Car sales price is higher than advertised price

March 31, 2015 14:57 by Consumer Ed

Dear Consumer Ed:

I responded to an ad for a car on a website listed for $24,799. When I spoke to a salesman, he said the price is actually more than $1800 higher. He explained this difference was because the advertised price includes discounts and rebates that I did not qualify for. I asked him to show me where this was stated on the website, and he was unable to do so. What are my options?  

Consumer Ed says: 

From what you’ve said, it sounds like the dealer is claiming the advertised price factored in a special incentive program that wasn’t disclosed in the ad. A special incentive program is one involving rebates, discounts, and/or financing that does not apply to all of the buying public. Auto dealers are permitted to offer such programs; however, because only a small percentage of the buying public usually qualifies, the dealer may not factor in these types of discounts in the advertised price. Special incentive program discounts may be included in an advertisement, but must be listed as a separate, additional discount available only to those who qualify.  Information about the specific qualifications required to receive the discount must also be included clearly and conspicuously in the advertisement.  The advertised price should be the price available to all of the buying public.

Because the dealer incorporated special incentives and discounts in the pricing, the Georgia Department of Law’s Consumer Protection Unit considers this to be a violation of the Fair Business Practices Act (“FBPA”).

If you have a copy of the advertisement, you could consider contacting the dealer again and asking that the original advertised price for the vehicle be honored.   You can also submit a complaint to the Georgia Department of Law’s Consumer Protection Unit at www.consumer.ga.gov, or by calling 404-651-8600.

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Car dealer has not paid off loan on trade-in

December 18, 2014 18:06 by Consumer Ed

Dear Consumer Ed: 

We traded in my wife's car 3 months ago and the dealer still hasn't paid off the loan. We've called them countless times and we are getting nothing but the run-around. Now the car has gone up for repossession. What do we need to do?

Consumer Ed says: 

Trusting car dealers to pay off your loan can be risky:  if the dealership fails to pay off your loan, you’re the one responsible to the lien holder.  You’re responsible for all loans that you signed a contract for – even on vehicles that you’ve traded in and no longer have in your possession.  The dealer’s failure to make payments on your previous vehicle could have a negative impact on your credit score, and lead to a lawsuit against you from the company that financed the car that was traded-in.

Since your vehicle is in the process of being repossessed, the best thing to do first is to consult a private attorney immediately; he/she can assess the particular facts of your potential claim and provide you with individualized legal advice.  That attorney can also contact the dealership and lenders on your behalf. Additionally, there are several other actions you can take to mitigate the situation:

  • Look at the documents related to your transaction with the dealership, such as the auto sales contract. See if your trade-in was included as part of your new-car purchase and if the dealership promised to pay off the loan on your trade-in.  If you have the dealership’s promise in writing, it is easier to make a convincing case to the finance companies.
  • Then you should contact the company that is financing your trade-in and explain that the car should have been paid off by the dealership and that the car is physically in the dealership’s possession.  If your contract with the dealership states that the dealership promises to pay off the loan on your trade-in vehicle, provide a copy of that contract to the finance company.  You should also provide the dealership’s street address and phone number, because the finance company is allowed to repossess the vehicle when the loan is in default.  Ask them to work with you so that your credit is not negatively impacted by the dealership’s default or late payments.
  • You should also contact the company that is financing the new car that you bought from the dealership.  Provide copies of the sales contract with the dealership, and explain to the new lender that you had traded in your car, but the dealership failed to pay off the loan as it promised.  Talk to the new finance company about taking the new car back and cancelling the that contract, or lowering the new loan to make up for what you still owe on the trade-in.


Pay special attention if the outstanding balance on the loan for the car you traded in is more than the trade-in value.  For example, if the outstanding balance on the loan for your trade-in is $18,000, but your car is worth only $15,000, the dealership may include the $3,000 in the new car loan.  This is called “negative equity.”  If you’re buying a $30,000 car from the dealership, then you’d be signing for a $33,000 loan.  As a result, you could end up paying a substantial amount more for your new vehicle if the dealership defaults on your old loan.

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Car loan denied; can dealer charge restocking and mileage fees?

September 24, 2014 23:30 by Consumer Ed

Dear Consumer Ed:

Is it legal for a car lot to charge a re-stocking fee and 50 cents per mile on a car because the loan was not approved?           

Consumer Ed says: 

It sounds like you entered into a conditional sales agreement known as a “spot delivery” transaction.  With spot delivery, the buyer takes possession of the vehicle “on the spot,” upon making a commitment to finance the vehicle, but not yet having a definite arrangement for financing with a bank or finance company.  It would appear that you negotiated loan terms with the dealership and agreed to buy the car only if a lender agreed to finance the deal according to those terms.   The car remains the property of the dealership until a lender finances the deal.  Since the dealership was not able to find a lender to finance your deal, the dealership may be entitled to order you to return the car and to pay for its temporary use.

The amount that you may be charged for using the car depends on the agreement you signed prior to taking the car off of the lot.  Dealers who offer spot delivery usually require potential buyers to sign a “bailment agreement” outlining what would happen if the dealer was unable to secure financing with a bank or finance company.  If you signed a bailment agreement, and if it includes a reasonable restocking fee and per-mile fee, then these fees are likely legal.

However, even if the fees are legal, the dealer could still be in violation of the Georgia Department of Law’s Consumer Protection Unit’s Auto Advertising and Sales Practices Enforcement Policies.  For example, if the dealer represented that you had been approved by a prospective lender prior to your purchasing the vehicle, it would be unfair and deceptive for the dealer to require you to return the vehicle for an alleged failure to obtain lender approval. In that event, the dealership should also return any down payment you made on the vehicle if you are denied credit approval and choose not to pursue any other financing options.

You have additional rights if you traded in a vehicle as part of your transaction.  First, the dealer should have retained both title and possession of any such vehicle until financing is actually approved.  Second, if you choose not to execute another finance agreement for the purchase of your vehicle, the lot must immediately return your old vehicle to you.  If you believe the car lot engaged in any of these prohibited practices, you may file a complaint with the Georgia Department of Law’s Consumer Protection Unit by visiting www.ocp.ga.gov/consumer-services/filing-a-complaint, or calling 404-651-8600.

To avoid this situation in the future:

  • Prepare in advance.  Shop for financing as you shop for a vehicle.  Ideally, arrange for financing ahead of time through your bank or credit union so you know the amount of money you can borrow.  At least contact them to find out what interest rate you would qualify for, so you can compare this with the dealer’s financing offer.
  • Read through all documents thoroughly before you sign. If there are any blanks left in the contract, you and the dealer should complete them before you sign.  Ask questions if there are items you don’t understand.
  • Get everything in writing. Insist in advance on a written assurance that if your financing should fall through, your deposit and your trade-in will be returned to you; or, if credit terms change, you may cancel the deal.
  • Wait until financing has been approved.  If you do work with the dealer to secure financing, seriously consider waiting until financing has been approved before you take possession of the vehicle.

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