Stringing You Along, Yo-Yo Style
You did it……you found the car that fit your budget and had the features you wanted. You negotiated the deal and signed the paperwork and now you have the vehicle. The new car smell still exudes from the interior and, even if your vehicle is not new, you are learning the various features of your vehicle. Then you get “the call”…..
Dealership: “Mr. Consumer, this is Sam Salesman from the dealership. We are sorry to tell you that the bank did not accept your income information and we need to get more info and docs from you. Also you will probably need to sign some more papers since the bank will not finance the vehicle at that great monthly payment we negotiated. When can I expect you to come in?”
Boy….talk about deflating one’s high. Let’s step back a moment from the shock of getting the call. Is the dealer telling you the truth and is this “do what we tell you or bring the vehicle back” call legal?
In North Carolina, dealers are allowed to sell vehicles on a conditional basis. This means they can sell a vehicle to you and advise you that the deal is not final until something else occurs (typically the bank or lender approves the terms of the Retail Installment Sales Agreement or other finance contract you sign). Here is the relevant North Carolina General Statute:
§ 20-75.1. Conditional delivery of motor vehicles.
Notwithstanding G.S. 20-52.1, 20-72, and 20-75, nothing contained in those sections prohibits a dealer from entering into a contract with any purchaser for the sale of a vehicle and delivering the vehicle to the purchaser under terms by which the dealer’s obligation to execute the manufacturer’s certificate of origin or the certificate of title is conditioned on the purchaser obtaining financing for the purchase of the vehicle. Liability, collision, and comprehensive insurance on a vehicle sold and delivered conditioned on the purchaser obtaining financing for the purchaser of the vehicle shall be covered by the dealer’s insurance policy until such financing is finally approved and execution of the manufacturer’s certificate of origin or execution of the certificate of title. Upon final approval and execution of the manufacturer’s certificate of origin or the certificate of title, and upon the purchaser having liability insurance on another vehicle, the delivered vehicle shall be covered by the purchaser’s insurance policy beginning at the time of final financial approval and execution of the manufacturer’s certificate of origin or the certificate of title. The dealer shall notify the insurance agency servicing the purchaser’s insurance policy or the purchaser’s insurer of the purchase on the day of, or if the insurance agency or insurer is not open for business, on the next business day following approval of the purchaser’s financing and execution of the manufacturer’s certificate of origin or the certificate of title. This subsection is in addition to any other provisions of law or insurance policies and does not repeal or supersede those provisions. (1993, c. 328, s. 1.)
Key notes: if the vehicle sale is to comply with the law, the dealer must place a dealer tag (NOT a 30-day tag) on the vehicle and keep the vehicle on the dealer’s insurance policy (NOT have you add it to your insurance policy). Well this should be simple you say..not so fast. Many dealers have consumers sign documents that specifically state the vehicle is being delivered on a conditional basis and must be brought back if the consumer fails to cooperate with the requests of the dealer or potential lender. Such documents may pose a direct conflict to the North Carolina law cited above so how do you reconcile these two? Unfortunately there is no automatic answer to this question. If you find yourself in this position be sure to do the following:
Keep all of your vehicle documents in a safe place—-in the vehicle is NOT a safe place. If the vehicle is picked up by the dealer you will be without your documents. In several cases I have had clients’ documents mysteriously disappear once the vehicle was retrieved by the dealer or the dealer’s agent.
Do not sign any new finance contract, Retail Installment Sales Agreement, Bill of Sale, Buyer’s Order, or any other document that has new dates, details, or terms. Signature could void your rights.
Contact an experienced auto fraud attorney to discuss your situation. These situations involve pressure, legalese, and other things beyond what most consumers are willing or able to handle on their own. Have a professional provide you with an opinion of where you stand and what action you can/should take.
Be informed and know your rights. Here’s hoping your next vehicle purchase goes smoothly and has no strings attached.