So You Think You Know?

Occasionally, we discuss car business things that “everybody knows”. But are they true? Here is a quiz on issues that we hear from dealership personnel “everybody knows”.

  1. True or False. My franchisor’s captive finance company just announced the availability of 0.9% APR financing for buyers of new vehicles. If I advertise this, I must give full follow-on Truth in Lending Act disclosures.
  2. True or False. We sold a car to a customer, and assigned the retail installment sale contract to the bank with which we have a relationship. The customer has sued us contending that we committed fraud and violated the Consumer Protection Act in selling the vehicle. The bank has demanded we buy back the contract. We must do so.
  3. True or False. Our franchisor has developed a leasing plan requiring no downpayment. We want to simply advertise that leases are available without downpayment without identifying the payment, the duration of the lease, or other applicable terms. We can do so without making follow-on lease disclosures about the terms of the lease.
  4. True or False. We know the FTC has changed its used car rule, and the revised rule went into effect January 27, 2017. We understand, however, that we can use up our supply of old buyers guides. We cannot just keep on the cars the window stickers we completed under the old rule.  We must revise old form stickers until the supply is used up, and then use new form stickers.
  5. True or False.  We checked the used car rule, and demonstrators are used cars under federal law. If we are notified of a recall on a demonstrator that we cannot fix because the factory does not have parts, we can deliver the car because it is no longer a new car. We can deliver a demonstrator with an unrepaired recall if we disclose that fact. 
  6. True or False. Our service department has been extremely busy. We have instructed the service advisors to not check for open recalls when customers bring in their vehicles for service since the additional work only backs us up more. There is no federal law requiring us to check for an open recall on a customer vehicle bought from us as new and advise the customer if there is one.
  7. True or False. We have a certified pre-owned vehicle for which we have just been notified of a recall. The manufacturer does not have parts to remedy the recall. We can sell the vehicle with a disclosure of the unremedied recall, but we cannot sell it as a certified pre-owned vehicle.
  8. True or False. Things have changed regarding the Consumer Financial Protection Bureau. President Trump is in charge, and the CFPB is not as aggressive. Therefore, we no longer must use our Fair Lending Program with controls on unexplained rate differences.
  9. True or False. We are doing a deal with a $7,000 cash downpayment. The buyer is someone I know to be a drug dealer because he is my brother-in-law’s supplier. I think the down payment funds are the proceeds of illegal drug dealing. Even though there is $7,000 down and that is below the threshold for notification to the government on IRS Form 8300, we should file an 8300 form anyway and mark it as a suspicious deal.
  10. True or False. Nine years ago, our service manager signed an agreement with a supplier for three years. It contains a provision that, unless we give six months’ notice of termination, it automatically renews for a similar term at the end of a term. We looked at the amount we are paying, and we want to change. We sent notice to the company and let them know we are cancelling.  They have refused to cancel since we did not give six months’ notice, and it rolled over to a new three-year term.  We are not safe in stopping business with this supplier since the supplier is right.

Answers can be found HERE