State issues car sale warning

[CarDealerCheck]

The state attorney general has issued a consumer alert about an illegal vehicle sales practice.

The scam involves a dealer requiring a buyer to sign a new purchase contract — at a higher loan interest rate — more than four business days after the buyer has agreed to buy a vehicle for a lower interest rate.

A dealer has four days to arrange financing after a buyer agrees to terms, Attorney General Rob McKenna said. If financing falls through, the dealer must call off the deal, return a down payment and start negotiations from scratch if the buyer agrees, McKenna said.

McKenna's office received 300 complaints about the illegal practice between 2003 and 2007, he said.

A spokeswoman for the Washington State Auto Dealers Association said the practice, sometimes called "yo-yo sales," is a minor problem. Vicki Fabre, the association's executive vice president, said there were an estimated 2 million cars sold in the state during the period when customers made 300 complaints.

"This is a very small problem," Fabre said.

Further, Fabre said, not all complaints are about legitimate problems.
"It doesn't mean that all of those complaints were validated," Fabre said. State dealers associations cooperate with the attorney general by conducting classes to educate dealers on the laws pertaining to purchase contracts, she said.

Complaints come from buyers of new and used cars, said Cynthia Lanphear, customer service specialist with the Attorney General's Consumer Protection Office in Tacoma.

In some cases, Lanphear said, customers complained that the dealer contacted them months after they left the dealership with what they thought was a final deal.

The state law allows dealers four business days to arrange financing, not counting Sundays, holidays or the day the buyer and dealer agreed to a purchase, Lanphear said.

If a dealer cannot secure the financing in four days, "a good dealer will call you back, undo the deal, void out the contract, return your down payment and take the car you bought back," Lanphear said. "If you choose to, you can renegotiate."

Lanphear urged shoppers to try to prequalify with a bank or credit union auto loan before they visit a car dealership.

Source: http://www.theolympian.com