new car purchase - installment sale contract

[realitybytez]

What is the name of your state (only U.S. law)? California

we just purchased a brand new honda crv last week. we got a decent (not spectacular) price, and the dealer offered us financing at 1.64%, which isn't bad either. we have a signed contract with the dealer called a "RETAIL INSTALLMENT SALE CONTRACT - SIMPLE INTEREST FINANCE". 99% of the contract is straight-forward, but there's a couple of issues.

issue #1: there is a "Agreement to Arbitrate" section. this section was never mentioned during the financing session, and we were never asked to sign it. It is in it's own box, and there is a signature line, but we did NOT sign it. now, here we are a week later and the dealer is calling us and telling us we have to come in and sign that section or we will not get the financing. ??? we already have a signed contract, how can they require us to change the terms of the contract now?

issue #2: this is a much smaller issue. we asked the finance guy three times if there is any prepayment penalty on this contract, and he said no, and kept pointing to a line near the bottom of the contract that states "you can prepay the full amount due under this agreement at any time". after we got home, i discovered another line in the contract on a totally different part of the page that says "if you pay off your debt early, you may be charged a minimum finance charge" buried on the back of the form, the "minimum finance charge is defined as $75". not a huge deal, but i still feel like we were misled.

anyway, we are hesitant to go into the dealer and sign the arbitration clause because we feel like we have already closed the deal. any advice on how to proceed?

 

[LdiJ]

What is the name of your state (only U.S. law)? California

we just purchased a brand new honda crv last week. we got a decent (not spectacular) price, and the dealer offered us financing at 1.64%, which isn't bad either. we have a signed contract with the dealer called a "RETAIL INSTALLMENT SALE CONTRACT - SIMPLE INTEREST FINANCE". 99% of the contract is straight-forward, but there's a couple of issues.

issue #1: there is a "Agreement to Arbitrate" section. this section was never mentioned during the financing session, and we were never asked to sign it. It is in it's own box, and there is a signature line, but we did NOT sign it. now, here we are a week later and the dealer is calling us and telling us we have to come in and sign that section or we will not get the financing. ??? we already have a signed contract, how can they require us to change the terms of the contract now?

issue #2: this is a much smaller issue. we asked the finance guy three times if there is any prepayment penalty on this contract, and he said no, and kept pointing to a line near the bottom of the contract that states "you can prepay the full amount due under this agreement at any time". after we got home, i discovered another line in the contract on a totally different part of the page that says "if you pay off your debt early, you may be charged a minimum finance charge" buried on the back of the form, the "minimum finance charge is defined as $75". not a huge deal, but i still feel like we were misled.

anyway, we are hesitant to go into the dealer and sign the arbitration clause because we feel like we have already closed the deal. any advice on how to proceed?

If the finance company won't approve the financing without the arbitration clause then you stand to lose the financing. What do you have against arbitration?

 

[realitybytez]

If the finance company won't approve the financing without the arbitration clause then you stand to lose the financing. What do you have against arbitration?

i don't think it's ever a good idea to relinquish your right to sue for any reason. dealership mandatory arbitration agreements are almost always designed to protect the seller and to make it nearly impossible for the consumer to receive a fair hearing—even when the fraud committed against the consumer is clear and highly destructive.

 

[Zigner]

i don't think it's ever a good idea to relinquish your right to sue for any reason. dealership mandatory arbitration agreements are almost always designed to protect the seller and to make it nearly impossible for the consumer to receive a fair hearing—even when the fraud committed against the consumer is clear and highly destructive.

Nonsense. The hearing that the consumer receives is perfectly fair.

 

[LdiJ]

Nonsense. The hearing that the consumer receives is perfectly fair.

I agree. I think arbitration is one of the most fair forms of resolving a dispute. Its certainly far less costly that a full out legal battle.

 

[realitybytez]

so the advice is what?

go into the dealer and sign the arbitration clause?

 

[Zigner]

go into the dealer and sign the arbitration clause?

The OP could obtain other financing more to his/her liking.

 

[tranquility]

My wife recently bought a car that had an arbitration clause as well. She didn't sign the area and the dealer got a bit peeved when he discovered the "error" on review. Now, we did not finance the vehicle and it was an all cash deal so there was not much they could do at that point.

Arbitration is certainly cheaper than litigation. And, while in theory it should be fair, the arbitration companies certainly know they won't be getting a ton of repeat business if the side that arbitrates the most keeps losing. On the one side is a person that is worth one fee while on the other is an organization potentially worth hundreds of fees, if the call is close, where should the hammer fall?

The mere fact businesses much prefer arbitration over litigation makes the answer clear. It is unfair? I can't say I have any evidence of that. It's just they company really, really, really seems to want it.

 

[realitybytez]

My wife recently bought a car that had an arbitration clause as well. She didn't sign the area and the dealer got a bit peeved when he discovered the "error" on review. Now, we did not finance the vehicle and it was an all cash deal so there was not much they could do at that point.

Arbitration is certainly cheaper than litigation. And, while in theory it should be fair, the arbitration companies certainly know they won't be getting a ton of repeat business if the side that arbitrates the most keeps losing. On the one side is a person that is worth one fee while on the other is an organization potentially worth hundreds of fees, if the call is close, where should the hammer fall?

The mere fact businesses much prefer arbitration over litigation makes the answer clear. It is unfair? I can't say I have any evidence of that. It's just they company really, really, really seems to want it.

that's what i was thinking as well.

 

[realitybytez]

My wife recently bought a car that had an arbitration clause as well. She didn't sign the area and the dealer got a bit peeved when he discovered the "error" on review. Now, we did not finance the vehicle and it was an all cash deal so there was not much they could do at that point.

Arbitration is certainly cheaper than litigation. And, while in theory it should be fair, the arbitration companies certainly know they won't be getting a ton of repeat business if the side that arbitrates the most keeps losing. On the one side is a person that is worth one fee while on the other is an organization potentially worth hundreds of fees, if the call is close, where should the hammer fall?

The mere fact businesses much prefer arbitration over litigation makes the answer clear. It is unfair? I can't say I have any evidence of that. It's just they company really, really, really seems to want it.

this makes me think that this might not be a mistake at all. and then they wait until we have had the car for a week before discovering the "error"? now what? it's a little late in the game to start re-thinking the purchase. but if i read the contract correctly, the only thing that happens if they can't secure the financing is that they take the car back and we get our money back.

 

[tranquility]

this makes me think that this might not be a mistake at all. and then they wait until we have had the car for a week before discovering the "error"? now what? it's a little late in the game to start re-thinking the purchase. but if i read the contract correctly, the only thing that happens if they can't secure the financing is that they take the car back and we get our money back.

You must read your contract carefully. The financing may be an entirely separate contract. Such things have happened in the past and the tap-tap status quo ante may not be the legal result.

 

[TigerD]

OP: I'm sorry for the harshness of this comment.

Don't be dense or stupid. Arbitration is a fair processes and far cheaper than litigation.
Go sign the form that you should have and would have signed at the time of the sale.

You are only going to hurt yourself by refusing.

DC

 

[tranquility]

There is a difference of opinion on that point:

http://www.yalelawjournal.org/note/mandatory-and-fair-a-better-system-of-mandatory-arbitration

http://www.naag.org/binding-mandatory-arbitration-scrutinized.php

http://scholars.law.unlv.edu/cgi/viewcontent.cgi?article=1880&context=facpub

http://www.fairarbitrationnow.org/what-arbitration/common-questions/

http://blogs.wsj.com/law/2009/03/11/consumers-rejoice-after-all-arbitration-is-fair-study-says/

http://www.citizen.org/arbitration

http://www.dontgettakeneverytime.com/arbitration_faq.htm

http://www.jsonline.com/news/29336759.html

http://www.sfgate.com/news/article/PRIVATE-JUSTICE-Can-public-count-on-fair-2870731.php

http://alternative-dispute-resolution.lawyers.com/arbitration/arbitration-and-mediation.html

 

[realitybytez]

OP: I'm sorry for the harshness of this comment.

Don't be dense or stupid. Arbitration is a fair processes and far cheaper than litigation.
Go sign the form that you should have and would have signed at the time of the sale.

You are only going to hurt yourself by refusing.

DC

that is your opinion - to which you are entitled. however, as tranquillity has pointed out, there are many who disagree with that opinion. and for very good reasons.

 

[LdiJ]

that is your opinion - to which you are entitled. however, as tranquillity has pointed out, there are many who disagree with that opinion. and for very good reasons.

Nevertheless, do you want to keep that really great financing or not?