Legal Question in Consumer Law in New York

Re: Car dealer wants us to sign new contract

If the car sale was contingent on the acceptance of financing by GMAC and the application was rejected, then they can ask you to return the car; they cannot require you to sign a "new" contract for a higher interest rate.

In my practice I have encountered this scam on numerous occassions and seen clienst go back in several times over the course of a year to keep signing "new contracts" with interest rates that have climbed from five and six percent to as high as thirty-eight percent (38%) [that case was in Tennessee]. What the dealers don't tell you is that they are getting a piece of the action, that is, they are getting a portion of the interest rate that you pay on the financing that they arrange for you, and that the "F&I Guy," who handles Financing, Insurance and after market add ons for the dealership, has an annual bonus tied to the amount of money they make off of higher car sales interest rates.

Now, beware of the next scam... if you traded a car in when you bought this one, they will tell you that it was already sold or transferred and then tell you that unless you sign the "new" contract then they will take the car and you can walk home. If this happens, CALL THE POLICE. The charge is Grand Larceny - Auto. If the sale was contingent on the financing, then so was their ownership of your car as part of the trade in.

If your dealership cannot straighten out its problems with GMAC finance, then it is probably in your best interest to do business with somebody else.