Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811 #00070

Submission Number:
00070
Commenter:
Hyung Choi
Organization:
Choi & Fabian, PLC
State:
Arizona
Initiative Name:
Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811

I am an attorney. I represent victims of abusive automobile dealership practices. I feel a comprehensive regulations governing dealership practices are needed to protect consumers. I agree with many comments regarding the problems with dealers use of force-placed arbitration clauses and yo-yo sales. I believe a strong regulation is also needed to inform the consumers that (1) the dealer is the initial creditor, and that (2) the dealer will later attempt to sell the installment contract to a finance company. Abusive dealers often confuse buyers by claiming that they are only arranging a loan between buyers and finance companies. Abusive dealers further confuse buyers by refusing to commit on whether it will sell a vehicle through an installment contract. Attached is deposition testimony of an owner of a local franchised dealer. Starting at Page 73, the owner tried to explain what he claimed were the difference between financing being approved and financing being obtained : Q. And earlier you talked about financing being approved and then you also talked about financing being obtained. Are they two different things A. Yes and no. I ll try to do my best to explain that. Q. Sure. A. Obtaining of financing is having a bank, there s an approval and there s conditional approvals and there s turn downs. There s three classifications. So obtaining financing would be either an approval or conditional approval. Okay. And so I guess obtaining could be maybe we have a deal, maybe we don t because it s a conditional approval. And an approval would be the deal is approved and we re sending it to the bank. . . . Q. It seems like financing is just a long process, is that right A. It s not simple, by any means. Financing for a house is very similar to financing for a car, quite honestly, it s become that difficult. I believe abusive dealers use similar non-sequitur to confuse and force buyers into pay more cash down payments, agree to higher interest rate, or otherwise pay more than the initial bargain. A mandatory language on the contract documents similar to TILA disclosures informing the buyers that (1) the dealer is the initial creditor, and that (2) the dealer will later attempt to sell the installment contract to a finance company will result in better informed consumers. Better informed consumers will be less likely to be cheated by abusive dealers.