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07-31-2013 02:16 PM
My brother recently moved to FL from CA. He has a limited credit history as a young, recent college grad. He was starting work this week and needed to get a vehicle. He tried prequalification at BofA (his bank), a FL credit union and with Ford Financing, without luck.
He went to a car dealership due to the limited timeframe, even though we knew it was his last resort. He found a very decent car at a decent price. Everything was agreed on except he needed financing, enter the Financing Office. I was on the phone for most of the negotiation on the car price, and we were successful there. Once Financing got involved they got very agressive selling additional insurance (extra 3000) to which I told him to walk away, they removed the insurance not before offering it for 1500. He saved 3K since he is a naive kid and was sold on it easily...
Cap1 approved him at a high interest rate (12.5%) Then another thing came up: GAP insurance. My brother was told that it was a requirement in FL, which it may very well be, no problem. However, he was told that Cap1 will raise his interest rate to 15% if he didnt get it at the dealership. Deler's quote for GAP on a 9K car: $800.00! I talked to the financing agent directly, brother had been at the dealership for over 6 hours, it was closing time and he needed to eat, shower and get ready for work.
Financing officer said it was a requirement, that they are forced to sell it, blah blah blah. Finally I got on the phone and said that if they are lying and running a scam I will pursue the full extent of the law against them. My brother was beat and agreed to buy the car with GAP by the dealer.
So my question is: Would CAP1 be able to increase rates for not having GAP? Does this sound remotely legal? What are my brother's options? Is it possible to get help from CAP1? What can be done against a shady dealer like this to prevent others from being scammed?
Your help is greatly appreciated!
07-31-2013 02:24 PM
I'm not aware that GAP is required by law in any state. Sounds like they're just pushing it for the commissions.
There is probably some window of time where it can be cancelled. If you don't need it then I'd just cancel.
07-31-2013 03:09 PM
Not really a scam in FL, its probably an unethical sales tactic in all finance offices at dealerships.
Cap1 has already agreed on the rate with the contingent that your LTV is below probably 110%. If Cap1 was going to increase your rate, they would tell you directly. All you need to do is verify this with cap1 and you got your answer.
You should be able to file a complaint with the BBB or maybe the state attorney general's office.
In my opinion, I think they are just taking advantage of a naive kid. They know who they can trick.
07-31-2013 05:55 PM
He can cancel the gap insurance.
If he reads his contract he will see that it says the GAP is optional. However, I totally believe you that the F& I guy told him otherwise (it is a common trick here in Fl). Your brother needs to go back and get nasty with the F&I guy to get it removed if being nice won't do it. If he doesn't remove it, report it to every agency you can think of...
First: report it to the owner of the dealership, if he won't fix it report it to the General Manager if that doesn't work report it to the manufacturer the francises the dealership. If that doesn't work contact the BBB or better yet the office of consumer affairs for the county in which the dealership is located. If he still doesn't get it resolved then have him contact the DMV, then the AG's office. Lastly, contact an attorney that specializes in suing auto dealerships (from a consumer point of view).
Make sure your brother reads the actual contract. The entire thing. He wil see where GAP is optional (it's boxed and in bold on the contract - that is a requirement).
07-31-2013 06:38 PM
Best way to beat these guys is to pull out your smartphone. Push record. Say your name and ask the F and I guy to state his name. Then ask hime the questions: Is GAP insurance required by Florida Law? It is either a yes or no. Am I required by the lender to purchase at the dealer at this time? Go down the list.
My guess is as soon as you start the recording, all the fluff comes out of the contract.
When I lent money as a banker or as a salesperson the last 20 years, I have never minded anyone taking notes or recording my conversation.
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