Car loan paid mistakenly by third party

[Nyrobi]

Car loan paid off mistakenly by third party!!

What is the name of your state? California

I recently bought a $18,000.00 car from a local car dealer at 7%. The car dealer sold my loan to a loan company, and I began making payments to them.
Three months later after making payments to my assigned loan company, I received a call from the car dealer saying, "We looked at your credit again and would like offer you a better rate at 5.7%." hmmmmmm......( I thought how could the dealer redo a finance rate they sold to the loan company??) I told him I'd come down in a couple of days and see him anyway.

Before I could get there I received a letter from my loan company "Thanking me for doing business with them because they received my final payment in full, and my account is now closed" I verified the pay off information from the loan company's web site and TRW. They also sent me a $3.00 refund check for early payoff. The car dealer mistakenly paid off my account "in full." It seems they paid off my car loan, thinking it was a trade-in, instead of the car they actually sold me!

Instead of being straight with me and saying, "Hey, we screwed up and we need you to help us out, they tried to dupe me. My contract states in part, "The seller may not change the financing or payment terms unless you agree in writing to the changes. You do not have to agree to any changes." The dealer was a third party, and made an unsolicited payment to my account. As far as I'm concerned it's like a rich uncle paying off my debt.

The loan company sent the title to the dealer. Is the title legally his or mine? The title I have has me as the owner and the loan company as the lien holder. Since the loan is paid off, the car should be free and clear to me. What are my rights? What recourse does the dealer have? Shouldn't this dispute be between the car dealer and the loan company?

I am willing to deal with the dealer, but it's going to cost them a lot more than 5.7%!! Please help.

 

[madforce]

YOU didn't pay for the car, so why are you trying to get a free car from the dealer? Let the dealer re-finance it for you at a better rate, and have them deduct any prior payments you already made.

They made a mistake, but that doesn't entitle you to a free car.

 

[Nyrobi]

That doesn't answer the question

Morality issues aside. My use of this forum is to find out my legal rights! I may very well decide to deal with dealer, nothing in this world is free. You ALWAYS end up paying in the end. But my initial question goes unanswered. Thank you for your comment anyway.

 

[stephenk]

How do you know the dealer did not buy back the loan from the finance company? Did you get the pink slip to the car?

 

[Nyrobi]

Excellent response

Excellent response. I hadn't thought of that. The answer to your question is no. I will call them and ask. However, my contract reads the conditions of the financing cannot be changed or altered without the consent of the buyer. I'm really confused now.
Thank you for your thought provoking comment.

 

[racer72]

You do not own the car, the dealer does. When they show the judge the cashed check that paid off your account the judge will heve no choice but to side with the dealer if it goes that far.

 

[Nyrobi]

Thanks

Grandpa

Thank you. Your wisdom has been recognized.

I recently did some research on Dealer Scams and I'd like to share the following, the exact senerio happened in this case. The following is from CarBuyingTips.com Top 10 Dealer Scams of 2002:

We got a couple of complaints about this starting in November 2002, and it could be a good candidate for next year's Top 10 List. I call it the "We lowered your payments" scam:

About a week after you drive home with your new car, the car dealer calls you up and says "Great news! we were actually able to get you into a better loan with a lower monthly payment and less APR! Just stop by when you get a minute, and resign the papers to get your lower payment." You go down to the dealer to re-sign the paperwork, and this is where a huge red flag should shoot up for you: You notice that they changed your loan from 48 months to 60 months, or even 72 months. What they did in reality was increase the APR on you, then to mask their crime, they spread out the loan over more months, which drives down the monthly payment, and yes there are people out there who believe the dealer and think they are actually paying less. This does not even pass the common sense test either. With most banks, if you increase the number of months in the loan, the APR goes UP, not down! So who are these losers trying to kid? Make sure you point that out to them.

How to avoid the scam: If they call you later, just say "No thanks, I like my payment just the way it is." Then hang up on them. If you really want a lower rate, go refinance, or start sending in extra principle, it has the same effect. But changing an existing deal, is always a dangerous proposition, and you can bet you will not come out ahead.