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How can refi of a NEW car purchase turn into a USED purchase for the same vehicle - at a higher amount than what the payoff was.

Madison, AL |

Was suggested by dealer to refi after 1 yr for better rate. Confused as why 2011 loan paperwork does not show 'refi' but purchase of USED vehicle - at higher $ than payoff $ for original loan (not incl the misc items $). Questioned dealer, got no answers - said they couldn't explain how it was done, finance person no longer with dealer. It looks as if we bought this vehicle AS NEW in 2010 and then bought it again AS USED in 2011 - with $ added for items we already paid for with initial purchase (warranty, delivery, title). How is this possible? Is this legal? Have not seen the title "trail" - don't remember signing anything related to title but was told that the title (ownership) would not change. Have requested copy of title info from lender - not yet received.

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Attorney answers 3


A vehicle is only new once. It's new when the dealer sells it to the first purchaser.

The vehicle that you refinanced had been owned and used for a year when the transaction was completed.

There were transaction fees related to the refinance. They appear to have also packed the deal with lots of cool commission generating add-ons like extended warranties, credit life insurance, credit disability insurance and maintenance contracts.

It sounds like they dumped their finance person because they were churning the customers accounts generating repeat commissions on the same vehicles. You will need someone familiar with finance or accounting to determine whether the refinance was economically beneficial to you. You will need someone to review the original transaction and warranty terms and compare them to the replacement provisions to determine whether you paid twice for the same benefits.

You should probably see a lemon lawyer or consumer attorney in Alabama.

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This is outright Fraud, and also violates the federal Truth in Lending Act, for which your strict liability damages are twice the actual Finance Charge, capped at $2,000.00, plus actual damages, plus attorney fees and costs. Your Fraud damages include all costs, fees, sales taxes, etc for which you were charged again. You may also contact the Alabama Dept of Revenue because the Dealer is a Designated Agent and may be charging but stealing alleged Sales Tax. Contact a consumer rights attorney in your area, pronto.

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It depends on what the purpose of the refinance was. It is possible that they rolled fees into the refinance price so that it came out to be more than the payoff amount. If you feel you were misled or defrauded, seek the advice of a local attorney.