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My son was driving a used car that his dad bought – paid cash, no payments. It was a 99 Rodeo with 70k miles, and it was in excellent condition - really clean and very cold air. Last summer, he went with his girlfriend and her mother for his GF to get a car. While they were at the dealer, my son decided to get a new-to-him vehicle. The mother’s trade was worth more than she anticipated, so she gave my son $4000 toward his truck. He also got $5000 from his trade. He bought an 05 Durango, loaded. The dealer tacked on a shitload of fees. He paid just over $21K for the truck, and ended up with the amount financed at $17K.
His loan was approved with a large nationwide lender who I believe to have ethics problems, and who is known to screw borrowers. His interest rate is 13.4% for 6 years, and there was a small pre-payment penalty for the first 6 months.
PROBLEM – The sales contract shows one extended warranty at $2032. But the finance agreement shows that warranty, plus an additionally warranty of $2133 added. I understand that he signed all the documents, but I can’t seem to get the dealer to tell me what the extra warranty is.
My son apparently wanted to “be the man” and do this without asking me or his dad for any help. That’s a shame, because not only do I have a finance background, but I currently work in the used car industry. At the very least, I could have hooked him up with someone trustworthy and made sure he didn't get fucked on the financing.
At that point in time, my son had no credit – not good, not bad, NONE. (He was 19, and he’s a college student with a part-time job.) I asked him how he was able to get financing for that much money with no credit. He said the salesman shopped the loan around and it was rejected 4 or 5 times. So he (the salesman) said that he needed to “fix the income”, and changed the application to read that my son was making $3000/month.
At the time that all this happened, I was going to go down to the dealer and raise holy hell until I got my son out of this. (If anyone could have got him out of this mess, it would have been me.) As a former loan underwriter, I was appalled about my son’s income being lied about on the loan application. I’m not so naïve that I think that it doesn’t happen, but it bothers me that my son was involved in it. I also knew very well that there was no way my son could afford this truck. However, my son and my ex-husband asked me to cool my jets and leave it alone. I agreed, and now I’m really sorry.
My son is 2 months behind on the payments, and the lender is looking for the truck. It’s been temporarily stashed to buy me a little time to try to work with the dealer.
My son knows how much he screwed up on this, and he knows that he has to give up the truck. He also knows that the money from his trade and the cash from his GF’s mother are gone, and that he’s going to come out of this with no vehicle.
PROBLEM 2 – The used car manager is a total asshole who apparently didn’t work at the dealership last year when this all took place and hasn’t even spoken to the salesman. But he says they didn’t do anything wrong. The only thing that he is willing to do is take the vehicle back on trade. He tells me it’s got a value of $13K (low by my estimate), but the payoff is $19K.
In my conversation with the salesman last week, I hinted that I was sure that this lender would be interested in the fact that they’re getting fraudulent loans from this dealership.
So my question is this: How much trouble could my son get into if we let the lender know what the dealer’s doing?
If this isn’t an option, any advice?
I’m not in a position to bail him out on the loan payment, and I’m not sure I would even if I could. His dad could probably help him, but he won’t. Our son really can’t afford the truck, and the ex isn’t about to throw good money after bad.
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