Need Advice

[olddog]

My niece is certified by the government to be mentally disabled and gets a pension. She purchased a used car from a new car dealership for $3500. The top KBB value on the car was $3500. She told them she couldn’t afford to repair the car, so it had to be in good running order. The dealership sold her an extended warranty for $2800, then told her she would need gap insurance $900 and wrote it into the loan. They wrote her an $8200 loan from a local bank, on a $3500 car.

Skipping details, the dealership said the head gasket failed and filled the crankcase with antifreeze. The engine is a total loss. The warranty does not cover gaskets. They want $3200 to put a junk yard engine in it, which she does not have.

She called the bank, explained the situation and told them to come get the car. They sent a mechanic to look at the car. The bank told her they didn’t want the car, and if she didn’t finish paying for it, they would come and take her furniture.

Now other used car lots in the area sell that same warranty with the little box checked to cover the gaskets for $600, and they tell me they still make $50. The gap insurance states that if the loan exceeds the book value it will only cover by the ratio of book value to loan amount. In other words, they will not insure an upside down loan. It only covers if it depreciates faster than the loan is paid down. In my opinion, the dealership operated in a predatory manner, and knowingly took advantage of a mentally disabled person.

I’m thinking the bank is acting no better. After all they allowed the dealership to write loans as an agent of the bank, in my opinion. The loan was secured by the title of the car. I do not see they have any write to her furniture. Seems to me they forfeited their claim, when they refused to take the car.

Honestly if you sold everything she owns, including my 6 yr old great nephew’s toys, she might have a net worth of $1500.

Normally, I would agree let the buyer be ware, and she signed the papers. However in this case she is not very smart, and it is obvious. I have a big problem with what the dealership did, and I’m not happy with the bank. I’m going to go talk to the bank, but wanted advice first.

The first point I intend to make is that the dealership wrote at least $2200 more into that loan than reasonable and customary, stuck it into their pocket, and left the bank on the hook for it. They also did not check the box to cover the gaskets on an engine that their own master mechanic said is notorious for blowing head gaskets. The dealership screwed the bank over more than anyone else, IMO.

Thoughts?

[joyridin']

Tell her to walk away from the loan. People do it all the time. I bought a T56 for my Cobra from a 2006 GTO because the guy owed $27 k on the car, blew up the engine, and could not afford to have it fixed with 17k miles. He was selling parts from the car.

Maybe they will come for the money, but I doubt it. Might screw up her credit for a bit though.

Hope it works out for her. This is story is everything that is wrong with dealers in Ohio.

[cycleguy55]

I'm not a lawyer, so keep that in mind, but my view is that if she has been certified as 'mentally disabled' it may be possible to have the sales and loan agreements voided. The argument would be she is incapable of understanding such agreements and the dealership took advantage of her. Similarly, the bank should know better.

It would seem the level of mental disability or impairment is critical, so legal advice would be valuable - but it seems to me there's a reasonable probability of having either or both of the sales and loan agreements voided.

[Ron61]

That sounds like a rip off from the word go. Their master mechanic was probably lying as he works for them. I tend to agree with what Cycleguy said. If they push it, I would consult an attorney and get legal advise. Be sure to keep copies of all papers and any correspondence you have with any of the parties involved in this mess and also if you talk to them take a recorder and inform them that you are recording all conversations.

Ron

[1795]

I would consult an attorney regarding her capacity to make that loan. Does she have a guardian? Be careful, everything in life is a double edged sword. If it is determined by a court that she lacks the cognitive capacity to have signed for that loan it may get her out of that loan, but it will also negate her ability to make future financial arrangements and the court will look to appoint a guardian for financial matters. Be careful and ask a lot of questions before moving forward.

Also, check with the state banking authority and see if there is any way that you can go after the bank for approving a predatory loan.

Good luck.

Jim

[joyridin']

If you go the lawsuit route, just be careful of Ohio laws. They were dramatically changed in 2012 and the consumer lost a lot of rights. As it stands now, they can make you an offer to return your money and $2500. It is up in the air about exactly what they have to return. If you refuse this amount and take them to court and are awarded LESS than this amount, you have to pay ALL fees for your side and the dealerships side and you lose the right to ask for the triple award.

The laws are kind of rigged in Ohio against the consumer these days buying a car new or used.

[DanEC]

I'm not a lawyer either but it seems to me the Bank holds the title to the car and basically owns it. I think I would argue with them to come get their car as reposession is the legal consequences if I no longer make payments on the loan.

I'm sure it's not that simple and I wish your family good luck. Sounds like a unethical if not fradulant deal to me.