I got a call from my bank today that they made a mistake in figuring out the residual on my new car lease and that it would be an additional $50 a month. This is 2 weeks after we signed the loan. I said sorry you are out of luck. We have a signed sealed delivered contract. You signed the loan, you funded the loan and you paid the dealer. You cant come back to me after the fact and ask for more money. The guy went on to say that he was given the wrong data from the company (ALG) that supplies them with the residual values. Again I said then you cant come after me, you beef is with them. They need to make you whole. I said you are trying to go after the weakest link hoping I will roll over and agree to a new set of terms so you dont have to tell your manager that you wrote a bad loan. Your problem is with ALG not me. He said is that your final position on this, I said yes I am not budging. So you can either accept the loan as you wrote it, or you can come and reclaim the car and good luck trying to get back the money you gave to dealer. I spoke to my sister who is a lawyer and she agreed that they have to stand by the loan as written, that they dont have any legal recourse to hold me responsible for their own mistakes and by their own admittance they were given bad information from a company they contract with for residual data, so they will have to persue action against them to recover their losses.
A news story a few months ago reminded consumers in my state (Washington) that when similar financing 'screwups' cause the lender or dealer to come back for more money or higher interest rates after the fact, state law allows only two options: (1) honor the original deal; (2) cancel the deal entirely. Customer returns the new car to the dealer, dealer / lender returns the trade-in and all monies to the customer. The customer just got a free new car rental for the duration of the canceled deal. Dealer now has a 'used' new car. Usually the trade-in has already be re-sold and is no longer recoverable, leaving the dealer and lender with only one remaining choice. Beware that other states have different consumer protection laws.
State rules One thng I am aware of is that for CA, once you do a lease contract, you're stuck. Meaning, as a dealership, if I screw up a lease and use the wrong residual, rate, or calculate things wrong, it's between me and the bank. The dealership eats the loss. On a purchase, you're OK to rescind the loan. If this is a lease, I know in CA your dealership would have to honor it. I can't say for certain that in your state, it's the same. Car contracts can be rescinded by the dealer if they are purchase contracts and the dealership can't get it bought the way it's written and they don't WANT to eat the loss. Dianne
Re: State rules This is a lease. Not from the dealership though, it was through my credit union. So the dealer has no fault in this one.
Re: State rules I'm going to go out on a limb here with a guess. I don't think you should screw over your CU. If there was a mistake and they used the wrong residual, your credit union's not the place to play hardball. Why? Next time you need THEM, they might just tell you to take a flying leap. You may be able to do without other financial institutions... but I wouldn't screw my credit union over. I'm just giving you some... well, mom-type advice. Dianne
Re: State rules Its good advice, but I have never used my credit union before. In fact I only joined them to get this loan. All my regular banking is done through Bank of America. I have no other financial dealings with the CU and don't forsee ever needing to again. Plus they do have recourse against ALG and The Auto Finance Group which are the people that actually backed and prepared the loan. Its not like they have nowhere to turn. What ticked me off is that instead of going after the folks that gave them the wrong data, they went after me the customer because they saw me a a quick solution to their problem. Frankly I dont think the CU knows what has happened yet. I think it was my loan officer who found his mistake and he was trying to cover his tracks before he got caught in the banks audits. In fact he was not even man enough to call me himself. He had his secretary call me and tell me the news, when I asked to speak to him he was "unavailable" It was only after I told his secretary I was in contact with a lawyer that he suddenly called me back.
If you want to play hard ball, keep track of your credit reports. Have a face to face with the loan officer, then his supervisor, and try to reach a compromise.
If your sister isn't admitted to the bar in your state you may want to consult with an attorney who is, just to make sure you are in the right. Assuming you are (and I think you should be) I don't think there is anything else you need to do other than stick to your guns. No reason for you to pay for someone else's mistake - you negotiated in good faith. Actually, you probably want to consult an attorney in New York, since that's likely the state where the contract would be litigated, if it came to that.
I too would stick to my guns. Wherever you signed the contract is likely the state where legal recourse would originate. Keep in mind that almost no matter what you do, the residual value that they have assigned to your Prius at the end of the lease is likely to make them a good profit anyways, since they hold their values so well. If they made a mistake, they made a mistake. I would think that in any case, they would not be able to get any more than the $50 extra, even if they tried to go to court. But then, I think their contract would trump it, and not be an issue. (btw, I am not a laywer, just a relatively informed citizen)
I believe so too. As I said I think the guy who did the paperwork caught his mistake and was trying to get me to agree to a change before he finalized all his paperwork and it got seen by his managers. He was just looking to find a weak consumer who would say "oh OK sure go ahead and make the change." I read to him the statement my sister had prepared and he kind of just shut up at that point. I also checked with the car dealer today just to get their take on things, since they are not involved, and they said once the loan is signed its a done deal. It is as binding to them as it is to me. Its not like I could call up the CU and say, "you know what I made a mistake, I cant pay the amount we agreed on so lets lower it by $50 a month, or I changed my mind lets just call this off and you guys get your money back from the dealer." A contract works both ways.
From what I have heard so far from the bank they are not going to pursue this any further. While not the final official word on the subject the person I spoke to said he believes they are going to drop the matter and let everything stand as it is.
Hi Zaxcom, I've said it many times before on this forum - You never get the deal you deserve, you get the deal you negotiate. You have every legal right to demand that the financial institution honor the executed agreement. If they screwed-up - its' their problem. Next time, they will be a little more careful to ensure that they perform their due diligence. People in high-level management positions rarely put themselves in the position of being a "victim". (Playing the part of a victim is not a leadership attribute.) Meanwhile most people play the part of a victim thinking they have to do whatever somebody else (like a business) tells them - even if it is wrong. Best wishes, and keep playing hard-ball. Keith
UPDATE: Well it took the bank 2 months but yesterday I got a letter from them that they are going to abide by the original contract as signed. I kind of figured they would after they accepted and cashed my first payment of the loan. Cashing that check in effect was enforcing the contract and showing that they were going to agree. Chalk one up for the little guy.
Congratulations. That done, do you plan to buy it at the end of the lease? I tried leasing my Honda CRV which I still have for work and it was iffy 1.5 years ago - loan vs lease rate - and it was mostly for business. But now looking back with 1.5 years to go, if not for the business write off, I prefer purchasing (if reliable brand). It does depend on whether or not the state has sales tax since its easier to buy at residual and flip in OR accross the river then WA. Enjoy driving!
