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Posted in Auto Loans
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Question By
MDubs2000

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1 Person Helped
Purchased car with bad credit trying to avoid problems with dealership
I purchased a car just under a month ago from a dealership. The car has been great, but after reviewing all of my documents and details I have some big concerns. My car was sold to me below what is listed for his KBB trade in value which the dealership explained to me was because of my credit score and ranking they said them selling it to me that way and then selling it to me with an extended warranty (additional 3000) and gap coverage (additional 500) were how they actually make a little money otherwise they would take a loss on the vehicle. Also an added note the insurance cost is subject to tax at 9.5% The salesman tried to show me this on his computer, but I couldn't really make sense of his computer nor do I have any way to tell if it was truethful. In reviewing my documents I have a right to cancel the insurance within 30 days and receive a full refund, and in my documentation it explicitly states 2 things. 1. The insurance purchase is not necessary to receive the lending. 2. We are not responsible for anything we say, only things which are in writing. The dealers are guaranteeing me (only in verbal communications) I can cancel the insurance policies after 90 days and only have to pay them pro rats for that time.The interest rate is 19.08 percent on my loan. I am very concerned that I have to pay 19.08% interest on a loan that includes 3500 in insurance costs and ~300 in tax for things I don't want. I went to the dealership to cancel after having had some other problems with them and I've already made my first payment to the lending company my deposit is gone from the bank everything is good. They started cursing at me and getting upset threatening to take my new car away saying I can't cancel the policy that I had agreed verbally to keep it for 90 days and saying my only two options are to keep the policy or return the car to them and pay them 1.50$ per mile I drove it in the last month along with any other wear and tear they find on the vehicle. What do I do? I feel like maybe some of what they are saying is true about selling the car at a loss based on KBB values showing my car sold to me below the lowest range of blue blue trade in values even. I feel bad if I'm going back on my word, but I also feel like it's a used car dealer and they are just trying to screw me over. I don't want to be paying interest on this policy and hoping that they do honor their word to cancel it and refund me ~3100 after 90 days.

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They are correct that is they sold the car to you at a bargin price they are only making money in commisions for selling the extended warranty and gap coverage. Neither of these things are bad for you, but you are paying for them at a high interest rate.  If you cancel now the dealership loses those commisions and now takes a loss on the viehcle, so this would understandably make them upset.  Not to the point of cursing and getting irate, but to saying either keep or return so they do not lose money is to be expected.  You can cancel after the 90 days and get most of the money back, and the dealership still gets the commision, and is a common tactic used in the industry.  The dealership will not refund you, but the insurance company will send you a check when you cancel after 90days.  If you apply all of this money to your loan it should not hurt you too much in costs, and it is most likely you are saving more money in what the dealership would have charged more for to make money on the sale of the car.

Reply by
MDubs2000

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Helpful to 1 out of 1 people

Thank you for your reply.  I didn't realize this was a common practice and thought that they may have been misleading me.  I work in insurance I know how some products can be very convoluted and sold to people just to generate commissions without proper understanding.  I felt like I was in the dark and getting screwed over by the stereotypical used car salesman.  I will wait the 90 days to cancel the policy.  Thanks again for or helping me to feel like I'm not being preyed on by a dealership.

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You are most welcome.  And yes they do prey and use some tactics I do not agree with, such as this and they also get commisions on the loans quite often, it drives up the costs of those insurances :( .  As long as you feel you got the car at what sounds like a very good price and it is not damaged in some way, then this is how they are making their money. Hope you got the CARFAX lol. Best of luck

Reply by
MDubs2000

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I did get the car fax and did as much research as I could.  Only one owner before my purchase.  Vehicle seems to have been mostly used for recreation.  5 years old and 16000 miles only.  Those numbers checked out on the car fax.  However one thing about it that seemed strange was that the dealership had purchased it in Brittish Columbia and I live in Washington.  I was currious about how things were coming along with title transfer since I hadn't received anything yet so I called the WA DOL and they told me they don't have any records at all for the vehicle I purchased at all, not just records for a title transfer but no records of it ever existing.  I've confirmed the vin multiple times, but it seems weird that I would buy from a big dealership in Washington state that sold it and the state wouldn't have a record of that practically a month after purchase.

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I would be on the phone right away with the Attorney General's office in your state, consumer protection agency, etc. You need to go by what is in WRITING. This is obviously a very shady dealership. Go to a local reputable dealership and ask them if they could give you some advice on how to proceed. And unless you got financing directly with the dealership, they have absolutely NO right to take your car back as they do not own it, the lending company does.

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Personally, I would go by what's in writing and not what's been said...after all we are talking about used car salesman here. lol, its even stated as such in writing, that "we aren't responsible for what we say..."  then why would you go by what they said? If it stated in writing you can cancel it with-in 30 days and affect the lending? Then you should cancel it with-in 30 days and NOT 90 days as they "said". But that's just me.

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Have you check the KBB's pricing on your own?

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Reply by
JohnnyRain127

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554 People Helped

Correction.... "and NO affect the lending?"

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