# Can dealer back out of contract?



## Alpine300ZHP (Jan 31, 2007)

omaralt said:


> wow. a lot of people talking without any knowledge. what you need to answer is this; does your verbal agreement with the dealer match the first (original) or second contract? if it matches the original contract and they now want to charge you more tell them to F off. if it matches the second contract and they accidentally undercharged you i would sign the new contract. honest mistake


This is how I see it.

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## Arcane.Host (Sep 8, 2006)

ard said:


> When was the last time ANY car dealer- the day after selling a car- "did the right thing" when a buyer came back in with an issue over the deal terms? Never.


On December 30, 2011 - my uncle leased a new 2012 X5 from the dealer I recommended to him. He did not give my reference to the dealer. Next morning I called my contact at the dealership and asked for a better deal. The GM agreed to meet in an hour and redo the paperwork with about $115 per month payment reduction with no extra payments made and with the same terms - 12k/36k mile (car did not have any down payment for cap reduction anyways and did have 7 MSDs already).

Unless the dealer sold you the deal saying it is for 59 payments only while you use the car for 60 months - My advise to the OP is to offer meet the dealer midway and then call it quits by paying in full if needed. You will feel good about it always. Do the right thing and live proud. Set an example for the younger ones as well - you will earn their respect for life.

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## VIZSLA (Mar 16, 2007)

[email protected] said:


> Sounds like a finance contract maybe even a select finance. You don't pay a 1st payment at contracting.
> 
> If you agreed to a 60 month term...why wouldn't you have 60 payments?
> 
> ...


Given the immediate depreciation wouldn't the dealer loose more taking back the car than absorbing a payment?


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## ard (Jul 1, 2009)

VIZSLA said:


> Given the immediate depreciation wouldn't the dealer loose more taking back the car than absorbing a payment?


Dealer hasnt titled the car yet. He still holds all the documents, Car will be sold as new. IMHO


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## omaralt (Jul 17, 2010)

ard said:


> Dealer hasnt titled the car yet. He still holds all the documents, Car will be sold as new. IMHO


Except the car probably has a few hundred miles...


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## [email protected] (Jun 28, 2012)

VIZSLA said:


> Given the immediate depreciation wouldn't the dealer loose more taking back the car than absorbing a payment?


The last thing the dealer wants is the deal to unwound.

The car was registered with DMV as a new car. If the deal goes south dealer can't RS the car as new again.

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## [email protected] (Jun 28, 2012)

ard said:


> Dealer hasnt titled the car yet. He still holds all the documents, Car will be sold as new. IMHO


Car can't be sold as new twice once it has been register with DMV

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## namelessman (Dec 23, 2004)

Can contract be rewritten if it is a cash deal? There is no contingency to finance approval and such, so would the mutually signed contract be final?


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## ard (Jul 1, 2009)

omaralt said:


> Except the car probably has a few hundred miles...


Salesmen can surely make up a story that someone will buy.


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## ard (Jul 1, 2009)

[email protected] said:


> Car can't be sold as new twice once it has been register with DMV
> 
> Sent from BimmerApp mobile app


I know you're job is to represent dealers and argue that point of view...but lets be honest and no half truths.

You are assuming the car was registered, right? If dealer has not yet done the paperwork, do you think they would go ahead and register the car after the owner had returned the car?

Obviously you cannot sell a new car twice. But obviously if they haven yet registered the car they just unwind the deal. Now we can get into the legalities of unwinds versus rollbacks, and I know that there has NEVER been a dealer ANYWHERE that fudged on that....again, sponsors, I am not talking about your shops- but rather might happen in the wild.

In the interest of honesty, I 100% agree that if DMV has received the title application, they can only do a "rollback" and the car WILL be used.

https://www.dmv.ca.gov/pubs/reg_hdbk/ch6/ch6_8.htm



[email protected] said:


> The car was registered with DMV as a new car.


Do you have specific knowledge of this deal?? I so I apologize at the generalizations....


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## [email protected] (Jun 28, 2012)

I know you think you know everything and we the dealers are Satan's spawn. That's cool

I did not argue for the dealer or the OP. I just stated what I think are the options for the OP.

In the link you posted it tells you when the second owner buys the car the report of sale must be a used car. 

In CA we all pay a EFF. The registration is in sequence. If we think the deal will not get funded we will not RS the car. We will just paper roll the deal meaning the car does not leave the lot and RS has not been assigned. 

I don't know what it is you are arguing about.

The dealer clearly has more to lose then the buyer. They have a contract that can't be funded. 

What is the end game? You tell me. 



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## sublimegolf (Mar 9, 2010)

[email protected] said:


> Sounds like a finance contract maybe even a select finance. You don't pay a 1st payment at contracting.
> 
> If you agreed to a 60 month term...why wouldn't you have 60 payments?
> 
> ...


Thanks for everyone's response!

Yes...It's select financing. It basically about a extra payment of $730. 
When the finance manager first called me, she wanted to offer me free window tint worth about $700, according to her. I wasn't sure what it was all about. Then she said there was a problem with the rate but the 2.90% was on both contracts. I asked for a store credit for $730 that she said she could look into it. Later called me back and said they couldn't do that. She basically said sign the contract or bring the car back.


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## ard (Jul 1, 2009)

sublimegolf said:


> Thanks for everyone's response!
> 
> Yes...It's select financing. It basically about a extra payment of $730.
> When the finance manager first called me, she wanted to offer me free window tint worth about $700, according to her. I wasn't sure what it was all about. Then she said there was a problem with the rate but the 2.90% was on both contracts. I asked for a store credit for $730 that she said she could look into it. Later called me back and said they couldn't do that. She basically said sign the contract or bring the car back.


Well she's being nice, huh?

Pick option #1 that Justin laid out.


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## [email protected] (Jun 28, 2012)

sublimegolf said:


> Thanks for everyone's response!
> 
> Yes...It's select financing. It basically about a extra payment of $730.
> 
> When the finance manager first called me, she wanted to offer me free window tint worth about $700, according to her. I wasn't sure what it was all about. Then she said there was a problem with the rate but the 2.90% was on both contracts. I asked for a store credit for $730 that she said she could look into it. Later called me back and said they couldn't do that. She basically said sign the contract or bring the car back.


$730.00 is asking a lot... A couple hundred in goodwill should be a deal closer. Bottom line is what is it you want out of this?

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## ard (Jul 1, 2009)

[email protected] said:


> In the link you posted it tells you when the second owner buys the car the report of sale must be a used car.


I was pointing out that there are Unwinds and Rollbacks. The link I gave was to show folks the CA rules on a rollback. There are unwind rules there as well- key point on an unwind is the car cannot leave the lot. Or the dealer needs to attest that it didnt



[email protected] said:


> In CA we all pay a EFF. The registration is in sequence. If we think the deal will not get funded we will not RS the car. We will just paper roll the deal meaning the car does not leave the lot and RS has not been assigned.


And my point is that maybe, just maybe a car CAN leave the lot, not get registered and the dealer keeps it as a new car. Maybe.



[email protected] said:


> I don't know what it is you are arguing about.
> 
> The dealer clearly has more to lose then the buyer. They have a contract that can't be funded.
> 
> What is the end game? You tell me.


Dunno. Maybe the car will come back and be used. maybe the car will come back, the dealer cuts a few corners and it gets unwound. You dont know, I dont know. I suppose it is as wrong for me to say- definitively- that it will be sold as new, as it is for you to say definitively that it will be sold as used.

Thats all we are discussing I guess...


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## [email protected] (Jun 28, 2012)

ard said:


> I was pointing out that there are Unwinds and Rollbacks. The link I gave was to show folks the CA rules on a rollback. There are unwind rules there as well- key point on an unwind is the car cannot leave the lot. Or the dealer needs to attest that it didnt
> 
> And my point is that maybe, just maybe a car CAN leave the lot, not get registered and the dealer keeps it as a new car. Maybe.
> 
> ...


What ever the case is ... It will be stupid for the dealer to allow the deal to go south over a payment specially on a 2014.

I know this much ...the manager that desked the deal and the finance gal that typed the deal will not be having a nice chit chat with the GM.

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## Runon MD1 (Dec 26, 2006)

*Can dealer back out of a contract*



VIZSLA said:


> Given the immediate depreciation wouldn't the dealer loose more taking back the car than absorbing a payment?


He might or might not "lose" more.


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## Runon MD1 (Dec 26, 2006)

ard said:


> Dealer hasnt titled the car yet. He still holds all the documents, Car will be sold as new. IMHO


As to another issue, I do not believe that there is a "cooling off" period in CA, so that if there is an error in favor of the dealer, can the purchaser in CA back out? That would be a "no."

I'm not sure that a car can be re-sold as new if it has more than a certain number of miles on it, though I may be entirely wrong on that point...I am hardly an expert, whereas others on this site are, and I defer to their expertise. We don't know how many miles are on the car anyway.

I assume it wasn't registered/titled with the DMV. If so, that may impact upon the ability of the dealer to sell it as new, but, again, I'm not sure.

Richard


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## tturedraider (Nov 11, 2005)

sublimegolf said:


> Thanks for everyone's response!
> 
> Yes...It's select financing. It basically about a extra payment of $730.
> When the finance manager first called me, she wanted to offer me free window tint worth about $700, according to her. I wasn't sure what it was all about. Then she said there was a problem with the rate but the 2.90% was on both contracts. I asked for a store credit for $730 that she said she could look into it. Later called me back and said they couldn't do that. She basically said sign the contract or bring the car back.


So, you expected 60 payments at $730 and a mistake was made that resulted in only 59 payments showing on the contract and you want to take advantage of that? Is that correct?


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## sublimegolf (Mar 9, 2010)

I was under the impression that my first payment was included my down payment and drive offs...


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## ddeliber (Jan 31, 2013)

The problem that I have with this situation is what would cause a sales manager and an F&I mgr to write 59 instead of 60 here? I just can't see how they would make that kind of mistake. If what Justin says - leases 1st pymnt up front, finance it is after the month is up - is true (and it sure sounds perfectly logical and straightforward now that it has been explained), no one would ever be writing up 59 payment finance deals. It is not like this is their 1st (or 100th for that matter) deal right - assuming the guys aren't brand new of course - but that should add an additional level of scrutiny on their contracts. 

Plus the thought of a Select contract with a baloon doesn't seem right either. $730 sounds about right for a 535d over 5 yrs with a trade. I don't know the MSRP or the deal here, but I did just receive 2 separate emails ads touting >$10k off 535d's this week. 730 * 59 = 43070 + a trade sounds like a 535d (less 10ish k discount) with finance charges and tax etc. Do people do balloon's like this? Maybe I am wrong here, but it doesn't seem like that would be something that is a worthwhile strategy, but then again I've never done anything like this so IDK. Plus I am assuming there is a trade/down payment in that ballpark.


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## dunderhi (Dec 10, 2006)

Dealerships are businesses comprised of people. People have different motivations and flaws.

Case #1 Sometimes when motivated by money, deception can come into play as what happened to me when the finance manager swore up and down that she used the agreed upon MF despite the lease payments being too high for her quoted MF. It took the sales manager to unscrew the issue after which she was still defiant stating that she wasn't required to disclose her hidden adder and then she claimed she never agreed to any MF, despite having my wife as a witness to our discussions.

Case #2 Sometimes, there are simple misunderstandings. After some very frustrating negotiations where the CA and the SM couldn't produce a deal with the correct numbers, I began to doubt their sincerity and called the CA on it. After discussing my concern with the SM, the SM invited me into his office and I helped him with his computer entries. Once I figured out what he was doing wrong, we got the numbers to add up correctly. The combination of MSDs and not using my trade-in as a,down payment had him all confused.

Case #3 Sometimes people just look out for you best interest. I signed my paperwork the day before I left for my ED trip. After returning home and noticing there was nothing on my online BMW account about my lease terms, I called the dealer. The asked me to come in to discuss my paperwork. Well it turned out that month's lease numbers improved, but BMW had't released the current month's numbers when I had signed. The SM sat on my paperwork for three weeks until I could come in and re-sign the new paperwork saving me a little more than $100/mo.

So there you have it, dealers can have some bad, some confused, and some good people.

So my advice to the OP is to do the math: money down, trade-in, selling price, fees, taxes, interest, total payments, etc. Ignore any confusion you had at signing, the math doesn't lie. Does the deal add up to 59 or 60 payments?


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## [email protected] (Jun 28, 2012)

ddeliber said:


> The problem that I have with this situation is what would cause a sales manager and an F&I mgr to write 59 instead of 60 here? I just can't see how they would make that kind of mistake. If what Justin says - leases 1st pymnt up front, finance it is after the month is up - is true (and it sure sounds perfectly logical and straightforward now that it has been explained), no one would ever be writing up 59 payment finance deals. It is not like this is their 1st (or 100th for that matter) deal right - assuming the guys aren't brand new of course - but that should add an additional level of scrutiny on their contracts.
> 
> Plus the thought of a Select contract with a baloon doesn't seem right either. $730 sounds about right for a 535d over 5 yrs with a trade. I don't know the MSRP or the deal here, but I did just receive 2 separate emails ads touting >$10k off 535d's this week. 730 * 59 = 43070 + a trade sounds like a 535d (less 10ish k discount) with finance charges and tax etc. Do people do balloon's like this? Maybe I am wrong here, but it doesn't seem like that would be something that is a worthwhile strategy, but then again I've never done anything like this so IDK. Plus I am assuming there is a trade/down payment in that ballpark.


Select finance is very rarely written up even in a high volume metro store like mine. A smaller store may not type one up for months.

I have no knowledge of where the OP picked up their car from but my guess is most likely not from a big LA dealer.

I mean if the dealer is out for blood why would they short change themselves?

If I tell you I'm going to put you on a 60 month select contract ... What is your mind telling you? 60 payments with the last one being the balloon? If that is what your mind is telling you then the contract should read 59 monthly payments and one final payment. In reality a 60 month select contract should read 60 monthly payments and one final payment. Your last monthly payment and the final payment (balloon) are due concurrently. 60 monthly payments and a balloon payment is actually 61 total payments.

Nobody knows if the deal was worked correctly or not from the beginning. Bottom line is the contract got screwed up and now needs to be rewritten.

If the manager screwed it up he/she should just own up to it and tell the OP dude I screwed it up and here is what I can do for you to offset the error. FI also should be held accountable because they are the last line of defence before buyer drives out with their new toy. They are suppose to double check the structure is correct before typing up the contract.

Of course it could all just be BS and there is some sinister plot hatched by the sellers to give themselves a major headache. I mean what do I know...I didn't even stay in a holiday inn express.

Last but not least no way OP put up a large down payment on this contract... A couple grand give or take. The whole point of a select is not have to pluck down a large down payment to get to a monthly payment that makes sense.

When it's all said and done I hope it works out for both the OP and the dealer.

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## ddeliber (Jan 31, 2013)

Ok, this helps explain things better, thanks Justin. Plus I re-read post 32 which confirms select financing (I did miss that, my bad). It sounds like an honest mistake. I would work something out - tint shouldn't cost near $700 so I'd go shopping in the store and add a couple things up to get closer to a number that works for me (a big discount on something like the wheel and tire pkg sounds pretty good too). However, if you decide to stick to you guns on this be prepared to not go back there they will get it back in pricing for service or whatever. I also doubt that they really want to unwind the deal, they just want to get you back there so they can "discuss this further". Let us know what you decide.


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## omaralt (Jul 17, 2010)

ddeliber said:


> Ok, this helps explain things better, thanks Justin. Plus I re-read post 32 which confirms select financing (I did miss that, my bad). It sounds like an honest mistake. I would work something out - tint shouldn't cost near $700 so I'd go shopping in the store and add a couple things up to get closer to a number that works for me (a big discount on something like the wheel and tire pkg sounds pretty good too). However, if you decide to stick to you guns on this be prepared to not go back there they will get it back in pricing for service or whatever. I also doubt that they really want to unwind the deal, they just want to get you back there so they can "discuss this further". Let us know what you decide.


I really don't understand this mentality. Why is he entitled to a bunch of free stuff?? They made an honest mistake with the paperwork. Correct the mistake and move on. They offered him free tint, that's awesome. Take the free tint, correct the mistake, and move on with your life. Some people really like to complicate things...


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## ddeliber (Jan 31, 2013)

He said he wasn't happy with the tint offer, I was suggesting a different option as opposed to blowing them off - which I don't think he should do. A "bunch of free stuff"? The dealer offered compensation, if he doesn't want tint I think it is perfectly acceptable to make a reasonable counter offer.


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## innovativeit (Sep 30, 2007)

ard said:


> They are adults, fully mentally capable - correct?
> 
> In fact they- as their professional occupation- sell cars? And there was a "finance manager" that did the contract?
> 
> ...


Actually, I have had an auto store come back to me a couple of times when an internal audit indicated that I had mistakenly paid an additional fee. I also have pointed out instances where a store had failed to include something such as the addition of an accessory at the last minute.


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## omaralt (Jul 17, 2010)

ddeliber said:


> He said he wasn't happy with the tint offer, I was suggesting a different option as opposed to blowing them off - which I don't think he should do. A "bunch of free stuff"? The dealer offered compensation, if he doesn't want tint I think it is perfectly acceptable to make a reasonable counter offer.


He can't blow them off. From what I'm understanding the contract as written does not work. It has to be 60 payments. So they can re-write it and discount $730 off the car or write it as originally agreed. If he doesn't do that the car can be repoed?

My issue is why the hell does most everybody think he's entitled to something? When I bought my wife's odyssey there was a problem with the paperwork and they sent a driver to my office where I re signed the contract. I didn't demand the managers first born son . He's not inconvenienced in any way... I really don't get the fuss


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## timsev (Jun 6, 2011)

omaralt said:


> He can't blow them off. From what I'm understanding the contract as written does not work. It has to be 60 payments. So they can re-write it and discount $730 off the car or write it as originally agreed. If he doesn't do that the car can be repoed?
> 
> My issue is why the hell does most everybody think he's entitled to something? When I bought my wife's odyssey there was a problem with the paperwork and they sent a driver to my office where I re signed the contract. I didn't demand the managers first born son . He's not inconvenienced in any way... I really don't get the fuss


That's because you're a reasonable person. Many people on this board demand blood the at the first hint of a tiny mistake on the dealer because they perceive the dealer to be some back alley shady operation that wants to ruin customers' lives. Car message boards are filled with people that bitch about honest mistakes and then demand the world in return. I would hope those people never make any mistakes in life or in their profession...


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## ddeliber (Jan 31, 2013)

omaralt said:


> He can't blow them off. From what I'm understanding the contract as written does not work. It has to be 60 payments. So they can re-write it and discount $730 off the car or write it as originally agreed. If he doesn't do that the car can be repoed?
> 
> My issue is why the hell does most everybody think he's entitled to something? When I bought my wife's odyssey there was a problem with the paperwork and they sent a driver to my office where I re signed the contract. I didn't demand the managers first born son . He's not inconvenienced in any way... I really don't get the fuss





timsev said:


> That's because you're a reasonable person. Many people on this board demand blood the at the first hint of a tiny mistake on the dealer because they perceive the dealer to be some back alley shady operation that wants to ruin customers' lives. Car message boards are filled with people that bitch about honest mistakes and then demand the world in return. I would hope those people never make any mistakes in life or in their profession...


Entitled? Again, they offered to compensate him for THEIR mistake. Who is demanding anyone's first born son? You are just overstating things to a ridiculous degree, that makes your point less credible. If you want to let people walk all over you then knock yourself out. Go ahead and grab your ankles and say thank you sir may I have another. This mistake cost the OP over $700, the dealer recognizes this and offered something to make up for it. You might think that $700 is meaningless but others probably don't.

IMO, this is a mistake without any premeditated motives. I think being reasonable is the best response. OP if you don't like/want tint, I recommend a reasonable counter offer and that's it. No frst born, no world, just something in line with the unexpected additional cost. When I make a mistake in any situation, I expect and am willing to pay for it in a manor commensurate with the offense. And I expect the same from people I do business with. No grudges, no dramas.


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## ard (Jul 1, 2009)

omaralt said:


> He can't blow them off.


Actually I think he can.

The dealers here are being circumspect, but it seems clear that they eat one payment to make the contract work with BMWFS.

The only legal way to force the car back is when the buyer fails credit review. This was an error on the part of the person offering the deal to the buyer, hence the responsibility for correcting it falls on the seller. My understanding it that when the federal 'truth in lending' components have an error, those are the parts that are immutable- administrative errors in other areas can be corrected, but they cannot just add a payment.


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## [email protected] (Jun 28, 2012)

ddeliber said:


> Entitled? Again, they offered to compensate him for THEIR mistake. Who is demanding anyone's first born son? You are just overstating things to a ridiculous degree, that makes your point less credible. If you want to let people walk all over you then knock yourself out. Go ahead and grab your ankles and say thank you sir may I have another. *This mistake cost the OP over $700, the dealer recognizes this and offered something to make up for it. You might think that $700 is meaningless but others probably don't.*
> 
> IMO, this is a mistake without any premeditated motives. I think being reasonable is the best response. OP if you don't like/want tint, I recommend a reasonable counter offer and that's it. No frst born, no world, just something in line with the unexpected additional cost. When I make a mistake in any situation, I expect and am willing to pay for it in a manor commensurate with the offense. And I expect the same from people I do business with. No grudges, no dramas.


I am not sure where you guys and the OP are saying it's going to cost him an extra $700.00. It's not.

The amount finance has not changed. The term to finance the amount has increased by one month so basically one month of addtional interest.

$55K amount financed over 59 payments vs $55K amount financed over 60 payments @ 2.90% is no where near an extra $700.00 out of pocket.

I said from the very beginning...
have them eat it...they will have to drop the selling price...thats OP playing hard ball

or just be done with it and ask for some goodwill

difference in adding in an addtional payment is about +$100.00 give or take

Even if you return the car and start over it's not like your next contract will be back at 59 months....it's still going to be 60 months.

Come on festers ...you guys are the top 1%


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## Ninong (May 20, 2014)

sublimegolf said:


> I refused to sign it...they asked for me to bring the car back. Can they break the contract?


I just want to respond to your statement that you refused to sign the new contract and they asked you to bring the car back, can they do that? I think you will find the answer to that question by just reading all of the fine print on your contract. I'm not trying to be argumentative or insulting here in any way, just providing information. It's true that very few customers ever read every one of the sales contract before signing it but they are still bound by every word.

I think you will find that the dealer has the right to rescind the contract if he is unable to assign it. In that case the dealer has to inform you of his demand that you return the vehicle and he has to return every penny you paid, plus your trade-in if there was one.

The contract is between you and the dealer, not you and BMWFS or some other bank. Right now the dealer is the legal owner of the vehicle. He holds the Bill of Origin. There is no California state title yet because the dealer hasn't registered the car and he won't if he is unable to assign the contract. He will exercise his right to rescind the contract and demand that you return the vehicle. Or you can work out a new contract with the dealer that is acceptable to both of you.

The dealer is the legal owner of the car. The contract you signed is between you and the dealer until he assigns it to a bank, such as BMWFS. If the dealer is unable to assign the contract he can demand that you return the car or he can decide to finance the deal "in house," which is really dumb, but that's a long story.

If the dealer tells you that the reason he can't assign the contract is because your credit was turned down, you will receive a notice in the mail from the lender informing you of that adverse action. In this case, the dealer is telling you that the reason he can't assign the contract is because it isn't written in a form that is acceptable to the lender. He is offering you some sort of compensation to entice you to sign a new contract or he is, as required by law, offering you the option to return the car, which is definitely not something he wants.

So it's entirely up to you. Work out something with the dealer or return the car and get all of your money back.

Good luck!


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## omaralt (Jul 17, 2010)

[email protected] said:


> I am not sure where you guys and the OP are saying it's going to cost him an extra $700.00. It's not.
> 
> The amount finance has not changed. The term to finance the amount has increased by one month so basically one month of addtional interest.
> 
> ...


That's exactly what I thought happened (the OP seems to have disappeared). They agreed on a selling price and financing terms. But in the final contract the dealer forgot to include a payment.


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## [email protected] (Jun 28, 2012)

omaralt said:


> That's exactly what I thought happened (the OP seems to have disappeared). They agreed on a selling price and financing terms. But in the final contract the dealer forgot to include a payment.


:beerchug:


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## zx10guy (Jan 27, 2014)

[email protected] said:


> Select finance is very rarely written up even in a high volume metro store like mine. A smaller store may not type one up for months.
> 
> I have no knowledge of where the OP picked up their car from but my guess is most likely not from a big LA dealer.
> 
> ...


My sales guy tried to get me to do select financing. I told him initially I was going to put $20k down on my car. He countered by telling me about how great select financing was and that I could just put $10k down and hold on to the extra $10k. He didn't go into the fine details about how interest is also paid on the balloon payment during the term of the loan. He wanted me to believe I was getting a free lunch with someone else's money.

I ended up saying screw you and went back in with a loan check from my credit union.


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## Ninong (May 20, 2014)

zx10guy said:


> He wanted me to believe I was getting a free lunch with someone else's money.


I wonder if he actually believed that or if he actually expected that anyone else would believe it? Just doesn't make sense. I think we all know that on ANY loan of any kind, the interest accrues on the FULL amount of the loan regardless of how the payments are structured.

If the bank lends me $60,000 they expect to earn interest on $60,000 regardless of how the payments are structured. I have never understood why anyone would be attracted to any loan with a balloon payment. Smart move to avoid something like that.


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## ard (Jul 1, 2009)

Dude.

You are wrong, confirmed in the post above yours. Why keep talking?



Ninong said:


> I just want to respond to your statement that you refused to sign the new contract and they asked you to bring the car back, can they do that? I think you will find the answer to that question by just reading all of the fine print on your contract. I'm not trying to be argumentative or insulting here in any way, just providing information. It's true that very few customers ever read every one of the sales contract before signing it but they are still bound by every word.
> 
> I think you will find that the dealer has the right to rescind the contract if he is unable to assign it. In that case the dealer has to inform you of his demand that you return the vehicle and he has to return every penny you paid, plus your trade-in if there was one.
> 
> ...


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## zx10guy (Jan 27, 2014)

Ninong said:


> I wonder if he actually believed that or if he actually expected that anyone else would believe it? Just doesn't make sense. I think we all know that on ANY loan of any kind, the interest accrues on the FULL amount of the loan regardless of how the payments are structured.
> 
> If the bank lends me $60,000 they expect to earn interest on $60,000 regardless of how the payments are structured. I have never understood why anyone would be attracted to any loan with a balloon payment. Smart move to avoid something like that.


No, he actually expected me to believe it. When I confronted him about the little nugget he left out about interest still being paid on the balloon in addition to the rest of the loan amount, he admitted that was the case.

I don't buy vehicles all that often and I have to say this was my worst experience. I made sure I let him, the dealership, and BMW know how terrible it was on the post sales survey. But that is another discussion which I have my own thread.


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## tturedraider (Nov 11, 2005)

Ninong said:


> I wonder if he actually believed that or if he actually expected that anyone else would believe it? Just doesn't make sense. I think we all know that on ANY loan of any kind, the interest accrues on the FULL amount of the loan regardless of how the payments are structured.
> 
> If the bank lends me $60,000 they expect to earn interest on $60,000 regardless of how the payments are structured. I have never understood why anyone would be attracted to any loan with a balloon payment. Smart move to avoid something like that.


I guess you realize that's exactly what a lease is, nothing more than a balloon loan, where you return the car rather than having to pay the balloon payment. I think you might be amazed how many lessees don't realize they're paying interest on the entire capitalized cost. Most people think all they're paying for is the "use", they barely even realize it's the depreciation.


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## Ninong (May 20, 2014)

tturedraider said:


> I guess you realize that's exactly what a lease is, nothing more than a balloon loan, where you return the car rather than having to pay the balloon payment. I think you might be amazed how many lessees don't realize they're paying interest on the entire capitalized cost. Most people think all they're paying for is the "use", they barely even realize it's the depreciation.


We weren't talking about a lease. What I was commenting on was the salesman who, according to zx10guy, was trying to get him to believe that he wasn't paying interest on the balloon payment. I just found that hard to believe that a salesman would actually expect a customer to believe something like that.

Yes, I've leased cars myself but I've never gone for a balloon loan.


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## Ninong (May 20, 2014)

Some people on here seem to be confused about whether the dealer has the right to rescind the contract within 10 days in the event he is unable to assign it to an assignee willing to accept it in the form it is written and with the terms therein, either because of the buyer's creditworthiness or simply because no assignee is willing to purchase the contract as written.

Turn to the back of the purchase contract, and find the box that says "Seller's Right to Cancel." This box advises you that after you sign the purchase contract and leave with the car, the dealership is going to find a finance company or bank to buy your contract. This language gives a car dealer the opportunity to find someone to buy your purchase contract. 

Most of the time this is not a problem. However, if the car dealer cannot find someone to buy your purchase contract, it can cancel the purchase contract. But, the car dealer must notify you within 10 days of the date on the purchase contract. If it does not, then the purchase is final and cannot be cancelled. 

If the dealership cancels within 10 days, you get your down payment or trade-in back. That's the 10-day rule and the reason the F&I department will notify the customer to bring the car back before that 10th day if they still haven't been able to get the deal bought.

It doesn't matter what the reason is that results in the dealership's inability to get the deal bought as written, all that matters is that the dealership has the right to rescind the contract if they notify you within 10 days. The dealership is not required to keep the deal "in-house" unless they choose to do that. Every penny you paid must be returned to you and you must return the car once notified by the dealer. Your other option, of course, is to reach an agreement with the dealer on a new contract that meets the terms that are acceptable to the assignee.


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## Ninong (May 20, 2014)

ard said:


> I know you're job is to represent dealers and argue that point of view...but lets be honest and no half truths.
> 
> You are assuming the car was registered, right? If dealer has not yet done the paperwork, do you think they would go ahead and register the car after the owner had returned the car?
> 
> ...


If the car was tripped with a report of sale on the window, it's now a used car if it comes back. What you are implying is that the dealer will submit a false statement-of-facts to VOID the ROS instead of posting fees in the dealership's name as required by law and then tripping it on a used car ROS the next time.

It's not that big a deal and not at all difficult to resell the car on a used car ROS. The only difficulty would come in if the first customer kept the car for several days and racked up hundreds of miles on it. The fees get posted to the jacket and the cost basis is adjusted. It can be sold with just a transfer fee or it can be sold with pro-rated DMV fees. Many customers think they're getting a special treat if the salesman tells them the car has 148 miles on it because it was delivered in error but the good thing is that the DMV fees have already been paid and all he has to pay is the transfer fee.

The plates are ticking but the warranty isn't ticking so it's doesn't affect the customer, provided he knows the date his registration will be up for renewal. That's only a problem if the car sits on the lot for a few months instead of a few weeks.

The fact that it goes on a used car ROS doesn't affect it's ability to qualify for new car financing. That's easily explained and never causes a problem.


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## tturedraider (Nov 11, 2005)

Ninong said:


> We weren't talking about a lease. What I was commenting on was the salesman who, according to zx10guy, was trying to get him to believe that he wasn't paying interest on the balloon payment. I just found that hard to believe that a salesman would actually expect a customer to believe something like that.
> 
> Yes, I've leased cars myself but I've never gone for a balloon loan.


Yes, I realize what the thread is about. My point is anyone who has ever leased a car has, in fact, taken a loan with a balloon payment. Since you say you have leased that would include you.

If you convert the money factor to an interest rate (MF x 2,400), enter the capitalized cost as the amount financed, the residual as the balloon payment amount into a balloon loan calculator you will get the exact same before tax payment as you will get using a lease calculator.


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## quackbury (Dec 17, 2005)

And you can kinda sorta do your own Select Financing deal. You know you will only use the car for 3 years, but you take out a 72 month loan, giving you a big "balloon" at the end in the form of low or negative equity when you trade.

To my knowledge, the big factors in play include:


If the car depreciates more than expected, the added depreciation comes out of your pocket if you finance or do Select Finance, but comes out of BMWFS's pocket if you lease.
You pay state sales tax up front when you finance, but in most states you only pay sales tax on the monthly payment if you lease. You save interest by not having to capitalize / finance the sales tax.
If you use the car for business, you usually (though not always) get bigger deductions on your Schedule C or 2106 by leasing;
Some companies (like BMW) have traditionally use subvented leasing to move cars (MF's artificially discounted from the going APR), though they seem to be moving away from this practice).


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## zx10guy (Jan 27, 2014)

Yep. The way I see select financing is a lease on a car you know you want to buyback. Because of the crappy way the whole transaction went down, I would have helped the sales guy and the dealership by doing the select financing and then refi'd later or maybe kept it and made accelerated payments. My credit union was (and still is) offering 1.49% which was way below the select financing rate.


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## Ninong (May 20, 2014)

Ninong said:


> It doesn't matter what the reason is that results in the dealership's inability to get the deal bought as written, all that matters is that the dealership has the right to rescind the contract if they notify you within 10 days. The dealership is not required to keep the deal "in-house" unless they choose to do that.


Maybe I should have included the fact that if the customer doesn't voluntarily return to sign a new correct contract when asked to do so, as is the case here, the dealership will submit the contract as is and it will be rejected, as expected. The assignee (BMWFS) will send out a form letter (adverse action notification) to the customer notifying him that the contract was denied due to terms and conditions.

The customer then has the option to return to the dealership and complete a new contract under terms and conditions that are acceptable to the lender or he can simply surrender the car and get all of his money back. The dealership has 10 days to notify the customer that the current contract was rejected and that he needs to return the car or complete a new contract under terms and conditions that are acceptable. If the customer refuses to cooperate, the contract is rescinded, the borrower is then in default and the car will be repossessed.


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## ard (Jul 1, 2009)

Ninong said:


> Maybe I should have included the fact that if the customer doesn't voluntarily return to sign a new correct contract when asked to do so, as is the case here, the dealership will submit the contract as is and it will be rejected, as expected. The assignee (BMWFS) will send out a form letter (adverse action notification) to the customer notifying him that the contract was denied due to terms and conditions.
> 
> The customer then has the option to return to the dealership and complete a new contract under terms and conditions that are acceptable to the lender or he can simply surrender the car and get all of his money back. The dealership has 10 days to notify the customer that the current contract was rejected and that he needs to return the car or complete a new contract under terms and conditions that are acceptable. If the customer refuses to cooperate, the contract is rescinded, the borrower is then in default and the car will be repossessed.


So you are saying Justin was wrong?

HE is in californina...where did you sell BMWs?



[email protected] said:


> I said from the very beginning...
> have them eat it...they will have to drop the selling price...thats OP playing hard ball


Read up on CA regs- http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=02001-03000&file=2981-2984.6

the dealer promised certain terms in writing to the OP. While BMWFS can refuse those terms, the fact it that those terms are a contract with the dealership.


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## [email protected] (Jun 28, 2012)

Ard ...OP can't just do nothing. He has to resign under the correct term or return the car. 

OP has already left the thread...for all we know it's probably all resolved.


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## sublimegolf (Mar 9, 2010)

Thanks for everyone's feedback. Payment was adjusted and dealer gave me an parts and accessories credit for $350. It was an honest mistake by a new finance manager.


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## namelessman (Dec 23, 2004)

Glad it worked out to your satisfaction. Enjoy your new ride, 535d has some serious torque!


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## Ninong (May 20, 2014)

ard said:


> So you are saying Justin was wrong?
> 
> HE is in californina...where did you sell BMWs?
> 
> ...


The only contract is the contract signed by the customer and a representative of the dealership's management (the F&I manager). The signed credit application, which the customer was given a copy of, is also part of that contract. Yes, that is a contract between the customer and the dealer until it has been assigned.

If you check the back of the contract you will find that the dealer has a 10-day right of rescission. In order to protect the dealership's interests under California law, all the dealership has to do is submit the contract they have (the one with the incorrect terms) to BMWFS. BMWFS will then send the adverse action notification to the customer (it's just a form letter) informing him that the contract was rejected due to terms and conditions being unacceptable. The dealership will notify the customer that the lender has rejected the contract as it was originally written due to the terms and conditions being unacceptable.

I can tell you from personal experience that it is not a problem in California for the dealer to rescind a contract within the first 10 days if the contract was unacceptable to the lender as written. Just make sure the notification goes out from BMWFS to the customer informing him of the adverse action decision and notify the customer within 10 days that he needs to come back with the car.


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## Ninong (May 20, 2014)

sublimegolf said:


> Thanks for everyone's feedback. Payment was adjusted and dealer gave me an parts and accessories credit for $350. It was an honest mistake by a new finance manager.


Congratulations! I'm glad there were able to make you happy! Good luck with your new car!


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