Cooling off Periods for Finance and Dealerships

FrugalDealSeeker on 14/06/2022 - 09:55
Last edited 14/06/2022 - 10:15 by 1 other user

Hi guys,

I heard a pretty interesting story last week. My friend was looking to buy a car and finance it externally. He found a dealer who had the car he was interested in, however since it was very far he sent pictures of his trade-in car and wanted to get everything else sorted before he picked up the car.

Anyway, so the finance pays the dealer who then preps the car for collection. When this guy goes there the dealer basically changes his mind about the trade-in and lowers the valuation claiming some of the damage wasn't clear. Now this guy doesn't want to pay more money so chooses to walk out on the deal but then the dealer says that the car is under finance and encumbered so he has to buy it.

Now the dealer has signed a legally binding contract with that guy before the purchase which says subject to finance and test drive and all of this is within the 3 day cooling period (VIC) so I was just wondering if this is legal? Can a dealer force you to buy the car even if it is within the cooling-off period if it gets encumbered through finance?

Automotive

Comments

  • Muzeeb on 14/06/2022 - 10:12
    +3

    A friend of mine

    Ok

  • Seraphin7 on 14/06/2022 - 10:18
    +2

    Sounds like the perils of attempting to do a deal "site unseen".

    The big challenge here is that the finance (evidently) has been provided. That knocks out at least one limb of the "subject to" clause. Whether or not the test drive limb could have been used is open.

    The other element, of course, is the "damage" on the trade in. If the damage was genuinely not clearly shown/described, then the dealer should have recourse here … on the other hand, if it has been adequately shown/described then it sounds like the dealer is running a stitch up. Either way, I would not be exchanging dollars until the trade in price becomes "unconditional".

    • FrugalDealSeeker on 14/06/2022 - 12:05

      If the damage was genuinely not clearly shown/described

      This is actually the case. The damage was not clear at all and even I had trouble figuring it out from photos and I had seen the car in person. Regardless, it was quite educational even for me, so def not doing that ever.

  • pegaxs on 14/06/2022 - 10:20
    +4

    I know I am going to be stating the obvious here, but, has your "friend" read the contract of sale? What does it say about cooling off period? He may still be up for a portion of the costs, but this should be stated on the contract of sale (something like 2.4% or $500, whatever is the greater)

    If it is subject to "test drive" all he has to say is "Nope, don't like it, drives weird" and that is that.

    Was there a clause on the contract that states "pending final inspection of trade in"??

    And also, as soon as they change the price of the vehicle, either by devaluing the trade in or hiking the price of the new vehicle, the old contract ceases to be enforceable as the new amount is not what was agreed to. If they are not happy with the trade in, then they are breaking the contract by asking for more, but your "friend" may also be in breach of contract if they did not disclose any damage to a vehicle that awould otherwise have been noticed if the car was offered in person.

    And anyway, how much are we talking about here, an extra $300 or are we talking about thousands more?

    From Consumer Affairs Vic. website;
    Vic New car cooling off period rules
    Used car cooling off period rules

    • FrugalDealSeeker on 14/06/2022 - 11:41

      how much are we talking about here

      I think he paid $1000 more and the valuation was in line with what other dealers had quoted who had physically inspected the car so he was like "eff it".

      I am not really sure about there being any clause regarding existing damage as I personally haven't seen the contract (1/2 of the paint was faded) which tbh wasn't very clear in the pics he sent due to the car being wet.

      He did mention they got pretty aggressive and dismissive to whatever he had to say and almost coerced him to sign a new contract with an updated valuation pretty much at a metaphorical gunpoint. Basically, this is what raised the main question I had, can they force you to accept delivery due to encumbrance? It seemed the whole coercion was to ensure he waives his right to the cooling period.

    • spackbace on 14/06/2022 - 12:58
      +2

      It's a muddy situation

      The finance company has already transferred the money to the dealer, so the loan etc has already started. In order to cancel the whole thing, the finance company needs to be paid out and the finance lifted from the new car.

      I have trade-ins "subject to view" and it's why you make sure you see the trade before the day of delivery, because people aren't always honest about the condition of it

      Both sides fked up here…

      • pegaxs on 14/06/2022 - 14:05
        +1

        Both sides fked up here…

        100% this. I never traded in a car I never laid eyes on, and even when I did get that situation come up, the contract always had "subject to condition inspection of trade in."

      • FrugalDealSeeker on 14/06/2022 - 14:16

        Basically the moral of the story is to avoid financing a car. One of my old posts aged well!

        • spackbace on 14/06/2022 - 14:33

          No, not really. Sure, finance will always mean you pay more, but it's not the reason for this deal going south. If trade-ins are valued without seeing them, there's always (for more dealers anyway) a "subject to viewing" condition on it, as owners aren't up front (the paint fade on this one, for instance). You then get the trade-in into the dealership before handover of the new car, to deal with any issues.

          The issues arising from the deal have nothing to do with the car having finance on it, and your friend will need to take some of the blame about not being fully upfront about the condition of their car.

          • FrugalDealSeeker on 14/06/2022 - 14:52

            @spackbace: Actually, finance was the reason they could not void the deal and refund him as then the car would've gotten encumbered till the finance clears it. But yeah, first physically inspect the car and your valuation, especially if you're financing it as it complicates matters further if someone finds the other person misleading them.

            Also yeah, call it shifty photos or just incompetence, objectively I do understand why the dealer felt misled.

      • Chandler on 14/06/2022 - 14:28

        I have trade-ins "subject to view" and it's why you make sure you see the trade before the day of delivery, because people aren't always honest about the condition of it

        This is what got me - seemed (to me) that the dealer was trying to make the contract subject to acceptance of the trade-in without having that as part of the conditions.

        Seems OP's "friend" was trying to pull one over the dealer and got caught, but dealer realised they got caught with their pants down - contractually they had no recourse: they'd have to separately try to ping OP's friend for intentionally deceiving them in regards to the condition of the trade-in.

        Having said all that, I'm not a lawyer so all of the above could be BS…

        • FrugalDealSeeker on 14/06/2022 - 14:48

          intentionally deceiving them

          This part is alleged. Could be incompetence or poor photography skills, regardless I found it pretty astonishing that he would buy one without actually test driving it.

  • bobbified on 14/06/2022 - 11:17
    +1

    The dealer can organise and sign whatever he wants - what exactly has "your friend" signed?

    • FrugalDealSeeker on 14/06/2022 - 11:56

      He told me "a legally binding contract with the dealer before the purchase which says subject to finance and test drive" but otherwise a standard contract of sale I'd say. He said there was no clause with subject to final inspection of the trade-in vehicle or something like that.

      • bobbified on 14/06/2022 - 12:16
        +1

        If he's signed a contract, then it's going to come down to what's in the contract - there should be all the figures on it, the trade-in vehicle and the total amount payable, etc.

        And then it' a matter of who's not holding up their end of the deal - sounds like the dealer in this case! Normally, I'd just say to tell the dealer to get stuffed (and tear up the contract), but there's the issue of the finance company and their funds that your friend probably authorised to be released to the dealer. That part needs to be worked out.

  • oscargamer on 14/06/2022 - 11:34

    You'll have to tell us more about the damage?
    Was it visible in the photos?
    Was it described anywhere?
    Was it hidden?
    Would it be easier to get rid of the trade in elsewhere or continue to fight the stealership?

    • FrugalDealSeeker on 14/06/2022 - 11:45

      You'll have to tell us more about the damage?

      Okay so the paint was faded and in the pics, the car was wet so the damage tbh wasn't clear but I would give him the benefit of the doubt and say he isn't shifty enough to hide it. It could've been an honest mistake.

      Would it be easier to get rid of the trade in elsewhere or continue to fight the stealership?

      Probably, but then you'd have to pay that money upfront and deal with the hassle of disposing of the car.

  • Euphemistic on 14/06/2022 - 11:48

    Of course the dealer is going to try it on. Their part of the contract probably said something like trade value subject to final inspection.

    Buying a car without inspecting and driving it is a risky proposition. ‘Your friend’ found out he hard way.

    • FrugalDealSeeker on 14/06/2022 - 11:52

      $1000 isn't a lot of money for a cheap IS and objectively it was still a good deal, regardless, it was educational for me as well.

  • Baysew on 14/06/2022 - 11:58

    However this ends up, it doesn't seem like a very sensible way to trade and buy a car.

    • FrugalDealSeeker on 14/06/2022 - 12:02

      IKR it's hilarious but companies like Cars24 basically thrive on this.

      • Euphemistic on 14/06/2022 - 13:40

        But they’ll offer lowball values and occasionally get one they could have paid more for vs a dealer with your deposit and contract who can now tell you it’s not we’re as much.

  • Alva10 on 14/06/2022 - 12:36
    +1

    Subject to Finance is only a clause to protect you if you are unable to obtain finance require to settle the vehicle, in this case, since your financer has already settled the contract, this clause is no longer valid as it has been fulfilled. Is the contract subject to trade appraisal? Otherwise, you could back out with the 'Test Drive' clause. the whole situation with the vehicle has already been paid will complicate the whole thing.

    Another method is calling your finance company to cancel the finance contract, which they will chase up the dealership for a refund. Can be a bit of a complex process but doable. I'm just shock that the financier willing to settle, and you're willing to sign their contract, while there is still uncertainty on the vehicle selected.

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