Need advice on car dealer settlement, trade-in issues and third party loan

Lkipela on 12/03/2020 - 21:39
Last edited 13/03/2020 - 22:24

Wife and I put a $500 deposit down on a new car last weekend, subject to finance.

We're trading in one of our cars, and at the time of contract signing by both parties, dealer agreed to a $8,500 trade in value. Finance was approved by third party (bank), funds were distributed to our new account ready for settlement tomorrow (Friday).

Dealer called today asking whether we knew if the trade in had been written off. We had zero clue it had been (purchased from an apparently reputable used car dealer several years ago). They now wish to offer $500, resulting in us now being $8k short.

Obviously we're not going to agree to that. As the funds have been released by our lender, what's a likely scenario from here? Regardless of whether the car was written off or not, Car History checks have shown it as a repairable write off.

Dealer did suggest selling it privately, but is also pressuring us to accept the $500 offer. Contract has a bunch of clauses, which I'm still trying to decipher in terms of cooling off vs. their acceptance of the trade in "as is".

My take is we purchased the vehicle unaware (our mistake), however they have signed and agreed to a value of a $8,500 trade in. If they too needed to do a proper check, why was this not done prior to a contract of sale being drafted and signed?

I simply want to walk away, hopefully with out deposit back. It's unlikely they'll budge. I don't know whether to talk to the lender to see if the loan contact is simply void as no vehicles have changed hands.

Any advice on how to tackle this, or questions to ask?

UPDATE: Reneg'd dealer, came up to $3k on the trade in, we threw in another $500 and will pay out the $5k loan on the trade in with some home loan offset cash. Not ideal but we got there. I'll take it.

Automotive

Comments

  • 87percent on 12/03/2020 - 21:43

    Did you sign anything stating they will offer you $8500?

    • kipela on 12/03/2020 - 21:49

      Yes we did. Nothing I can see refers to anything around "subject to further checks" etc.

      • brendanm on 13/03/2020 - 11:31

        Read everyone over again. If they don't have a "subject to" clause, and it has the rego/vin of the vehicle, then you should push them to pay that amount, they will not be happy with it though.

  • jimbobaus on 12/03/2020 - 21:45
    +1

    Problem is trade ins are wholesaled and they are wholesaled nationally. Some states do not allow repairable write offs to be registered and as such almost every car dealer won’t trade a RWO
    Either come up with the 8k or work out something with the dealer.
    You are SOL sadly in this situation.
    As for your question. They won’t check the Register until they are processing your sale as they have to have legal reason do do these checks and being a day or so out from delivery of the vehicle gives them a legal right to check.
    All trade ins will be subject to these final checks so even if they said they would give you $8500 they are legally allowed to change the offer given the situation with your car. Legally you should of declared this at time of making the deal. You didn’t and they have now made the discovery. They can legally change their offer and they have.

    @backspace should be here soon to clarify as things may have changed since i worked in car sales

    • kipela on 12/03/2020 - 22:01

      We can easily come up with $5k-$6k. Unsure if selling privately and recouping that money later on is possible.

      I'm not prepared to add $8k to the loan, even if the lender approves it.

      Losing a deposit, walking away, selling privately and buying it later on is front of mind now, but unsure on what the best option is.

      • jimbobaus on 12/03/2020 - 22:07

        I am totally on your side do not get me wrong.
        Also QLD laws do slightly differ from Vic where i am (no cooling off for new car sales for example)
        The dealer would not perform these checks until they are ready to transfer ownership of your old car to them, you also had a pending finance clause i assume, so the contract would of been on hold pending your allowing them to remove this clause and proceed with delivery.

        I know its annoying, but PPSR checks etc are usually not performed until pre delivery stage of a sale.
        Once they have a car ready to give you, they commence the paperwork they need to including checking the status of the trade in.

        i can 100% guarantee you they have a clause which allows them to change trade in value if certain conditions are met/found.

        I would say try and re-negotiate with them and say you wont be trading your car in but they now have to wait until you are able to sell your old car.
        the delay will probably get them to come to the party with you to get the car delivered so they can tick the sale off and move on.

        Other option is simply tell them you will be walking away and will be seeking to get the deposit back through legal means (you have options as they can not reasonably withhold your deposit)

        be clear and concise, say well i have a loan for $XX based on your offer for my car and unless you come to the party with a fair price without my trade in i will need to cancel the deal/
        the salesperson will work hard to get your sale over the line, they have probably already spent their commission

        • kipela on 12/03/2020 - 22:13

          Thank you. I'm in QLD so no cooling off on new cars also.

          Oh I don't doubt there's multiple clauses to cover them.

          When you say re-neg, in what way? We'd be prepared to trade it in to a value we can get a reasonably clean break with. For example, $3.5k and we contribute $5k cash. We sell the trade in privately and pay out the $5k owing on the trade in car loan.

          We do wish to do business with them in the future, buy only if their goodwill is there. If they screw us we'll never be back, so part of this is also how far are they willing to go?

          Thoughts?

          • jimbobaus on 12/03/2020 - 22:18

            @kipela: Yeah re-neg by saying you agreed to a deal and they want to remove the trade in, so they need to give you a better price on the car (without the trade in)… currently you are 8.5k difference so see if they will come down somewhat, i suspect they might be willing to drop the price 2-3K and not trade your car.

            I literally had a similar problem recently, mine was a bank being difficult after approving my loan then changing it after i paid a non refundable deposit and removed a finance clause. When i told the dealer i had a $$ gap between agreed amount and borrowed amount they dropped price somewhat to keep the deal as i was now paying more of the difference myself.

            they will want the deal to go ahead, do not give them your figure, just ask for a new best price without trade in and explain $8K is too big a gap for the deal to go ahead. I honestly beleieve the price will drop 2 or 3K

            What brand is the car?
            A lot of what they can do price wise will depend on what price bracket it is in.
            some cars have razor thin margins sadly, i know when i was at Toyota for example the Yaris had like no money in them so negotiating was a non starter on them in most cases.

            • kipela on 12/03/2020 - 22:22

              @jimbobaus: Appreciate it. It's a Mitsubishi Outlander. It's already on a deal ($38k rrp, $34.4k sale).

              • jimbobaus on 12/03/2020 - 22:26

                @kipela: Push hard.

                I bought a $50,000 car recently. (Negotiated to 50K)
                Was planning to borrow $35K and bank approved me, then a day later a "senior reviewer" lowered my approval to $28K so i was $7k different. i told dealer i needed to walk away, he dropped price 5K so i had to pay 2K more only. (long story, 2 days after i got car the lender rang and apologised for their "error")
                He wanted the deal and did what he had to.

                Have a polite and friendly chat with the sales person, i would suggest in person and say
                We need a new price or i need to walk away. at 34K they might not have room to move, unless they are on sale which means they are selling into hold back (minimum mark up on a car set by manufacturer)

                mention wanting to bring them future biz
                servicing etc
                it will all help, you might not get much room but they can take a hit on your trade in if they have too
                they have plenty of options, just stand your ground.

                • bobbified on 13/03/2020 - 00:34
                  +2

                  @jimbobaus:

                  ..he dropped price 5K so i had to pay 2K more only.

                  If they were still able to drop the price by another $5k, I would say that you probably didn't negotiate hard enough at the start. An extra 10% off their "final" price is huge! If you said you were $10k short, there's a chance they would've dropped the price even more! haha :p

                  • jimbobaus on 13/03/2020 - 01:10

                    @bobbified: Nah, having worked in the industry i get they have to make money,
                    They dropped the price for a few reasons
                    1) was 4 days before end of month
                    2) I was going to walk away and they knew it.
                    3) i was buying the car from a dealer i used to work for, so they applied a staff discount (which i was not eligible for, but they ended up doing to get the deal closed)

                    I had to agree to finalise the deal by the last day of the month or allow them to register the car by then so it could be marked as "SOLD"

                    i got a awesome deal before i had to re-negotiate and had spent almost 5 hours originally negotiating.
                    The Dealer Principal got involved when i wanted to walk from the deal due to the finance issue and he stepped up.

                    i can see why you would think what you do, but in this case many factors ended up working in my favour

                • kipela on 13/03/2020 - 22:25
                  +1

                  @jimbobaus: UPDATE: Reneg'd dealer, came up to $3k on the trade in, we threw in another $500 and will pay out the $5k loan on the trade in with some home loan offset cash. Not ideal but we got there. I'll take it.

    • Typical16-bitEnjoyer on 13/03/2020 - 08:49
      +1

      They can legally change their offer and they have.

      Not quite. They can't just change the existing deal and contract. They likely have rights to rescind the contract or cancel and keep the deposit. The dealer is reserving their rights and is trying to negotiate a new deal.

  • oscargamer on 12/03/2020 - 22:07

    Dealer is in the shit. Trying to force your hand. Caveat emptor on him.

    • spackbace on 12/03/2020 - 23:14
      +3

      Nope, it's clear on a WA contract that you sign agreeing your car isn't written off, and there's no additional money owing on the trade. You're making that statement, and whether you know or not, if it's a false statement then the contract may be null and void.

      And yes this has happened many times over

      • oscargamer on 13/03/2020 - 06:59

        OP appears to be in QLD

        • spackbace on 13/03/2020 - 10:29
          +2

          Yep I was just going off what we have. I don't know what's actually on their contracts without seeing it…

  • spackbace on 12/03/2020 - 23:41
    +2

    The issue is how far the dealer has gone with your new car… Is it registered? Have they put any accessories on it yet? If the answer is no to those, then you should be able to get your refund and walk away.

    Another option is to ask the dealer to give you till the end of the month to sell your car privately. That will keep the contract in place and save a lot of further tough discussions.

    The problem with selling your car privately is private buyers finding out about the write off status after purchase, while they know your address.

    Few things:

    • dealer won't give you $3k+ for a written off car. Your trade went from a retail car to a wholesale car
    • if the new car has been licensed and/or had accessories fitted, you won't get your deposit back
    • you may be up for a headache with the bank if you have security on the new car for your finance

    Ask the dealer if they can work on the $500 value, or ask to give you some time to sell it privately.

    You will have to grovel. Dealer has done nothing wrong in this instance

    (yes this has happened before and is the reason we do a ppsr just after the deal is done)

    • Zachary on 13/03/2020 - 10:37

      The problem with selling your car privately is private buyers finding out about the write off status after purchase, while they know your address.

      What's the issue with writes offs that would warrant the customer to come back with a baseball bat and demanding a full refund and return of the vehicle if the vehicle is working perfectly fine?

    • kipela on 13/03/2020 - 22:23
      +1

      @Spackbace UPDATE: Reneg'd dealer, came up to $3k on the trade in, we threw in another $500 and will pay out the $5k loan on the trade in with some home loan offset cash. Not ideal but we got there. I'll take it.

  • bobbified on 13/03/2020 - 00:25
    +1

    Cancel the contract and get your deposit back. Don't simply pay for that $8,000 trade-in difference.

    During your original negotiation with your trade-in, they would not have "discounted" the new car very much so that they could offer you (what appears to be) a "higher" trade-in price. It's a numbers game and they want to be able to pretend to offer you a lot on the trade-in. But the higher their offer on that trade-in (it makes the buyer feel better when someone offers them more on their car), the less they'll "discount" the new car. The money has to come from somewhere!

    Now that your trade-in is not applicable, go to a new dealer and renegotiate the final driveaway price on the new car. The price will definitely be lower than what you've got now. Guaranteed!

  • Typical16-bitEnjoyer on 13/03/2020 - 08:44

    Nobody can answer this question without reading the Contract.

    Guess what you haven't provided?

  • Oz8argain on 13/03/2020 - 09:23
    +1

    It sucks that you got scammed by a dealer with your current car. But if you're struggling to come up with a few grand to buy a car, maybe you're not in the financial position to buy it… Is it really urgent?

    • [Deactivated] on 13/03/2020 - 13:38
      +3

      Sometimes I wonder if Ozbargain's definition of "scam " is the same as the dictionary one. How is the dealer scamming them? Op didn't do his due diligence. He can either walk-away from the deal ( and lose his deposit) or grovel and try to come to a compromise he can live with.

      • spackbace on 13/03/2020 - 13:45

        with your current car.

        The current car OP has, the original dealer didn't disclose the fact it was a write-off

        purchased from an apparently reputable used car dealer several years ago

        • [Deactivated] on 13/03/2020 - 13:47
          +1

          Oops! What would I do without you Spack? :)

        • [Deactivated] on 13/03/2020 - 14:03

          In NSW, under the 2004 Motor Dealers Regulation, licensed dealers are obliged to guarantee that no money is owing on the car, it has not been deregistered due to parking fines or previously declared a written-off vehicle.

          Shame that this is not Australia-wide.

          • Typical16-bitEnjoyer on 13/03/2020 - 14:47
            +1

            @[Deactivated]: OP lives in a state that is/was well known for selling written off cars unfortunately. Pretty sure it was common practice for QLD dealers to pickup bargain write offs across the border. I thought this was no longer occurring but a quick google indicates otherwise.

            • kipela on 13/03/2020 - 22:28
              +2

              @Typical16-bitEnjoyer: UPDATE: Reneg'd dealer, came up to $3k on the trade in, we threw in another $500 and will pay out the $5k loan on the trade in with some home loan offset cash. Not ideal but we got there. I'll take it.

  • crashloaded on 13/03/2020 - 13:36
    +1

    You can almost guarantee the dealer will have a clause covering their own ass in situations like this.

    They will simply exit the contract.

    • [Deactivated] on 13/03/2020 - 13:46
      +1

      And why wouldn't they?

      I wouldn't buy a written-off car for the same price as one which hasn't been written-off. Would you?

      • crashloaded on 13/03/2020 - 13:47

        I agree with you, for all we know op isn't telling the full story 😒

        • kipela on 13/03/2020 - 22:28

          UPDATE: Definitely telling the full story. Reneg'd dealer, came up to $3k on the trade in, we threw in another $500 and will pay out the $5k loan on the trade in with some home loan offset cash. Not ideal but we got there. I'll take it.

  • Gabehcoud on 16/03/2020 - 15:21

    I had the exact same thing happen to me, virtually to a T.

    Was looking at a new car, negotiated a $3000 trade in and answered "No" to the has it been written off to the best of your knowledge. I only had the car a few months and I wasn't aware of PPSR checks. Arranged external finance and they settled the loan directly with the dealer. On the Friday before a Monday pickup I get an email advising there was a big problem and I wouldn't get the trade value in the contract.

    I was given two options, cancel the deal entirely or remove a bonus of the deal (7 years free servicing) to make up the price difference. I couldn't exactly cancel the deal as they had been given the money from the finance company. I also wasn't willing to wipe off ~$2400 in free servicing to make up a $1000 valuation discrepancy.

    What really pissed me off was 1) Why wouldn't a dealer do this $2 check at the point of initial contract of sale, 2) Why leave it over a week and literally 2 days before pickup and once finance of the new vehicle is settled to stumble on this.

    In the end I sold it privately at a tidy margin over the initial trade in offered with full disclosure of the PPSR checks that the vehicle was involved in an accident back in 2013.

    I learnt a very valuable lesson over a $2 check.

    • Typical16-bitEnjoyer on 16/03/2020 - 19:23

      Why wouldn't a dealer do this $2 check at the point of initial contract of sale

      Well, you didn't do a $2 check when buying it either :P

      • Gabehcoud on 16/03/2020 - 20:05

        Very true. I didn't know about said check however.

  • SlavOz on 16/03/2020 - 20:23
    -3

    Why are you paying so much for a car you obviously can't afford? If you need finance and trade in to be able to buy a car, don't buy it.

Login or Join to leave a comment
Login Join