“Trust Me” Could Bust You!
I get many calls from people all across North Carolina who have problems with vehicle purchases. Some people purchase vehicles where the seller fails to disclose vehicle defects. Some consumers are defrauded via odometer rollbacks or undisclosed salvage/flood vehicles. Other consumers have problems with the financing and other paperwork related to their purchases. And there are those consumers who are taken advantage of by unscrupulous “buy here, pay here” dealerships and finance companies leading to the loss of money and sometimes even the loss of the vehicle.
One of the more common practices I see is the informal “agreement” to allow a buyer to make vehicle payments on a different date and/or in a different amount than is set out in the finance agreement that was signed at the time of the vehicle purchase. For example, buyer signs loan agreement to pay $300.00 per month for 48 months with each payment to be made by the 5th of each month. As the months wear on and other financial obligations arise the buyer becomes unable to maintain timely payments on the loan. When the buyer tells the finance company about the financial hardship the buyer is told it is OK to miss a month’s payment….or to pay a portion of the payment due and “catch back up later on the rest”…or “to bring in some money when you can”…all sorts of possibilities exist here. The consumer confirms—verbally—this arrangement and is told it is fine. “Trust me; we will take care of you”. Problem? You bet!
The finance agreement signed by the buyer and seller sets out the terms of the loan repayment and most of these agreements have a ton of other provisions that make clear any amendments to the terms of the agreement must be in writing and signed by the seller/dealership/finance company. A true modification of an agreement should be signed by the parties to the original agreement.
Nowadays it seems that a person’s word is no longer sufficient. The days of “trust me on this one” may be gone for good. Too often I get calls from consumers who have relied on verbal promises or statements that would be amendments to the finance agreement only to have the finance company conveniently “forget” or decide not to adhere to the verbal promise(s). And when this happens what does this mean for the consumer who is clearly behind on payments but wants to rely on the verbal promises as some sort of legally binding agreement? Nothing very good…that much is for sure. While there are legal doctrines such as waiver and promissory estoppel which may seem helpful it usually takes a skilled attorney to research and determine if such doctrines can help save the consumer. Often these doctrines are insufficient to require a court to overlook an obvious breach of contract by the consumer.
My suggestion: if possible, make your payments on time and if you are unable to do so consult the lienholder. If you are able to work out a satisfactory resolution on the payment issue ask the lienholder to place the resolution in writing and sign it for you. Or you can prepare a short letter or document setting out the terms of the resolution and have the lienholder sign. I cannot assure you this signed writing will serve as an effective modification of the original finance agreement (this is where a legal consultation and legal research are required) but it is better than operating on nothing more than a verbal promise. And if you have made several payments pursuant to the terms of the modification this could help your case.