Auto Finance Fraud

Buying a new car can be a scary experience. You wonder if the auto dealer is giving you a good deal or taking you for a ride. Car dealers provide consumers with valuable goods and services. However, as with any industry, there are those in the automobile business who choose to violate the law. Texas law allows recovery of damages for improper actions engaged in by car dealers.

If you purchased a vehicle in the last four years you may be entitled to a refund for excessive interest and bogus charges. You may have been cheated out of thousands of dollars!

How do auto dealers unlawfully overcharge you? The following are red flags to look for in your auto purchase paperwork:

Did you have a trade-in?
Were you "upside down" in your trade?
Did the paperwork show a higher trade-in allowance than the dealership actually gave you?
Did the dealer arrange your financing?
Were you told that the A.P.R. in your contract was the best rate the dealer could find you?
Did you purchase an extended warranty for a period for which you were covered by the factory warranty?
Did you purchase other warranties such as tire, wheel, and glass coverage?
Did you purchase credit life, gap or disability insurance?
Do you know what all of the charges on your contract were for?

To receive a FREE review of your vehicle sales contract, just give us a call toll free at 1-800-LONGHORN (1-800-566-4467) or fill out the questionnaire located on our home page (click the CASE REVIEW button). We’ll get back with you as soon as possible to let you know if you are entitled to money back.

To determine if you have a claim, we need to review your vehicle purchase paperwork, specifically the "Retail Installment Sales Contract". We will check to see if you were charged fees you were not legally obligated to pay. You can send us the paperwork by:

Toll Free Fax: 1-877-677-5334 Attn: Auto Finance

E-mail: Christi@LonghornLawyer.com or

Mail: 518 East Tyler St. Athens, TX 75751

If you can't find your paperwork, you can contact the lender who financed your vehicle. They will send it directly to you or you can ask them to send it directly to us.

Any information we review will remain strictly confidential.

You have nothing to lose. There is no charge and no obligation. If we take your case, there is no fee for our services unless we collect money for you.

We look forward to working with you! Together we can help put an end to the illegal practices of auto dealers.

Here are some other auto dealer tricks you may run into:

“THE FALSE CREDIT SCORE”

“The dealer checks your credit report but lies about your credit score, telling you it is lower than it really is. (The higher the score, the better the credit.)... you don’t qualify for the low-interest car loan that drew you to the dealership in the first place. . . .All states have laws that protect consumers from deceptive and unfair practices. . . .Michael Meiring, who owns a Cleveland die-casting business, checked his credit score before car shopping. His average score from the three major credit bureaus was 750. Generally, scores above 700 are considered excellent. Yet Meiring said he was told my a Chrysler salesperson that his credit score was too low to qualify for the 0% financing offer he had seen on TV. . . .He told me the only way he could sell me a car was through a lease for $2,200 more than the Internet price, Meiring says, ‘I was so angry I ended up buying my car online’. . . .Know your credit score before you shop for a car loan. A report with a credit score costs $15 or less at each of the major credit bureaus. Equifax at 800-685-1111 (www.equifax.com); Experian at 888-397-3742 (www.experian.com); and TransUnion at 800-888-4213 (www.transunion.com). . . If the dealer says your credit score is lower than you know it is, buy your car elsewhere and report the deceptive dealer to your state attorney general’s office.

“0 DOWN, 0 INTEREST,

0 PAYMENTS FOR ONE YEAR”

“When the year is up, you find out you owe all the monthly payments you’ve delayed – sometimes plus retroactive interest. You end up owning much more than the sticker price on a vehicle that is now a used car. . . .‘It’s hard to find anyone who doesn’t have a 0-0-0 program now,’ says Art Spinella, president of CNW Marketing Research in Bandon, OR, which tracks consumer auto spending. In some cases, the contract states that they buyer owes the dealer X number of monthly payments at a high interest rate, then must refinance the balance of the loan. . .[A client]. . .thought she was paying $31,000. Now that the 0-0-0 time is up, a 9.9 percent interest rate has kicked in. She must pay $677 per month for the five years, or a total of $40,591 for the car. She can’t refinance at a lower rate; the loan is much more than the $16,800 her depreciated car is now worth. ‘At this point, I just want to let them repossess the car,’ she says. . . .Don’t fall for this gimmick. A 0-0-0 deal costs more in the long run than a conventional loan.

“WE’LL PAY OFF YOUR LOAN”

“The ads suggest that the dealer will assume your old-car debt or lease to get your business. But the debt doesn’t simply disappear. Whatever you owe on your old vehicle – including any early-termination fees that a new lease or purchase may occasion – are rolled into your new loan. . . .Often the installments are spread out over six years or more to make it look as if your payments are lower. Stick with your current lease to avoid early-termination fees, which can top 5 percent. And don’t trade-in a car if you are still upside-down on the loan, meaning you owe more than the car is worth.

“PAY MORE OR WE’LL SAY YOU STOLE THE CAR”

“The salesperson says you can drive home today in your new dream car. And you also qualify for a better rate than you expected – if you finance your purchase with the dealership. You sign the papers and away you go. A week later, the salesperson calls and says you didn’t qualify for the low rate after all; you now have to pay more for the loan. . . .You assumed the deal was done, but you missed the fine print in the contract that read something like, ‘Subject to financing approval.’ "You may be told that you must pay a larger down payment and higher monthly installments, or the salesperson may threaten to report the car stolen", says Jeff Ostroff, president of CarBuyingTips.com. A salesperson calls a few days later and claims he can lower your payments if you sign a new contract. How? He raises your annual percentage rate – thus charging you more—but spreads payments over a longer time period, which lowers your monthly payment. Accept the dealer’s financing offer only if it beats the best rate you find elsewhere. Before taking possession of the car, be sure to have in hand an approved financing agreement.

“THE MANDATORY CREDIT CHECK”

“You go to a dealership to buy a car, but you plan to get the financing elsewhere. The salesperson tells you he still must run a credit check on you. . . If you’re paying cash, have other financing, or just taking a test drive, car dealers may obtain a credit report with your written consent, according to a 1998 opinion letter to a car-dealer association by Federal Trade Commission staff. Credit reports may be obtained without a customer’s express permission only if the customer is initiating the purchase or lease of a car and wants dealer financing or is writing a personal check for the vehicle, the letter states. . . .An excessive number of credit inquiries can lower your credit score and thus blemish your credit. Generally, all inquiries concerning auto financing within a 30-day period will not lower your score. However, if you shop for financing for more than a month or are also applying for other credit, your score may drop. . . .If you have already arranged financing elsewhere or plan to pay cash, tell salespeople the moment you walk in that you do not authorize them to run credit checks on you. Do not give them your Social Security number or your driver’s license. If a dealership requests your license before a test drive, show it but do not allow a copy to be made. Before you sign any papers, insist that the credit-check authorization clause be stricken from the document and then read it to make sure it was done before you sign.

“THE MANDATORY EXTENDED WARRANTY”

“You’re ready to sign the papers when the finance manager says you must buy a $3,000 extended warranty. The bank requires it, he says. In some states such a pitch is illegal, but it’s hard to prove if you don’t get it in writing. At any rate, lenders typically don’t require an extended warranty. CONSUMER REPORTS does not recommend buying an extended warranty unless a car is particularly trouble-prone. Most basic warranties are sufficient, covering at least three years or 36,000 miles.

“WE DON’T TAKE CHECKS FROM ONLINE BANKS

OR CREDIT UNIONS”

“You arrive at the dealership with a financing deal from a bank or a credit union. Your salesperson or finance manager tells you that the dealership does not accept deposits from your source if it is stated in a written policy, much like a restaurant can post a ‘No checks’ sign. But this often amounts to another ploy to try to get you to finance through the dealership. . . Point out to the finance manager that online banks and credit unions have been around for years, and they are in the business of writing loans. . .and, note that most U.S. online banks are FDIC-insured and they don’t bounce checks. If the dealership won’t back down and accept your check, or won’t offer you a better rate for financing, leave.

“WHAT CAN YOU AFFORD TO PAY PER MONTH?”

“The salesperson greets you with this line, hoping to use your monthly payment limit to determine the model he’ll recommend and the price he’ll charge. The dealer stands to make more money this way then if you negotiate a purchase price. Say your limit is $320 per month. . .having qualified you for a 7.25 percent loan and charged you the manufacturer’s suggested retail price of $19,415. . with 15 percent down on the price the dealer paid for the car and even add[ing] a dealer profit of 6 percent, you would pay $288 per month and save $1,900 over the five-year loan period. Negotiate the vehicle price first, as if you were paying cash. Calculate the monthly payments after you agree on the sale price.

“DUBIOUS FEES”

“You’ve agreed on a price for a new car and your trade-in. You think the deal is complete. But the bill of sale includes ‘protection package’ fees and ‘dealer prep’ charges that no one discussed with you. These additional charges usually include protection you don’t need, including etching your Vehicle Identification Number (VIN) on windows to deter thieves, rustproofing, and fabric protection. Approximate dealer cost: $90 for all three services. The cost to you: $1,000 or more. ‘Usually the charges are printed right on the form, as if you have no right to charge them,’ says author Sutton. One CONSUMER REPORTS car buyer was asked to pay $159 for VIN etching and $189 for glass, battery, and tire protection, though no one had explained those services. The prep fee is supposed to cover the dealer’s cost to gas up the car and get it ready for you. Refuse to pay these fees; put a line through the items on the bill of sale. Vehicle bodies are already coated to protect against rust. Upholstery is typically treated at the factory. Some states require dealers to offer VIN etching, but you can do it yourself with kits you can buy online for $25. ‘Get used to saying, ‘I’m not going to pay for that,’ Sutton says. ‘You’ll be surprised how quickly they’ll back off, especially if you threaten to walk out.’

“THE ARBITRATION CLAUSE”

“After you bought your new car, transferred your title, and signed the paperwork, an increasing number of dealerships place another piece of paper in front of you notifying you that you must agree to arbitrate any future problem you have with them that warrants legal action. Or the clause may be in fine print on the back of the contract, and no one bothers to tell you. Arbitration is an alternative to a lawsuit in resolving disputes. . . .In the kind of binding-arbitration clause used at many dealerships, you’re required to waive your right to sue, to participate in a class-action lawsuit, or to appeal. . . . Don’t buy from a dealer that requires that you sign a mandatory arbitration clause. You would effectively be giving away your right of redress should a serious problem occur.

This information includes excerpts from an article entitled "Tricks of the Trade", published in Consumer Reports magazine in April 2003.

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Auto Finance Fraud