Auto Loan Contract

[CivicMan]

What is the name of your state? New York

I recently bought a new car. I took out a loan for about 75% of the purchase price. Now I had the money to pay for the car in full but I took out the loan because I wanted to use the money saved for potentially other purposes and if I decided to pay off the loan early , say within 1 month or 2, very little interest would be accrued and it would give me sometime to think if I want to continue with the loan or pay it off all in cash. The salesman had said the loan rate would be about 5.9% for 5 year loan.

The finance manager provided 2 loan options. One was the first one I mentioned. The second one was a 5 year loan at a lower interest rate 3.9% but you had to buy a 5 year antitheft package costing $2995. Now she spent almost one hour trying to convince me that you pay about the same amount of money. And that is true. Actually the monthly payments for the 3.9% loan was slightly less that the 5.9% loan. So it sounds like a good deal. You pay the same monthly payment and get this anti-theft insurance package Now, I would never had take the anti-theft package because I believe that's money flushed down the toilet but if you're paying the same amount , it's not a bad deal. I told her I wanted to possibly pay the loan off early. She said New York State law requires a loan to be held for a minimum of 18 months. And in 18 months you will have paid off all interest so paying the loan off early on the 5.9% package isn't going to save you any money. So I decided to go for the 3.9% loan. It made sense since given the information I was given.

However, this woman lied. After speaking with bank , I was told you can pay off a loan at anytime and are only responsible for the interest accrued for length of loan is out. I tried to go back to offer to pay in cash but she wouldn't let me. Gave me a song and dance. In fact she didn't really listen to much I had to say, just spent another half hour giving me the sales pitch.

She said first about the NYS loan law that she thought it used to be true, then kind of denied it later so obviously I was talking to the wall.

In the end, she gave me about 20% refund on the anti-theft package. I took it figuring it was this or nothing and I signed paper saying this settles dispute with dealership.

Did she break the law by providing false information that affected my loan decision? Is this fraud?

[cjbrown929]

What is the name of your state? New York

I recently bought a new car. I took out a loan for about 75% of the purchase price. Now I had the money to pay for the car in full but I took out the loan because I wanted to use the money saved for potentially other purposes and if I decided to pay off the loan early , say within 1 month or 2, very little interest would be accrued and it would give me sometime to think if I want to continue with the loan or pay it off all in cash. The salesman had said the loan rate would be about 5.9% for 5 year loan.

The finance manager provided 2 loan options. One was the first one I mentioned. The second one was a 5 year loan at a lower interest rate 3.9% but you had to buy a 5 year antitheft package costing $2995. Now she spent almost one hour trying to convince me that you pay about the same amount of money. And that is true. Actually the monthly payments for the 3.9% loan was slightly less that the 5.9% loan. So it sounds like a good deal. You pay the same monthly payment and get this anti-theft insurance package Now, I would never had take the anti-theft package because I believe that's money flushed down the toilet but if you're paying the same amount , it's not a bad deal. I told her I wanted to possibly pay the loan off early. She said New York State law requires a loan to be held for a minimum of 18 months. And in 18 months you will have paid off all interest so paying the loan off early on the 5.9% package isn't going to save you any money. So I decided to go for the 3.9% loan. It made sense since given the information I was given.

However, this woman lied. After speaking with bank , I was told you can pay off a loan at anytime and are only responsible for the interest accrued for length of loan is out. I tried to go back to offer to pay in cash but she wouldn't let me. Gave me a song and dance. In fact she didn't really listen to much I had to say, just spent another half hour giving me the sales pitch.

She said first about the NYS loan law that she thought it used to be true, then kind of denied it later so obviously I was talking to the wall.

In the end, she gave me about 20% refund on the anti-theft package. I took it figuring it was this or nothing and I signed paper saying this settles dispute with dealership.

Did she break the law by providing false information that affected my loan decision? Is this fraud?

I worked in sales for 10 years at a dealership.

You experienced a classic trick used to boost profits on the "back end" of a deal. "Front end" profit is simply the difference between the sales cost on the vehicle and the price it sold for.

"Back end" profit includes extended warrantys; the differential between the buy rate and the sell rate for the interest rate; paint protection and undercoatings; ALARMS etc.

I would be willing to bet $100 that there is no requirement for you to purchase the antitheft to receive the 3.9 rate. If you have any doubts, ask to see the paperwork that states so. It won't exist.

While it may be a crime to mislead a customer about rates, etc, it would be next to impossible to prove. This doesn't mean that you won't be able to CANCEL the antitheft completely, and still get the 3.9.

[CivicMan]

Thanks for the info.

I called the etching company providing the anti-theft policy and they said it could not be cancelled.

It said on their website that their policies are tied to auto loan rate. So I am not upset that the 3.9% is tied to the anti-theft policy. I paid off my loan in full at first payment so the rate is really irrelevant.

What infuriated me is that the loan officer provided me with false information (NYS law requires loan to be held for 18 months) which is the reason I took the 3.9% rate with anti-theft to begin with. I would think it would be illegal to deliberately provide false information to a customer that would affect their decision to sign a particular contract.

But since it's just my word against the loan officer there is no proof. It's just a life lesson not to believe everything somebody says even if they work for a reputable company.

[dallas702]

What exactly did you you get in this "antitheft" package that isn't already required by law or built into the car? What year is the car?

[CivicMan]

Well, the idea is that if your car is stolen it depreciates over the years so the insurance company will only pay for the depreciated value in the year it was stolen. The anti-theft package will pay for the difference what the insurance company reimburses you and what it would cost the buy a brand new car in the year it was stolen including all taxes and fees. Since I was told you can't save interest by prepaying loan, then you basically pay the same amount of money if you take a 5.9% loan for 5 years or 3.9% loan + antitheft package. So I took the latter package.

[dallas702]

Even though chances are slim your car would get stolen, I'll bet there a better chance of Hell freezing over than the company paying the difference between the car's present value and a new replacement car....especially after the first year.

I'l also bet the list of terms and conditions and caveats is long and binding.