Consumer Protection Law
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Just recently I visited a car dealer who made me a very good offer on a car I liked. Then they offered me to apply for credit with a finance company they have been making business. I submitted a credit application and next day I was told that I was approved at a very low rate. So I went to the car dealer and at the entry door they asked me for a check with the down payment. I went in the finance office and signed a contract to purchase and finance the car. The dealer offered me to deliver the car on the spot but I preferred to wait, at least one day. Later in the afternoon I received a call from the credit institution verifying my employment and so I realized that my credit was still not approved. In the afternoon I talked to the sales man because I was concerned that my credit application was still not fully approved and asked them for a letter of credit approval. When talking to him, he also mentioned that he added some additional information to my credit application on his own, because the financial institution required an additional personal reference. At this point I realized that I was been setup for some kind of scam. So I went back home and started researching the facts and realized that they call this the Yo-Yo financing scam. Once you take the car with you and since your credit application has errors in it, the bank denies your credit. Later once they got you trapped and since you already took the car you are force to sign a new contract at a much higher rate. After learning this, that same night I logged in to my bank and placed a stop of payment for the down payment check. Next day I went to my bank and got a credit with them and then went to the dealer and asked them to change the contract to reflect my new financing company. They wrote a new contract and wrote void in all the previous paper work but I refused to sign any new documents until I had the chance to look at the new contract and so I asked them for a copy of the new contract. Since they were not able to return my previous down payment check that they tried to cash, I decided to wait until I receive the document back and so they got desperate and withdrew the offer and placed the car back on sale. Because of the predatory nature of this dealer I am concerned and would like to get some counsel to know exactly what are my risks and how to proceed to recover the stopped check and make sure that there is no future problems with the cancelled car sales contract and forged credit application?
** I want to add that the contract was signed on 05/21/2013 and since I refused to sign a new contract the dealer decided to void the contract on 05/23/2013.
Question: Since I need to start disclosing you specific information about the sale, this is a formal attorney-client relation right?
Because of the predatory nature of this dealer I am concerned and would like to get some counsel to know exactly what are my risks and how to proceed to recover the stopped check and make sure that there is no future problems with the cancelled car sales contract and forged credit application? Response: Once you stopped payment on a check, the payee does not have any legal obligation to return the check to you. If the bank has stopped payment, the check is worthless and the return of the check to you is not legally required. Since the downpayment was part to the contract you signed and you stopped the payment, there is nothing else for you to do except to send written notice to the dealership that you have changed your mind regarding the purchase because of their unilateral altering of the loan application. You can also inform the lender. However, these steps are not legally necessary because you do not have the possession of the vehicle and you are not seeking the return of your dpownpayment. Once you were successful in stopping the payment, you effectively killed the deal— you made the contract null and void. Nevertheless, since the action of the dealership here in altering your application is quite egregious, you should file complaint with your Attorney General's Office. You may also file complaint with the Better Business Bureau for their deceptive act and practice.
One additional concern: the credit application was filled in by hand by the sales man and he only asked me for one personal reference. When I signed the credit application it only had one personal reference. Later on he filled in the second one without my consent and he just let me know once he has done it, that was the actual trigger for me to cancel the payment. My concern is that the whole credit application is written by him (with errors) and then signed by me. So I wonder if they can claim that the application was never forged? since the writing is always of the sales man and there is no way to tell what was introduced before and what was introduced after I signed it?
Since they have already agreed to cancel the contract, should I just avoid mention any of these facts and avoid conflict? Or how should I address the notice of cancellation of contract?
Here is a letter I have crafted can you please review and advice?
May 30, 2013
Dick Poe Dodge, LP
El Paso, TX 79925
OBJECT: NOTICE OF CANCELLATION OF CONTRACT
Notice is hereby given that we are cancelling our contract dated 05/21/2013 for the sale and financing of a new 2013 Ram 1500 R/T Regular Cab, Serial No. 3C6JR6CT8DG535587, for the following reason:
On 05/23/2013, we both agreed to cancel the contract in the following respect:
I never took delivery of the vehicle or the financing.
You have chosen to withdraw your offer, cancel and void the sales and financing contract and continue to sell the vehicle to the public.
Since there was no vehicle or finance delivery, you have agreed to return my full down payment check #3062 for the amount of $10,000.00 dollars.
Francisco Adolfo Zapata Gonzalez
Research Assistant Professor, PhD
Research Institute for Manufacturing & Engineering Systems,
University of Texas at El Paso
500 W. University Ave., Engineering Building Rm. E-201D, El Paso, TX 79968
Response 1: As previously stated, you do not have to write the letter in the first place. It is not legally required. You can just forget the notice entirely to the lender and the dealership. With no downpayment, the dealership is not going to bother with you anymore. They would inform the lender to stop processing your application.
Response 2: I am sorry but I cannot review the draft for you. I am prohibited from giving legal advice here.
Ok, so basically your advice for me would be to just forget about it and I have nothing to worry about anymore???
Its kind of easy, but any way.
One last concern: so if you are not giving me legal advice, what kind of advice is this?
Response: I provided you with general legal information. You can use that information to point you to the right direction. For instance, I have provided you information regarding the significance of putting a stop payment on your downpayment. Once you did that, you effectively cancelled the contract that you signed with the dealership. The fact that dealership has put the car back on the market confirms my information. There is no legal requirement that you give written notice to dealership that you are backing out of the deal.
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