A Chevy dealer in Connecticut is being sued after taking a customer’s car back following a spot delivery due to unqualified credit.
According to a report from Automotive News, the dealer sold a used 2018 Kia Sorento to a customer via a spot delivery after initially approving their credit application. For reference, a spot delivery means that the vehicle was delivered immediately after the sales contract was signed despite financing that wasn’t yet fully approved by a bank or credit union. In addition, the filing claims that the customer put $2,000 down and assigned ownership of his $500 trade-in to the dealership. However, this approval didn’t last forever.
Later on, the dealer asked for a pay stub – which the customer provided – only for them to learn that their credit had been unapproved. Despite the customer’s offer to increase the down payment by $1,500, the dealer requested that the car be returned, which the customer did on a voluntary repossession. Likely, as a consequence of this turnaround, the customer filed a lawsuit alleging unfair trade practices, violation of the Equal Credit Opportunity Act, and other violations.
It’s worth noting that while the Chevy dealer did refund the customer’s down payment, the trade-in had already been sold. As such, the customer had no mode of transportation, and the dealer elected not to compensate them for the value of the trade-in.
“We respectfully disagree with certain … facts and circumstances alleged in the Complaint, and are presently reviewing the matter with plaintiff’s counsel,” a lawyer for the dealership remarked in a prepared statement.
Furthermore, the lawsuit alleges that the dealership “retook possession of the Kia because it did not want to be bound by the (retail installment sales) contract due to its inability to assign the contract to a third-party lender.” Finally, in order to resell the Sorento with a clean title, the suit claims that the dealer “submitted a false statement of withdrawal” to the Department of Motor Vehicles (DMV) and “falsely certified that the ‘customer never took delivery of the vehicle.'”
No matter where you want to assign the blame for this mishap, this is a good reminder to know what you’re getting into when you sign a sales contract and to shop for cars that fit your budget and your credit score.
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Comments
Missing from the article (and likely also missing from the plaintiff’s complaint) is what the issue was with the paystub submitted. Presumably the income wasn’t as high as claimed.
But this does raise two points that are not well known by consumers. First, financing obtained at a dealership is likely contingent on final approval, or what the article calls a “spot delivery.” Nothing unusual about that. Second, by the time disapproval is given, a trade-in might be history. For people with good or even decent credit these are not big issues, although it’s possible there might be minor (but very annoying) changes in terms, but for people with poor credit the results can be devastating.
The solution to this is requiring dealerships to hold the trade-in until financing approval is complete. The real issue isn’t the “new” sale but rather the dealership’s sale/disposal of the trade-in before the full transaction completes.
we NEVER wholesale or retail a trade in after a spot delivery until the deal is a DONE DEAL. Also the dealership should have had the customer sign a “Spot Delivery Form” that acknowledges the fact that the lender has not yet given final approval and that there is a possibility of this very thing happening. We call it the CYA form :p
That would certainly take care of 99% of the problem!
IMHO, the dealer is responsible for the value of the trade-in that they disposed of prior to final approval of the “deal”.
It will also be interesting to find out what the Courts do with the dealer falsifying the Title records for the new/used car that repossessed.
You sign a statement saying that what you state (as far as income) is factual and if that’s the case the deal goes thru with the lenders. The statement you sign says if you give false or misleading information that the deal can be canceled.
so they got the trade -in and $3500 cash and the man has a job – how the hell much is really at risk on a 2018 Kia they likely have $6000 invested in. Car dealers are criminals
Where are you buying 2018 SUV’s for $6k? Every dealer would like to know
Over 100,000 miles and a history of a major accident? Used as a loss leader lure to get people into the dealership.
I would have paid less then 6k for that car! An would have bought it at the same place that chevy dealer in CT did… Southern Auto Action East Windsor CT. I’ve seen 2018 Kias with under 50k miles still under factory warranty sell for less then 5k!
This happens often when there is a discrepancy with info the customer provides and what the banks are able to verify. The dealer should not have sold the trade until the deal was approved and funded by the lender. If the article is correct and they did not refund him for the trade value they need to do that immediately. Im wondering why they didn’t work harder to secure another approval. This is unnecessary bad pr.
Or they could have put the kid in a lower spec car with maybe a few more miles, or find of there other cheap trade-ins they took in for nothing, just to put him in an give him some sort of transportation!! Places like this are what gives car dealers a bad name!!
The main issue I see is that the dealership sold the trade in before the line of credit was finalized, Most States have laws against the sale of a trade in before the deal is finalized.
I had to look this up at one point (varies state to state) cause I traded in my car for a truck late last year and the car was essentially paid off in full already and they had listed the vehicle a few days after they got it but didn’t pay off the remaining balance until 2 months later to my bank.
They must’ve sold it before then too cause the listing was gone in a few weeks but dealerships aren’t supposed to sell or list vehicles they don’t have a title for. Dealership was very scummy in general and I had to fight them on several other issues too and I shouldn’t have had to pester them to pay off the loan. Was about ready to show up and take my car back and tell them to bill me for it, I made two extra payments on it and got 1/4 value for it because KBB valued it at half of what they normally sell for in good shape. Trade in’s you usually get screwed over on anyways, I know. But with all the other “stuff” I dealt with I was not happy with them to say the least.
Ali wanted to know was the dealers name . . . . Always name the offender.
“always name the offender” ??? How many men have been FALSELY accused of sexual misconduct and had their names published and lives ruined yet the “accuser” remains unnamed?
EXACTLY!!!!! Give us a heads up because we know how some dealers deal. I could probably think of a few that would do this. Connecticut customers want to know.🤬🤬🤬🤬🤬🤬
If everyone in America “played by the Rules” and “did his/her job WELL” 95% of the “problems” we face everyday would be gone .
And we wouldn’t be having these lame conversations .
Car dealers are famous for doing sneaky things! It certainly is not anything new!
And customers NEVER do anything underhanded….lol.
Those dealers are the ones that give the rest of us a bad rap!!
If you’re asking for Americans to start playing by the rules I would suggest not trying to start with “Car Dealers”??? Maybe try “Politicians”! LMAO
I don’t know if it’s illegal, but it’s a predatory business practice on the dealership’s part. Certainly unethical at the very least and the sales person, finance person, and ownership could care less that they screwed over a customer of likely relatively modest means. The fix: spot sales should be outlawed. I truly hope the plaintiff/victim gets justice and enough compensation to teach this stealership an unforgettable lesson.
To outlaw spot sales (which isn’t a terrible idea), you’d need to eliminate dealer financing. No lender is going to deal with a program where they’re required to lend based solely on what the dealer’s employees input to the system, or a dealer’s review of a credit report. Maybe when AI becomes more mature, but not today.
If someone doesn’t want to deal with a spot sale, they should go to their bank or credit union for a loan. Note most manufacturer special loan and lease programs require “exceptional credit,” which is probably to avoid this type of thing.
Or change the laws to bring back “Buy Here Pay Here” dealerships like back in the day, where people were able to buy cheap junk boxes and go in every week and pay for them until they blew up or actually paid it off?? Lol When they did away within house financing and changed the Lemon Laws, they pretty much threw out any chance of ever buying a cheap car ever again.
The dealer stole their old vehicle, prove me wrong. The trade in value of the old vehicle went towards the new (2018) vehicle. The dealer got the new vehicle back, which the customer had equity in, from the trade in money value. And the Dealer just puts their nose in the air at that fact. So now, when the dealer resells the 2018 (new) vehicle again, they double dipped. Got money for it from 2 different people. The dealer should be exposed so they can be put out of business. Both the dealer and GM need sued.
GM had nothing to do with the transaction, so they shouldn’t and won’t be a party to any lawsuit… This was a pre-owned vehicle and this is all on the dealer….
This article is missing a lot of pieces to it. By the way what is a Chevy Dealer selling KIA’s for? It is bad enough most Chevrolet nameplates are not made in USA, but now GM dealers selling KIA’s!
Dealers sell used vehicles of all brands.
Reading Comprehension is not your forte…..
Happen to me had a lease end coming up went to dealer gave me my new truck lease payment less then old lease after over a month told to bring back couldn’t get it leased old lease always paid on time.But they could get me a loan for a new vehicle that had a higher month payment and longer.
Buyer beware if it looks too good to be true if it sounds too good to be true.Do your math.
I had a similar issue once in California back in 1998 . Gave the down payment, traded my old car and drove away. But in a few days they wanted me to return the car to the dealership. I contacted a lawyer and the lawyer said “let them come for the car, you don’t take it to them.” That’s what I did and after 4 month’s the dealership gave me a lot of money. Ever since then I have always asked “Am I bought?” And I record them. Dealerships are scumbags