My mother took a pre-approval from a bank to a dealer and found a car - they had her sign paperwork based on the terms of the pre-approval before giving her the purchase order she needed to take to the bank. In addition to this, they also made her sign a blank contract, calling it a "collateral contract," in case her pre-approved deal did not go through. It ended up not going through because the bank determined the value of the vehicle was lower than the purchase price. They then took the signed blank contract and secured a loan with a rate 6 times higher than the original pre-approved rate and told us there's nothing we can do. Is this legal? We have an appointment to meet them this weekend to discuss what they did. Should I have an attorney accompany us?
Washington State has some very strict car dealer laws, including those governing "Bushing" contracts or yo-yo financing.
That said, never ever sign a blank contract! Do you sign blank checks? No! That's what you have.
Fortunately there's another issue. Its called "Regulation Z". Reg Z requires that the borrower be shown the interest rate on an APR basis, and sign the reg z disclosure form before a financing deal can be processed.
Some such disclosures also contain a rescission period such as with mortgages.
There may also be several consumer protection laws including Unfair and Deceptive Trade Practices/Unfair Competition laws that will also provide a layer of protection. A savvy consumer protection lawyer familiar with car dealer tactics could use much of this to your mother's advantage.
Because this involves a bad car deal, and it appears to be a bushing style contract, I am changing the category to Lemon Law/Consumer Protection.
Click on "Find a Lawyer" above and locate a consumer protection/lemon law attorney in your area. And in the future price out your cars before plopping down anything on a contract and NEVER sign a blank contract!
This is a public forum. Any questions or answers published here should not be construed as the giving or receiving of legal advice or the formation of any attorney-client relationship. You should consult with a competent attorney in the jurisdiction where your legal issues are pending and get good, solid legal advice. This being a public forum, those answers you do read are merely given for informational purposes only.
I agree with the excellent advice provided by Mr. Elie. I would add that a complaint should be filed with the Washington State Attorney general's Office at once. I added a link below.
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