theoretically could happen, seems a bit fishy.

I would do the math on what that .3%  interest would cost you over the life of the loan, and ask for that to be taken off the purchase price.  (On a $28,000 car, the difference is about $250 or $4/month over a 60 month loan term).

[mu_hilltopper]

Can't help with the legal stuff .. just reminds me of when I bought my car, I had the opposite story.  About a week after I got the car, a $600 check arrived in the mail.  "Sorry, we screwed up the sales tax."  .. Truth was, I don't think they did, but I'm not turning that down.

[Herman Cain]

Next time try the Costco car buying program. I use it every time.  It is fantastic and gets you the lowest price.

[Lighthouse 84]

Dish, it’s called yo-yo financing. Dealers try it all the time. They offer you great terms just to get you to buy and drive it home.  Then, after you drive it, show it to family and friends, they tell you that a mistake was made.

A dealer recently pulled that on my son. I told them, get our trade in back to us and we’ll drop the new car off at the lot.  They are required to give you back 100% of your down payment, including any trade in. Push them on it. In my case, they knew I’m a lawyer and I’d take my kid’s case for free and cost them a bunch in attorney’s fees. 

On the other hand, with the refi planned, if you can get it done quickly, do the refi before making a payment and don’t give them the satisfaction of getting any interest from you.

Good luck.

[ZiggysFryBoy]

What color?

(Just another scoop non-answer to a very specific question.)

[T-Bone]

https://jalopnik.com/what-to-do-if-a-car-dealer-says-they-made-a-mistake-on-1795217709

Probably more here. http://lehtoslaw.com/

[DegenerateDish]

Dish, it’s called yo-yo financing. Dealers try it all the time. They offer you great terms just to get you to buy and drive it home.  Then, after you drive it, show it to family and friends, they tell you that a mistake was made.

A dealer recently pulled that on my son. I told them, get our trade in back to us and we’ll drop the new car off at the lot.  They are required to give you back 100% of your down payment, including any trade in. Push them on it. In my case, they knew I’m a lawyer and I’d take my kid’s case for free and cost them a bunch in attorney’s fees. 

On the other hand, with the refi planned, if you can get it done quickly, do the refi before making a payment and don’t give them the satisfaction of getting any interest from you.

Good luck.

Thanks for the feedback. From a legal perspective, can the dealership do this? I've read over the contract, it's your standard car contract, the APR and term is clearly listed.

I didn't have a trade in, I put down $6000 on it. Mostly what I'm wondering is if I just ignore them, they don't have any legal recourse to do anything, right?

The other part of this is that there are some add on's I want done to the car (it's my wife's car). As an example, I was going to get a heated steering wheel put in. Do I have pull to use that over the dealer to get that done for next to nothing, in exchange for this higher rate (knowing I'm just going to re-fi it)?

[DegenerateDish]

Dish - I picked up my hybrid touring a month ago. Love it. Outside of the legal contract stuff, any questions you might have, I could probably answer - tech, driving, MPG, etc

Thanks, I got it for my wife, it's a Touring as well. Love it, great car, and the MPG is ridiculous.

[DegenerateDish]

What color?

(Just another scoop non-answer to a very specific question.)

Silver.

(I like what you did there btw).

[drewm88]

I took business law sophomore year at Marquette. I don't remember anything, but I did buy a hybrid Accord last year. Love it.

[Benny B]

Thanks for the feedback. From a legal perspective, can the dealership do this? I've read over the contract, it's your standard car contract, the APR and term is clearly listed.

I didn't have a trade in, I put down $6000 on it. Mostly what I'm wondering is if I just ignore them, they don't have any legal recourse to do anything, right?
The other part of this is that there are some add on's I want done to the car (it's my wife's car). As an example, I was going to get a heated steering wheel put in. Do I have pull to use that over the dealer to get that done for next to nothing, in exchange for this higher rate (knowing I'm just going to re-fi it)?

Is there anything on your contract that uses any form of the words “conditional” “contingent” “provisional” preliminary” or similar terminology near the APR or other financing terms?  If so, you’re going to lose most of your leverage. 

Not knowing what Wisconsin statutes say about spot delivery, but first thing I would do is ask to see the denial letter from the financier (or whatever they can produce that shows you weren’t approved for the original rate).

Regardless, I would absolutely use it as leverage for a heated steering wheel.  Even if the dealer is technically in the right, as unseemly and unethical as it may be, believe me when I say that dealers (new car dealers, at least) absolutely hate being put in this position... spot delivery helps them sell a lot of cars, but it can come at the expense of a horrible customer experience, and new car dealers rely more on word of mouth and referrals than most people think.  If they feel like they can help you out and smooth the matter over in another manner, e.g. with a discounted or free add-on, the good dealers are going to jump at that opportunity.  Just don’t tell them you plan to refi, otherwise you might lose what remaining leverage you have.

[LloydsLegs]

Next time try the Costco car buying program. I use it every time.  It is fantastic and gets you the lowest price.

Used it to buy my Volvo S90 T8 Hybrid.  Amazing deal. 

Dealer cost ("A Plan") base pricing; $3,000 Costco incentive/rebate on top of the $4,500 manu rebate

And then (non-Costco) $5,000 tax credit for a hybrid. 

I ordered while the deal was still going and the dealer agreed to keep it in place even though it wasn't going to be delivered until after the deal expired. 

[warriorchick]

Glow and I had a horrible experience at Russ Darrow a couple of years back.

We were looking for a specific model of used car with low miles.  Darrow had advertised what we wanted at a price that was so good (we had done our homework) we had already decided that we weren't going to kill ourselves haggling.  Glow confirmed the price via email with the dealership.

We get there, test drive it, and tell them we are interested.  The salesperson gives us his initial price quote - $2,000 over the advertised one.  When we give him the WTF look, the salesman says, "That price assumes you had a $2,000 trade-in, and since you don't..."  Glow showed him our written quote, and the salesperson tried to claim that the trade-in requirement was covered under "other charges apply" or some such B.S.

Glow told him that unless he wanted us to call the Attorney General on Monday morning, he had better honor the original price.  They backed down, but as punishment, they made us cool our heels in the waiting area for several hours because the business manager was "busy".  We sat next to a guy that they had pulled the same "trade-in" crap on, who admitted that he caved and was paying $1500 over the quoted price.

When we finally see the business manager, he hands us an extended warranty and asks us to check the box next to the one we wanted.  When we said "none", he spent a lot of time trying to tell us what a dumb decision that would be before he finally gave up.  The form didn't even have an option of declining an extended warranty; he had to write it in.

After all the paperwork was completed, we sat it the waiting room waiting for them to actually bring the car around.  We finally had to ask someone, "Where is our freaking car?".  You know how it's traditional to drive the car up, and make a big deal about opening the doors, helping you in, showing you some basic dashboard functions?  They basically threw the keys at us.  All in all, we spent six full hours at the dealership for a transaction that shouldn't have taken more than an hour and a half.

We had very pleasant experiences with the purchase of several cars before that (at other dealerships) so I guess we assumed that the old-school slimy dealerships were a thing of the past.  Apparently not.

[GGGG]

I have bought my last five cars from the same dealer since the experience has been so good. I have no idea how businesses can’t figure out that good experiences give you repeat customers.

[DegenerateDish]

Glow and I had a horrible experience at Russ Darrow a couple of years back.

We were looking for a specific model of used car with low miles.  Darrow had advertised what we wanted at a price that was so good (we had done our homework) we had already decided that we weren't going to kill ourselves haggling.  Glow confirmed the price via email with the dealership.

We get there, test drive it, and tell them we are interested.  The salesperson gives us his initial price quote - $2,000 over the advertised one.  When we give him the WTF look, the salesman says, "That price assumes you had a $2,000 trade-in, and since you don't..."  Glow showed him our written quote, and the salesperson tried to claim that the trade-in requirement was covered under "other charges apply" or some such B.S.

Glow told him that unless he wanted us to call the Attorney General on Monday morning, he had better honor the original price.  They backed down, but as punishment, they made us cool our heels in the waiting area for several hours because the business manager was "busy".  We sat next to a guy that they had pulled the same "trade-in" crap on, who admitted that he caved and was paying $1500 over the quoted price.

When we finally see the business manager, he hands us an extended warranty and asks us to check the box next to the one we wanted.  When we said "none", he spent a lot of time trying to tell us what a dumb decision that would be before he finally gave up.  The form didn't even have an option of declining an extended warranty; he had to write it in.

After all the paperwork was completed, we sat it the waiting room waiting for them to actually bring the car around.  We finally had to ask someone, "Where is our freaking car?".  You know how it's traditional to drive the car up, and make a big deal about opening the doors, helping you in, showing you some basic dashboard functions?  They basically threw the keys at us.  All in all, we spent six full hours at the dealership for a transaction that shouldn't have taken more than an hour and a half.

We had very pleasant experiences with the purchase of several cars before that (at other dealerships) so I guess we assumed that the old-school slimy dealerships were a thing of the past.  Apparently not.

You guys are smart, you really have to do your homework before you walk into a dealership. I had been patient in knowing what number I wanted from an email quote before I walked into a dealer.

In this transaction, they were offering a really low price compared to everyone else, at least $1000 less. Their email quote said it also included some type of paint protection and car security system in the price. I honestly didn't care about either of those things, but the quote said they were included, so I didn't care.

When I got to the dealer, and they came back with the offer, they had jacked up the price by $1000 to account for the paint protection and car security system. I immediately called them out on it, and said the email offer I had clearly stated both items were already included in the proposed price.

They then came back and said I had to take a 7 year/120k warranty, which again jacked up their original emailed price by $1000. I firmly said no, and told them I need an itemized list of car price/tax/title/licensce/doc fees to go over it line by line. They finally then agreed to the original emailed price without the other crap.

Of course anyone who's bought a car knows it's not over yet, and then the finance manager comes in to hard sell the warranty. I was up front and told the FM I work in service sales and my brother-in-law is a mechanic (both are true) and I have zero interest in any warranties. He still tried to hard sell like no one I've ever seen before.

All in all, the experience itself was slimy as hell, but I was determined to hold my ground on walking out with the price they originally offered.

[jsglow]

Dish, I don't know the laws in Wisconsin but in Illinois the dealer does have the right to rescind the contract predicated on COMPLETELY undoing the transaction.  That means that they return ALL of your money and your trade-in upon your return of the car in a worst case scenario.  They are not allowed to compel you to agree to the new terms or to withhold anything from you if you decide to cancel the transaction.

But let's look at the practicality of that over a minor change in the terms they could eat by not being able to secure the financing they thought they could get.  Do they really want the nightmare?  I'd hold firm and not agree to sign anything but definitely read the fine print of your existing paperwork.  Again, I don't know WI law on this topic.

Have fun.  I hate car dealers with a passion.  They're ALL crooks in my book. 

[jsglow]

To follow-up on what Chick said.

NEVER, EVER do business with RUSS DARROW.  Ever.

Now I've told thousands of scoopers what a slime ball he is.  And remember, I'm a lifelong banker.  I know financial transactions and what's 'reasonable' in business.  You win some and lose some in healthy negotiations.  Those are some bad guys.

There.  Hopefully the unreasonable pain they caused us has been paid back tenfold.   

[Benny B]

After all the paperwork was completed, we sat it the waiting room waiting for them to actually bring the car around.  We finally had to ask someone, "Where is our freaking car?".  You know how it's traditional to drive the car up, and make a big deal about opening the doors, helping you in, showing you some basic dashboard functions? They basically threw the keys at us.  All in all, we spent six full hours at the dealership for a transaction that shouldn't have taken more than an hour and a half.

I'm not defending or advocating on behalf of car salesfolk here, but showing you around the car is really more of a "new" car thing.  Car salesfolk typically haven't a clue about the functionality of used cars unless it's the same make as the dealer (e.g. buying a used Honda at the Honda dealer).  That said, it is customary to not give the keys to the customer and direct them to where it's parked somewhere in the lot.

Unfortunately, the extended warranty sale is way too profitable for dealers, especially used car dealers (who mostly sell third-party warranties that exclude half of the things that could go wrong with a used vehicle), to see that go away.  And the "stall and delay" tactic is way too overused, but it works... just like a casino, one of the golden rules of car sales is that the longer you keep the customer on the sales floor, the more profitable they become.

With the caveat that this works much better for new cars than used, as I posted in another thread buried in the Superbar somewhere, make the dealers work for your business... fax or email RFP's to as many dealers as you can and force them to respond in writing on your terms.  Be very specific with what you're looking for, and always ask for the "out the door" price, which is understood to be all-inclusive of hidden charges, fees, etc.  Half of the dealers you contact won't bother to respond... don't even think of trying them back, but the ones who do respond, those are the ones who want your business and are most likely to provide a pleasant buying experience.  I took 3 or 4 offers into my local Subaru dealer for a new Outback (factory order) and told them I had 3 or 4 offers from other dealers, and guess what, without me disclosing the quotes I had in hand, the salesperson beat my best quote by a few hundred dollars.

Another little known secret about car dealers, new and used.... the "floor" sales team earns a commission based on price you pay, but "internet" sales team earns commission based on volume.  Both teams usually have the same minimum price/markup that the dealer sets for the vehicle, so your chances of getting the best price - unless the floor salesperson is a friend or family member - almost always is going to be with the internet team.  Even if you like dealing with someone in-person, check the price for the vehicle on the internet (like Glow did) before heading to the dealer and then look at the sticker on the vehicle... more likely than not, the sticker price is always going to be a couple thousand heavier than the internet price.

[GooooMarquette]

Have fun.  I hate car dealers with a passion.  They're ALL crooks in my book.

I generally share this sentiment...but have occasionally come across an exception.

Years ago, we had just moved to Richmond and were buying a slightly used '89 Acura Legend from an independent used car dealer. We wanted to get an inspection and the nearest Acura dealer was about 20 miles away, so we took it down the road to Richmond Honda. They quoted us a competitive price for the inspection (it was in '93 so I can't recall the number). When we picked it up, they told us the car was in great condition...and then told us they'd only charge half the quoted inspection price because it was so clean. We bought the car and took it there for service until we moved out of Richmond. Always polite, prompt, and at (or under) the estimated cost.

As for Russ Darrow - yep, they suck. Had an awful experience trying to buy a Mazda at their Greenfield location years ago. They tried to screw me, so I just walked away. Never again.

[jficke13]

If amazon got in the car sales business, no negotiation, just a quote, a click, and you're done, they would end up selling 100% of the cars.

There's no reason for car dealerships to exist aside from antiquated laws put into place for bad reasons.

[jesmu84]

If amazon got in the car sales business, no negotiation, just a quote, a click, and you're done, they would end up selling 100% of the cars.

There's no reason for car dealerships to exist aside from antiquated laws put into place for bad reasons.

Agreed. But that's a hell of a strong lobby. Good luck getting rid of those laws.

Costco auto is good. No haggle. Good deals. But it's not available at every dealership. You can often haggle for less than Costco price if you want to do the research and put in the time.

[Babybluejeans]

You know how it's traditional to drive the car up, and make a big deal about opening the doors, helping you in, showing you some basic dashboard functions?  They basically threw the keys at us.  All in all, we spent six full hours at the dealership for a transaction that shouldn't have taken more than an hour and a half.

In my experience with sales people, when you’ve closed the deal and they’re pissed off, you did it right. Several years ago, after setting a trap for the sales person (cash for clunker trade-in) and getting a splendid deal, he handed me keys from clenched fists. He absolutely hated me. The b.s. waiting didn’t matter—I’d never felt more pleased and vindicated.