Electronic Loan Contracts: Some Dealers Are Using Them to Scam Buyers
» Posted February 26, 2018 Resources | Share This Post
San Diego lemon law attorneys provide help to car buyers whose vehicles have turned out to have serious problems after purchase. Buying a defective car can result in substantial financial loss since cars are so expensive. However, it is not just problems with a vehicle that can end up costing you money during the car buying process. As Jalopnik explains, car dealers are now using electronic loan contracts to scam buyers.
How Car Dealers are Using Loan Contracts to Scam Buyers
E-contracts are a fixture of American commerce, and many consumers will sign their names to complete transactions without even thinking much about it. However, the transition to electronic paperwork has been slower in the auto industry as there is a lot of paperwork involved with a new car purchase. More and more auto dealers are starting to embrace electronic contracts, though.
While this can be a good thing, it can also be a problem if dealers behave in an unscrupulous way, getting people to sign e-contracts without actually knowing what is in the contracts. Because consumers do not get a hard copy of the contract to review, it can be much simpler for dealers to slip in extra fees that buyers don't see when they just glance at the contract on the computer screen. And, because signatures on e-contracts are electronic, it can be much more difficult for people to prove they did not actually sign a contract that a dealer or car loan lender is claiming that they signed.
There have been many instances where dealers have been accused of putting in the wrong trade-in value and giving borrowers less credit for vehicles they traded in. There have also been accusations that dealers entered higher purchase prices than car buyers were promised, or added on insurance or other up-sells that the buyer did not agree to. In many cases, dealers perpetrating these scams do not ever provide buyers with a hard copy of the contract so it is difficult or impossible for buyers to even realize when they have been scammed through unexpected costs being added.
In a few particularly egregious cases that Jalopnik covered, a woman who visited a car dealership and who filled out a computer-based credit application discovered several weeks later that she had allegedly opened an auto loan for $17,737 while she was at the dealership. However, she had not actually taken out such a loan and she had not actually purchased a vehicle. It took some time before the issue was worked out and she was able to get the loan off her record.
Another car buyer purchased a vehicle for a negotiated price of $18,000 without actually signing a physical copy of a loan contract. He had provided his credit information to the dealer, but said he never signed a contract for a loan. The loan paperwork for the loan, which was at a staggering 18.99 percent interest, didn't include the car buyer's $4,000 trade-on and it also had the price of the car listed as $20,350.
These are just a few of many examples of how consumers have been scammed by electronic car loans. It's important to carefully review loan paperwork before buying a vehicle and to only provide credit information to reputable dealers. You should also know your rights after the car purchase and should consult with San Diego lemon law attorneys if you have problems with the car.