Lender wants to change terms due to oversight

What is the name of your state? Colorado

We signed a contract for an auto loan with Bellco on Dec. 31 2007. On Jan 24th, Bellco called saying there was a problem with our loan. They, admittedly, missed the fact that the used car we purchased has a salvage title. They cannot hold salvage titles and want to get the loan off the books and put it on an unsecured loan (ie. a credit card) or use a home equity loan.

NEVER did they ask if the car was salvaged. We would have gladly told them. If they were not able to do the loan, we would have gone with someone else. Now they want to change the loan which will probably increase the interest rate we will be paying.

Can they do this? It seem to me that we have a legal contract and they need to honor the terms of our loan. Given the way they are handling this, we have no desire to refinance our home with them to get them out of this. Can we insist they uphold the contract?

Thank you for your advice.What is the name of your state?

Does your contract say anything specific about the car to be traded in? Is there anything conditional on financing in the contract? Are they able to offer you any better terms as compensation for changing the contract? Unless they can prove fraud by you it just may be one of those mistakes they will have to eat this time....

CraigFL said:

Does your contract say anything specific about the car to be traded in? Is there anything conditional on financing in the contract? Are they able to offer you any better terms as compensation for changing the contract? Unless they can prove fraud by you it just may be one of those mistakes they will have to eat this time....

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I don't trust car dealers.

I've seen tons of posts like this.

All car dealers surely cannot be that stupid; I think they lure you in and then try to change stuff after you buy your car.

But...what do I know? Hey, I thought OJ was guilty!

cflaherty said:

What is the name of your state? Colorado

They cannot hold salvage titles and want to get the loan off the books

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I'd tell 'em that they're going to make an exception. You have a contract, and will be making your payments as scheduled. There's really nothing else to talk about.

They are not offering anything better -- unless we want to refinance our house with them and roll the cost of the car into it. We do need to refi our 1st (our ARM is up in march) but after all this, we don't want to go with Bellco. With the way they are handling this, they may decide in a month that our house is not worth what they thought and try to raise our interest rate . . .

When I mentioned to the loan officer that I did not think they could legally change the terms of the loan, he stated that they have the right to call in the note at any time. The only statement I see in our contract says they can ask for additional security if they feel the orginal security (the car) has lost value and they could incur a loss. That says to me that they can ask for us to sign over something else, but still keep our original loan and terms.

I suggested to him that they check with their legal department. If they "cannot" make an exception, they perhaps they should find another lender they can sell our loan to, they way mortgage companies do. We left it with him checking with his legal department.