Contract Question (Lawyers?)

SkyHog

SkyHog

Touchdown! Greaser!
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Everything Offends Me
My wife and I bought a car last week, and we financed it. We signed an agreement at x% interest rate with both of us on the loan. Her credit is not so hot, and we understood that going into the deal, knowing this would be a great way to improve her credit.

Today, I got a call saying they could get a better rate if we left her off, and I initially told them no. They then said that because of her credit, we could not qualify for the loan with her on it.

We've already signed paperwork and everything. Its literally been a week. Can I hold them to this agreement?
 
Here is a non-lawyerly opinion. It is going to all be in the details. Prepare to fax a copy of the wording to a friendly attorney for a read on that.
 
Did you file a loan application or did you actually close on a loan? That could change the outcome to a considerable degree.
 
steingar said:
Did you file a loan application or did you actually close on a loan? That could change the outcome to a considerable degree.
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I don't understand the difference (naievity). We signed a contract for a specific amount down (which was tendered), and a specific payment per month, with details on percentage and everything else.

I don't have the contract in front of me at the moment, but I'd wager that it was a completed loan, since we already gave the down payment.
 
There is usually a delay (10mins up to a week) between the loan application and the loan approval, ime - during which they perform a credit check with the info you have given them. If that helps you know the difference more easily than reading the paperwork.
 
It really depends on the details. Unfortunately, that's all I can say without reading the actual details....
 
Ok, I scanned and blacked the contract, turns out I had it in my car.

As I read it the first time, I really felt like it was a done deal. They also explained that they had physically talked to the credit union and sealed the deal.

The contract still reads that way to me, but I'm not a lawyer.
 

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SkyHog said:
Ok, I scanned and blacked the contract, turns out I had it in my car.

As I read it the first time, I really felt like it was a done deal. They also explained that they had physically talked to the credit union and sealed the deal.

The contract still reads that way to me, but I'm not a lawyer.
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There's the problem, it's a Toyota. :D
 
If they really want to hem and haw about it give them back the car, or at least threaten to do so. That should shut them up.
 
steingar said:
If they really want to hem and haw about it give them back the car, or at least threaten to do so. That should shut them up.
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That's where we are right now. I told them that the car will be returned if they try to violate the original terms, and they're going to call me back.

I'm just curious if I can actually force them to hold to the original contract.
 
1. did you take possession of the car?
2. contact the state consumer affairs office and chat
 
How can the loan risk be worse if she's on the note? That makes no sense to me.

Let's say they were willing to make the loan based on your good credit. If you default, they've got nothing except the collateral and a deficiency judgement. If she's on the note and you both default, they've got the same result. What's the distinction?
 
wabower said:
How can the loan risk be worse if she's on the note? That makes no sense to me.

Let's say they were willing to make the loan based on your good credit. If you default, they've got nothing except the collateral and a deficiency judgement. If she's on the note and you both default, they've got the same result. What's the distinction?
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The way the fed is now looking at who is making these risky loans.
 
It appears to be a fully executed, binding vehicle finance contract, with the dealer as the lender.

It also appears there are additional terms on the reverse of the page you posted.

Ask the dealer to point you to the provision of the finance contract that allows the dealer to cancel the contract.

I agree that the threat of a complaint to the state attorney general's consumer protection program will be effective against the dealer.
 
Obi Heed Kenobi said:
Start here: http://nmag.gov/office/Divisions/CP/faqauto.aspx
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That helps David, but the question, I guess, is whether or not the vehicle was Spot delivered, or if we had a formalized agreement and they are trying to force me into a different financial agreement that better benefits them.

It appears that the financing has already been contracted and approved as we agreed upon a week ago. That is where I'm confused, whether or not this contract indicates what I believe.

I hate legalese sometimes, its so confusing.
 
RMCN172RG said:
The way the fed is now looking at who is making these risky loans.
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Exactly. And Congress is in the act. If you're an entrepreneur or small business owner the financial reform act will make it much, much more difficult to get a mortgage. Among the other provisions is an outright statutory requirement that lenders obtain proof of income and verify ability to repay the whole loan. For someone operating a Sub-S or partnership that runs income and business expenses through their personal return the income used by the lender will be much lower than someone that can run stuff through a corporate return. Ergo, it becomes harder to qualify. There will be much collateral damage from that one.

Same kind of stuff will apply to other types of lending, though it may not be statutory.... meaning someone with lower credit or lesser income may not be able to buy a car. As in Nick's issue here....
 
SkyHog said:
My wife and I bought a car last week, and we financed it. We signed an agreement at x% interest rate with both of us on the loan. Her credit is not so hot, and we understood that going into the deal, knowing this would be a great way to improve her credit.

Today, I got a call saying they could get a better rate if we left her off, and I initially told them no. They then said that because of her credit, we could not qualify for the loan with her on it.

We've already signed paperwork and everything. Its literally been a week. Can I hold them to this agreement?
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Nick,

I'm not sure I understand the problem. If they're truly offering a better rate (for the same duration) by leaving her off the loan, TAKE IT! You want to finance a car as cheaply as possible. There are other ways to help improve Brianna's credit score.
 
rpadula said:
I'm not sure I understand the problem. If they're truly offering a better rate (for the same duration) by leaving her off the loan, TAKE IT! You want to finance a car as cheaply as possible. There are other ways to help improve Brianna's credit score.
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The issues is they can't qualify leaving her on it after Nick refused the lower rate.
 
P.S. Was it your idea to buy the Gap contract? I doubt it's worth it, and doubly doubt it's worth adding to the loan amount.
 
RMCN172RG said:
The issues is they can't qualify leaving her on it after Nick refused the lower rate.
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What?

It sounds like Nick needs to take her off the loan app. Nick should be able to qualify by himself, and it sounds like get a lower rate in the process. What am I missing?
 
SkyHog said:
...

It appears that the financing has already been contracted and approved as we agreed upon a week ago. That is where I'm confused, whether or not this contract indicates what I believe.

....
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We have some guys here who are experienced in the auto industry, so they should correct me if I'm wrong.

My understanding is that your average car dealer - esp. used cars (because they're smaller, not any issues of shadiness) - often use 3rd party lenders to finance their buyers' purchases. So, if I buy a GMC from a GM dealer, my loan might not be through GM directly, but perhaps through a national credit union. If I buy a used car from a small lot, it might be through a local bank.

With that in mind: some dealers have enough volume where they can send the information and get instantaneous approval from the bank. As in - you have a loan the same day.

But, if it's a smaller dealer, I might give the dealer my info, and the dealer will agree to find financing for me at X% on Y terms - it may not be instantaneous, and could take some time for the dealer to find a lender. Even if you've made a down-payment and have actual possession of the car.

Being as that lag exists, it may turn out that no bank is willing to approve the loan (lots of factors: many small lenders won't finance a car 5+ yrs old regardless of your credit, for instance). If that's the case, you're looking at a contract that may be impossible to perform - despite the good faith and best efforts of both parties.

Is that latter what's happened in your situation? Maybe not, and you'd certainly be within your rights to cancel the contract, but then you're out the car on terms that were apparently agreeable to you. But, I'm guessing that something along the lines of the above paragraph is what happened.

My recommendation on reconsideration: if financing is available for just you, and it's at a lower rate, just do it. Leave the AG out of it. Nobody benefits from that.

There are a lot of ways, that are probably better, to improve her credit. For instance, get a very small credit card (as in $1,000 or less), and have her buy one tank of gas a month, and pay it off on time every month. Just as good as having a car payment, and maybe even better because she might gets points on the card.

In fact, you could probably get the dealership to help you out with that. Say, "as we're changing the terms of the contract because you couldn't do what you said you'd do, why don't you arrange a credit card through the same lender for my fiancee with a max. limit of $500. You make a sale, we have a car and no reason to badmouth you."
 
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Looks to me like the deal's done. If the dealer screwed-up and sold you a car under terms which they cannot sell to whatever third-party lender they hoped to palm the paper off to, sounds like a "too bad, too sad" thing to me. You'll be making payments to the dealer instead of some bank to whom they might sell the loan.

What's *really* goin on here is that, if you don't agree to change the deal, their commission from the loan sale will be lower. THey always have the ability to sell the loan to a financing organization; the only question is, "at what price." They don't like the deal they made.

"I'm sorry, Mr. Credit Manager, explain again to me how this was a conditional sale?"
 
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I say go hire a mouthpiece and let him do the talking for ya. A deal's a deal, and if the dealership screwed up, then it's their problem.

There's a storefront lawyer in my neighborhood with a great mouth. I'm amazed at how quickly he solves problems like this. Chances are there's one in your neighborhood, too.

-Rich
 
wabower said:
How can the loan risk be worse if she's on the note? That makes no sense to me.

Let's say they were willing to make the loan based on your good credit. If you default, they've got nothing except the collateral and a deficiency judgement. If she's on the note and you both default, they've got the same result. What's the distinction?
Click to expand...

The answer lies in the lender's ability to sell the loan. Rightly or wrongly, they will get a better price for it if both credits are good.

-Skip
 
Nick search for a consumer attorney in your area. There are a lot of Federal Rules that apply to these transactions. I can't read the contract because it is just too bad of a scan. I can't tell if the sale is contingent on the financing or not. Off the top of my head I'd think that even if the financing doesn't come through you still have to pay for the car. A consumer attorney is a very specific type of attorney who will certainly have dealt with this issue many times over. Their fees are usually contingent as well so there should not be any up front fees.
 
AdamZ said:
Nick search for a consumer attorney in your area. There are a lot of Federal Rules that apply to these transactions. I can't read the contract because it is just too bad of a scan. I can't tell if the sale is contingent on the financing or not. Off the top of my head I'd think that even if the financing doesn't come through you still have to pay for the car. A consumer attorney is a very specific type of attorney who will certainly have dealt with this issue many times over. Their fees are usually contingent as well so there should not be any up front fees.
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I read it, all the way through, Adam, including terms on the reverse.

Nothing remotely contingent about it. The dealer calls itself, "Seller/Lender," and it's a done deal. Some finance guy is in a crack, but it's his problem, not Nick's.

They can process payments themselves, or they can sell the loan (at whatever discount may be required), but they made their bed.

As the car guys say, the dealer "kissed the note."
 
SCCutler said:
I read it, all the way through, Adam, including terms on the reverse.

Nothing remotely contingent about it. The dealer calls itself, "Seller/Lender," and it's a done deal. Some finance guy is in a crack, but it's his problem, not Nick's.

They can process payments themselves, or they can sell the loan (at whatever discount may be required), but they made their bed.

As the car guys say, the dealer "kissed the note."
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Ultimately, I suspect this is the correct interpretation. But, if the better deal is for Nick to be on the note by himself and there are alternative ways to improve credit, is there really any point to trying to enforce the letter of the contract? A deal is certainly a deal, but if a better deal comes along that would leave everyone happy, why not take it?
 
Obi Heed Kenobi said:
Ultimately, I suspect this is the correct interpretation. But, if the better deal is for Nick to be on the note by himself and there are alternative ways to improve credit, is there really any point to trying to enforce the letter of the contract? A deal is certainly a deal, but if a better deal comes along that would leave everyone happy, why not take it?
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Its complicated, and I can't really detail why, but it is in my wife and my best interest that this car loan remain in both our names. Interest rate be damned, we need this loan together.

All I'll say is this: You ever try to establish credit as a low 20 year old with 0 positive credit history (and a few negative credit items that are resolved, but still on the report)?

You take what you can get.

That said, I was pleasantly surprised we got the interest rate we did with both of us on it, and I now feel very comfortable after some joint-reading via phone with a very good lawyer buddy of mine (name withheld). The dealership has not called me since my last interaction ("You will honor this contract"). I think this is resolved.
 
Nick, if you are trying to build credit for Brianna there are better ways than a car loan. I'd defer to Spikes post since I can't read the contract for anything. The one issue you may have on the credit end is that the bank would probably report to credit reporting agencies thus having a impact on Briannas creidt The car dealership may not if so that is moot. Eitherway I wouldn't think it would hurt for her to be on the loan.

If you really want her on the loan and want the car the fastest way to accomplish this may be just to say to the sales manager " Gee it sounds like I need to get a consumer attorney involved in this matter" IIRC the dealership could beliable under some consumer protection laws beyond just being forced to honor the contract. That may provide the dealer with the incentive that they need to live up to the deal. Beleive me most big dealer sales managers are well aware of the consumer protection laws.
 
SkyHog said:
Its complicated, and I can't really detail why, but it is in my wife and my best interest that this car loan remain in both our names. Interest rate be damned, we need this loan together.

All I'll say is this: You ever try to establish credit as a low 20 year old with 0 positive credit history (and a few negative credit items that are resolved, but still on the report)?

You take what you can get.

That said, I was pleasantly surprised we got the interest rate we did with both of us on it, and I now feel very comfortable after some joint-reading via phone with a very good lawyer buddy of mine (name withheld). The dealership has not called me since my last interaction ("You will honor this contract"). I think this is resolved.
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I'm glad it's working out.

But, and I don't mean to butt in to your personal affairs but do think it's worth pointing out: if this is only over credit building, there are a lot better ways.

First, if you go this route, as Adam pointed out, will there be reporting to a credit agency? If not, what's the point?

Second, it sounds like you've got a higher interest rate doing this. That means, literally, you're going to be paying to build her credit which you can otherwise do for free.

Third, if you want to build Brianna's credit, you can do it for free with a no-fees credit card with a crappy interest rate that you put $50-$100 on per month (one trip to the supermarket), and pay off on time. Do that for a while, and her credit will shoot up. And, you might be able to get a little money back through credit card points.

Like I said, not trying to butt in, but I thought that was worth pointing out. Take it for what it's worth.

And, if I'm butting in where I'm not wanted, tell me to stick it in my ear. :yes:
 
I never thought it was about credit building.... more like marital bliss. Joint ownership goes hand in hand with marriage.
Young love is beautiful... If not expensive! (See divorce for more information.)
 
silver-eagle said:
I never thought it was about credit building.... more like marital bliss. Joint ownership goes hand in hand with marriage.
Young love is beautiful... If not expensive! (See divorce for more information.)
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That is the other part. I disagree, but she sees it as a special thing because its the first thing we bought together. Can't quite convince her that is the wrong way to approach these things, but meh.

David/Adam, I dlont think credit reporting will be withheld, as I am 99% sure that the original finance deal is ok, they are just trying to sell the loan for more money to a different bank. If they selll to the cu they originally dealt with, all is fine (and I bet they will report too).
 
SkyHog said:
...

David/Adam, I dlont think credit reporting will be withheld, as I am 99% sure that the original finance deal is ok, they are just trying to sell the loan for more money to a different bank. If they selll to the cu they originally dealt with, all is fine (and I bet they will report too).
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Dude - if that's the situation, they signed the deal, and they can live with the consequences.

Anyway, I think Spike's interpretation earlier is the right one. I was just trying to think of things that might work out better for you. Like I said, feel free to tell me to shut the bleep up. :yes:
 
SkyHog said:
That is the other part. I disagree, but she sees it as a special thing because its the first thing we bought together. Can't quite convince her that is the wrong way to approach these things, but meh.

David/Adam, I dlont think credit reporting will be withheld, as I am 99% sure that the original finance deal is ok, they are just trying to sell the loan for more money to a different bank. If they selll to the cu they originally dealt with, all is fine (and I bet they will report too).
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Why not tell her you will put both names on the title and you'll do the financing? The title is the important part anyway... ;-)
 
woodstock said:
Why not tell her you will put both names on the title and you'll do the financing? The title is the important part anyway... ;-)
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Yeah, but then "he" bought it for "them". Not quite the same (to some eyes) as buying it together. Just sayin...
 
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