What Happens After Defaulting On A Loan
In general, defaulting on a loan hurts credit and makes it very tough to qualify for another loan. If you are not able to afford your loan, its a good idea to see if there may be a way to refinance the loan for lower payments.
After a default, it is possible for the dealer to repossess the car and collect any outstanding debt. Worst case scenario, if you know you cannot make your car payment, call the finance company and try to work out a deferment or a payment plan to avoid a repo.
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Can A Car Dealership Cancel A Contract
Imagine buying a new car, driving it home, and then receiving a call from the dealer telling you that the financing fell through. Can the dealer cancel your contract in this case? Surprisingly, the answer is yes. In most cases, the dealer can rescind on the purchase contract but usually only within ten days.
This is called spot delivery. Dealers use this method to get you to agree to purchase a new car before you have a chance to change your mind. Be forewarned, though, that the financing is not set in stone with these types of deliveries and that it can fall through later.
If you read the Sales Contract carefully, it should note that the dealer has the right to rescind the contract within a certain number of days. This is legal. However, there are some practices associated with spot deliveries that are not legal. One of these shady practices is called Yo-yo financing. With yo-yo financing, the dealer will call you a week or so later to say that your funding fell through. They will ask you to come back to the dealership to sign a new financing contract.
Usually, the terms of the new agreement will be unfavorable. The interest rate may be higher or the loan term longer. This practice is deceptive. Dont sign the financing contract if the conditions arent in your favor. Instead, contact anauto fraud attorney for advice. You might have grounds to file an auto fraud lawsuit.
Tips When Backing Out
Before you call your state’s motor vehicle office to pursue a complaint, let the dealer know you plan to do so. This can help you receive your deposit back quickly. But keep in mind that if your state does not offer any recourse and the dealer refuses to take the car back, you must keep the vehicle.
If you have bring the vehicle back while the dealer is closed, call the manufacturer’s customer service hotline. You can find the phone number in the owner’s manual. Let the representative know why you aren’t keeping the car. The representative will let the dealership know or may provide further instruction.
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Can I Return A Car If I Changed My Mind
In general, there are no federal laws that outline a return period following a vehicles purchase.
Unlike many retail markets, cars significantly lose their value simply by leaving the lot. But the immediate car depreciation plays a vital role in consumer protection laws surrounding auto sales.
The valuation of a car depends on whether it is considered new or used. The MSRP of a new vehicle at a dealership depends on manufacturer and dealer markups and other factors that influence a new cars price. Once a contract is signed and the new vehicle is registered to the buyer, it is no longer new. If dealers resell returned cars, they would have to sell them as used and most likely at a loss over a new model.
According to the Federal Trade Commission, federal law does not require dealers to provide car buyers the right to cancel a transaction. State laws may vary, but in general, they mirror federal requirements.
Where it exists, it may be the policy of individual dealerships to allow returns within a certain period after purchase, but it is not a legal obligation.
Car companies and dealers generally dont have this policy, which means drivers will almost always find themselves out of luck if they want to return a car like they might return a lamp or a sweater.
The bottom line: You cant return a car just because you changed your mind about it or because the salesman was pushy unless its written into the sales contract that you can.
Can You Return A Car
Soon after buying a car, you may realize the purchase isnt right, its too expensive, or something is wrong with the vehicle.
So the important question becomes, can you return a car?
In some rare cases, you may be able to return the car, but its quite rare. Heres what you need to know about how to return a car.
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Good Reasons For Returning A New Or Used Car
Eleazer lists several ethical issues for dealers to consider regarding their car return policy. You can use these to your advantage. Edmunds advises that you walk in asking for help and service in a reasonable tone.
Being overly demanding or angry from the start will probably not get you nearly as far as appealing to ethics and great customer service standards. If one of the following applies to your deal, speak about your concerns with a manager or owner of the dealership.
Some of the top reasons to accept a return include the following:
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How To Return A Used Car To The Dealer
Determining when and knowing how toreturn a used car to the dealer can be a difficult decision. It is important to know your rights when a problem arises after the purchase and you deduce to return a used car to the dealer. There are many helpful consumer laws aimed at helping buyers to get out of a contract before returning a used car to the dealer.
In most states, when a dealer or finance company engages in fraudulent practices, the buyer has remedies to revoke the contract and get a full refund. In California, for example, there is a vehicle code that protects car buyers from illegal practices, such as:
- You bought a car and paid more than the advertised price
- You bought a car and it broke down soon after you drove off the lot
- You bought a car and later found out that it has been in an accident or that it is defective or has frame damage.
- You bought a car with a warranty that the dealer wont honor, or you are being told that your repair is not covered due to an exclusion.
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You Changed Your Mind
When you simply have buyers remorse after buying a car, youll probably have the hardest time getting the dealer to agree to a car return. Thats because very few dealerships have a return policy once you sign the sales contract, youre responsible for paying the note as promised.
Although the FTC has a Cooling-Off Rule a rule where you have three days to cancel a sale made at your home, workplace or sellers temporary location a vehicle purchase is one of the exceptions to the rule. Even if a dealership sells you a car at a temporary location, as long as they have one a permanent location, the rule still applies.
Dont Let The Dealership Run A Credit Check
If you are going to finance your new car with a loan, the dealer will have to run a credit check eventually, but dont agree to this before you are well on your way to completing a deal. A full-on credit check, also known as a hard pull, can negatively affect your credit rating. There is no point okaying a credit check and risking a ding to your credit if youre a long way from buying.
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Dealing With Buyer’s Remorse
Dealerships are not required to take your used car back just because you’ve changed your mind, says Trusted Choice Independent Insurance Agents, a company that represents independent insurance business owners. That’s where negotiating skills come in handy in explaining why you’re not happy with your purchase. These reasons can vary from realizing you’re in over your head on the monthly payments, feeling the salesman was overly aggressive or the bank won’t approve the needed financing at an acceptable rate.
Bring documentation to back up your complaint. Speak calmly and tell the manager you need help resolving the issue. Otherwise, your next step may involve going to court to attempt to return the car and get your money back.
Swap Your Lease With Someone Else
Say youve signed a four-year lease, which will be paid off in monthly installments for the next four years. Youre no longer able to afford these paymentsbut maybe someone else can. In the same way that you might find a tenant to take over the rest of your apartment lease, you can also look for someone to take the reins on your car lease. Be sure to look at your lease agreement before starting this process, as there is a possibility that a lease transfer is not permitted.
This can be a great deal for both sides. If you find someone who doesnt want to spring for a new car , taking over an existing lease can be a great idea. People who only need a car for a year or two are also good candidates for a lease takeover. To initiate such a deal, you can search online for lease swapping websites. A popular option is Swapalease, though there are several other sites out there, too. And while many include fees for a lease transfer, this fee is usually much lower than the penalty youd face after returning your car.
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Your Rights When Buying A Used Car Online
If you buy online, consumer rights will still cover you.
But your rights will depend on who the seller is.
If youre buying from an online dealer, you have the same rights as if you bought in person.
The cooling-off period will also cover you – under the Consumer Contracts Regulations 2013.
You have the right to cancel from the moment you place the order until 14 days from when you get your car.
But youll have to return the car within 14 days. You should then get a refund within a fortnight of the dealer getting the car back.
If youre buying from a private seller online, you have the same rights as if buying in person.
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Refinance The Car Loan
If the issue with monthly payments is affordability you may want to look at refinancing your car loan. Qualifying for a new loan with a lower interest rate could save you money and potentially reduce your monthly payment.
It’s important to consider the new loan term, however. If you refinance into a longer loan term, your monthly payments may be lower. But you could still end up paying more in interest versus choosing a shorter car loan. Be sure to check the best car loan rates before going this route.
Looking For Somewhere To Trade In
If your leased vehicle is something you’re looking to trade in, but your credit situation isn’t what it used to be, chances are you need to find a dealership that works with subprime lenders. This way, you can trade-in the car and finance another one. If you don’t know where to start, let us help.
Auto Credit Express works with a nationwide network of special finance dealers that have the lending capabilities to help people with bad credit get the auto loans they need. To get matched with a local dealership, simply fill out our easy and free car loan request form today!
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Returning A Defective Car Under Lemon Laws
Lemon laws are not the same as buyer’s remorse or right to rescind laws. Lemon laws vary from state to state, and each state’s Attorney General’s office defines how these lemon laws are enforced. A lemon law only applies to a vehicle that, after a certain number of repair attempts, still has mechanical faults that are unsafe or detrimental to the operation of the vehicle. When you purchase a new car, during the vehicle delivery process, the salesperson should offer you a pamphlet that explains the lemon laws in your state if they don’t, ask what the laws are.
The time period covered by lemon laws also varies by state. Depending on where you purchased your new vehicle, you have between one and two years to take legal action and return it.
Don’t Discuss Your Trade
Its almost always possiblewith time and effortto sell an old car privately for more than the dealer offers in trade. Many buyers nevertheless find the convenience of driving their old car in and their new one away compelling. If thats your aim, research the value of your trade-in beforehand but decline offers or pressure to discuss it until after youve settled the price on the new car. If it turns out that youre upside down on the old carthat is, you owe more money on it than youre getting in tradeyou probably dont belong in a new-car dealership yet. At the least, the car should be sold privately to pay off the debt. Yes, the dealer will offer to roll your old debt into a new loan. But that’s not a good idea.
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If You Decide You Dont Want A Car You Just Bought Many Auto Dealers Are Unlikely To Let You Return It But There Are Exceptions
The easiest way to find out whether a dealer accepts returns is to ask ideally, before you make a purchase. If its too late for that, being able to return the car typically depends on the dealers policies.
What if the dealer is unwilling to work with you? You might have some options if you decide that you dont want the car anymore or that you cant afford the monthly loan payments.
Lets take a closer look at returns, including what some other options are and what you can do to help ensure you get a car thats right for you in the first place.
What Happens If You Trade In Your Leased Car For Anotherlease
On the other end of the spectrum, if you were to trade your leased vehicle in, instead of just turning it into the dealer, then the dealer can waive the disposition fee, but tack on the other taxes, fees, and repairs onto the new lease that youre trading in for. They will also appraise the car and factor in the appraisal amount against the cars current payoff amount. If this is the case, one piece of advice is to negotiate the repair costs and minimize that amount, that way, you will owe less on your new lease.
You can also shop your lease around to other dealers, such as Carmax, and see what they will give you for the car as they might actually give you more than a traditional dealership. Leasing is actually pretty straightforward if you understand how it works, just remember to always ask your dealer any questions pertaining to returning or trading in your current lease and to make sure to always read the final costs and the fine print.
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What’s The Dealer’s Problem
Before you storm the gates, take a moment to see things from the other side. There is a reason that car dealers are mostly exempt from the federally mandated “cooling off period” that applies to toaster ovens and vacuum cleaners. The laws and state regulations on car sales and financing make a complicated web out of every single deal that auto sellers make.
No matter how willing your dealer might be to help you, the act of unsealing a done deal creates a lot of headaches for everyone involved.
In 2012, finance and insurance agent Marv Eleazer wrote a short article addressing the topic of dealer fairness regarding returns. In it, he outlines several of the main concerns dealers face when deciding whether to reverse a sale:
- Taking back commissions from staff, even after paychecks have been cashed
- Retrieving statements from the DMV that have already been filed
- Filing affidavits to keep the new car status on the vehicle so as to prevent severe depreciation and financial loss
- Retitling a trade-in and getting refunded by the bank
These tasks and the mountains of paperwork involved add up to many hours and troubles for dealership staff for a vehicle that they considered sold and gone. Despite all of this, a dealer might be willing to work with you if you come in with an understandable and ethical reason for the return.
