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Bonus Scam: The
Call-Back Leasing Scam
In this scam someone from the dealership
calls the customer a few weeks after leasing or buying a new car, and asks
for more money or asks the customer to sign a new contract at a higher
payment.
Try to imagine the following scene. A
couple of new car salesmen are sitting around at the dealership on a slow
day sipping coffee.
"Joe, remember Mrs. Smith from last
month? Sticker price plus one (thousand) and a five year extended warranty
on a 4-year lease. Easiest five g's I ever made! What a gullible old
bat."
"Hey, I'll bet you fifty bucks I can
get another 500 out of her. By the end of the day."
"You're on, Mike." and they shake
on the bet.
So Mike flips through his rolodex and pulls
out Mrs. Smith's number. "Hello, Mrs. Smith? This is Mike
Strongbreath over at Baycity Nissan Isuzu Cadillac. I'm the salesman who
got you that great deal on your new car last month. Yeah, that's right.
I'm the one who reminded you of your grandson."
"Listen, the reason I'm calling is
that I have a bit of bad news. We ran into a legal problem with the
paperwork on your lease. It seems the gal in the back who typed up the
papers put in the wrong residual amount and now the bank won't accept the
lease. You may have to return the car. It's such a small error we would
just assume ignore it, but you know how banks are about details."
"What's that? I know you love the car
and would hate to miss out on the huge savings you made on the deal. I
tell you what. Hold on a minute while I talk to my manager about your
situation." (Three minutes go by while Mrs. Smith waits on hold
thinking about having to return her new car).
Finally, the salesman returns. "Great
news Mrs. Smith. You can keep your car. All you have to do is come down to
the dealership and sign a corrected copy of the lease agreement and we'll
take care of the rest. Of course you won't have to pay anything, but your
payment may change slightly. No more than a few dollars a month, probably
less than ten or eleven. And, oh, I almost forgot. My manager said that
for us to be able to do this for you the papers need to be signed today."
"Ok. That's fine. I'll see you in
about an hour. And, Mrs. Smith, be sure to bring all the copies of your
old lease papers so we can replace them with the new ones. Oh, your
welcome Mrs. Smith. It's my pleasure. I'm glad to have been of service.
See you soon. Good bye."
By the end of the day, Mrs. Smith solved
her 'legal problem', got to keep her new car, had a nice friendly chat
with Mike about how much he reminded her of her grandson. And her monthly
payment only went up $13.79.
Mike Strongbreath got an 'at-a-boy' from
his boss, $50 from Joe for winning the bet, and a $200 bonus, all of which
he blew that night on a stripper named Bambi.
This outrageous story is based on a
composite of several actual situations where customers were contacted by
the dealership shortly after signing a lease. (Sorry, the parts about the
bet and the stripper are fiction, but they seem to fit nicely with Mike's
character).
In the cases we are familiar with, the
customers were told that there was a mistake in the lease papers (usually
the wrong residual) or the customers credit did not meet the standards of
the leasing company. In all cases the customers were told that they must
return to the dealership and pay either a large lump sum or sign a new
contract where the payment goes up significantly. If they refused, they
were told the vehicle would be "repossessed" and their credit
ruined.
Tom Erins (not his real name) of Van Nuys,
CA began getting daily calls just under a month after he leased a new 2000
Toyota van. The dealer was demanding Tom immediately return the vehicle or
convert his 3-year lease at 8% to a 5-year loan at 12.5%. Tom's payments
would go from $500 to $696. The reason given by the dealer? Tom's spotty
credit was unacceptable to the leasing company. The dealer cited a
document that Tom had signed titled "Lease Credit Approval
Conditions". The document basically states that if the dealer is
unable to assign the lease to the leasing company, the lease will be
"rescinded", and the vehicle must be returned (view the document
here). Tom consulted an attorney who advised him
that the "Lease Credit Approval Conditions" document was
non-binding because it contradicts the terms of the main lease contract.
The attorney also advised Tom that the dealer cannot legally rescind the
contract or repossess the vehicle as long as Tom makes his payments on
time.
If you think about it, the dealer is making
an outrageous demand. Even if there was an honest mistake you should not
voluntarily release them from the terms of the lease in exchange for a new
lease at the same or higher cost. Consider for a moment if the situation
were reversed. What do think the response would be if you called the
dealer a month later and said, "Oops, I made a mistake. I thought I
had more money in the bank than I really do so I want to return the car
for a refund." Or if you called and said, "I think the interest
rate I'm paying is too high. I want you to void the original contract and
sign this new one with a 4% lower rate." After the laughter died
down, you might get "Sure, we'll let you out of your lease, but you
will have to pay $3900 in unpaid depreciation and fees."
Leasing companies are no different when it
comes to enforcing their legal rights. We have seen some real
heart-breaking cases where the lessee has been unable to make payments due
to tragic circumstances. For example, a man co-signed a lease for his
daughter who was later disabled in a savage attack. The father, unable to
make the payments on the car (which his daughter could no longer drive)
asked to be released from the lease contract. The lease company in a
incredible show of corporate compassion, offered to release him if he paid
the sum of the remaining payments plus $300 (almost $10,000). They also
reminded him that if he simply stopped making payments, they would
repossess the vehicle, sue him for the total amount due under the lease
plus attorneys fees, and ruin both his and his daughter's credit.
The point here is the dealership and
leasing companies are large, well funded corporations who will hold your
feet to the fire to get every penny that's legally due to them under your
lease. So why should you release them from one contract and sign a new one
at a higher cost to you simply because they ask?
What To Do If You Are Called By
A Dealer Asking For More Money
- Laugh really loud into the phone for
about half a minute then say, "No, really. Why are you
calling?"
- Tell the caller that you will not sign
or pay anything without consulting your attorney. Then ask that they
put their request in writing.
- If you do receive a written request to
sign a new contract or a notice that your lease is being rescinded,
consult with an attorney to understand your rights under the law.
- If someone comes to repossess your
vehicle, do not try to stop them. Doing so may precipitate a dangerous
situation (repo men are usually armed). If you feel the vehicle is
being taken as the result of an illegally rescinded lease, consider
calling the police and reporting a theft in progress.
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