View Full Version : CFC's "walk away" letter
Has anybody been given the amount CFC is wanting the newco dealers to pay for charge back losses when GMAC takes over floor planing?
Mine was unbelievable...
Is the CFC "walk away" settlement just for dealers who want to floor with GMAC or does it impact all dealers who have outstanding retail contracts?
it is settlement for dealers who want to floor with GMAC or are going out either way, but if you are going out they have no leverage to make you pay it, but the gmac dealers will have have to pay it so cfc will realese the ucc's to gmac...
Kitfox
07-23-2009, 12:36 PM
I was not floored with CFC, am not floored with GMAC and a surviving dealer(What is the 5 year survival rate after being diagnosed with Chrysler?) and I have been presented with my walk away agreement and the amount that I am to remit by the end of the month. It is a very manageable amount in my case but still a crock!
that number is negotiable, but you will never here them say that...
Kitfox
07-23-2009, 01:47 PM
I should clarify that it is manageable only because they seldom bought deals since we were not one of "their" dealers and what they did buy was gold plated so my loss ratio was good.
possum
07-23-2009, 02:13 PM
Are they talking about a % of your outstanding retail contracts?
I'm not sure legally they can make you pay for a loss that has NOT occurred.
Kitfox
07-23-2009, 02:19 PM
Yes, they start with 1% of outstanding retail balance then discounted that to about .5% of balance for me to "walk Away" but does not release dealership from anything other than reserve chargebacks.
possum
07-23-2009, 02:55 PM
Back on 7/11, there was a lot written on this forum under the "Area 51" section. It is money you will NEVER see again.
Kitfox
07-23-2009, 06:49 PM
I totally agree, however I believe their contract that we signed gives them the power to do this even though we all know it is pouring money down a rat hole.
possum
07-24-2009, 04:32 AM
Several years ago CFC came around getting to sign a "Re-Assaignment of Assets" contract. At the time they said they "would never actually use it", but it would just clean up their files.
I refused to sign it, and we fought about it for about 2 months. They threatened to pull the wholesale, etc. But, I never signed it.
Then, they told me they already had it anyway.........so I asked why do you need another one then? They said if the DEALER ever filed for BK, it would protect THEM.
Anyway, that document is the key. If you signed it, you are screwed. Thank the Lord, I never did!
Kitfox
07-24-2009, 04:57 AM
Can't say I really understand it all but, I never was a CFC wholesale dealer so I never signed a wholesale agreement. From what I see this is only pertaining to the retail contract where on page 4 it gives them the power to screw you(me)
Kitfox
07-24-2009, 06:36 PM
Does anyone know what the time period is for chargeback of dealer reserve by CFC? 90-120 days?? I have not sent them a deal since March of this year so why would I need to fund any reserve account if I'm past my period of chargeback????
possum
07-25-2009, 04:04 AM
They say the chargebacks cover the life of the contract for Credit Life, GAP, Service Contracts, A/H, etc.
They are stealing our money. IF there are legit chargebacks, then send us a bill, and we will pay it. BUT, to "pre-pay" a loss is rediculous.
Several years ago CFC came around getting to sign a "Re-Assaignment of Assets" contract. At the time they said they "would never actually use it", but it would just clean up their files.
I refused to sign it, and we fought about it for about 2 months. They threatened to pull the wholesale, etc. But, I never signed it.
Then, they told me they already had it anyway.........so I asked why do you need another one then? They said if the DEALER ever filed for BK, it would protect THEM.
Anyway, that document is the key. If you signed it, you are screwed. Thank the Lord, I never did!
Great information - thanks for the post.
This topic has to be impacting 100% of the Chrysler Dealers, both OLDCO and NEWCO, and yet there's been very little coverage besides a short story in Automotive News.
I'll include this thread in my next e-mail message to our members and ask for more input.
Anyway, that document is the key. If you signed it, you are screwed. Thank the Lord, I never did!
I was catching up on some reading an re-read the story in Automotive News and thought of this post.
The story makes reference to the fact that some dealers have the option to be billed as charges are incurred and other must make a reserve payment. The article indicates it's not clear how many Chrysler dealers have the choice to make payments.
possum - thanks for your insight - your information is more detailed than what was written in Automotive News. :)
I hope other Chrysler dealers who see this thread will add their thoughts/comments.
Kitfox
07-28-2009, 06:36 AM
My CFC rep is a wonderful young girl that unfortunatly will be unemployed at the end of the month tells me I either pay what they want now(half of the 1%) or they will have Chrysler deduct the full 1% from my parts acct. I do not have the option of pay as you go. I'm still of the mindset to do nothing. What do you say????
possum
07-28-2009, 07:17 AM
Are you a Newco Dealer? I think CFC is making Newco pay as well as Oldco.
Are you a Newco Dealer? I think CFC is making Newco pay as well as Oldco.
If I recall correctly, Kitfox is a NEWCO dealer who doesn't floor with CF or GMAC.
It's interesting all the tools that CF has at their disposal to force dealers to pay the reserve. If you used to floor with CF they'll threaten to withhold the UCC releases necessary to pick up a GMAC floorline. If you didn't floor with CF, they'll deduct the amount from the dealer's parts account. :mad:
I wonder how many dealers have the option of just making payments once the actual chargeback has been incurred?
DealerEx
07-28-2009, 07:34 AM
Possum was referring to a document that CFC tried to get all the dealers to sign in August of 2001, titled "Notice of Assignment-Deposit Accounts". It gave CFC the right to pull funds directly from your bank account if they deemed it necessary to protect their interest in the proceeds from sale of collaterized vehicles. It also greatly expanded their security interests by inserting a sentence that ammended the previous agreement from a specified deposit account to include ALL accounts held by dealer, equipment, and OTHER assets of the dealership. Only Possum, myself, and 3 other dealers in Texas refused to sign it, and they hassled us relentlessly for months, doing frequent floorplan audits, bank account cutoffs for analysis, kicking back drafts, contracts, slow paying the contracts...just anything they could to irritate us...but we still never signed it. I transferred ownership of all dealership assets to myself personally, so the corporation itself had almost no assets other than the vehicles and the one specified deposit account, just in case they eventually forced it on me in some way.
Kitfox is referring to page 4 of the "Retail Installment Contract and Lease Program Agreement" that everyone must sign to do finance contracts with CFC, whether you are a wholesale dealer or not. The wording in the agreement on page 4 and 5 concerning the Dealer's Reserve Account is intentionally vague and open ended in reference to the amount of the reserve account. Rather than specifying an amount--which was always a floating $1000, that was replenished via finance reserve as needed to maintain that amount--it just says "to the extent required by CF, Dealer shall establish and maintain a non-interest bearing Reserve Account with CF, which shall serve as collateral security for Dealer's obligations under this Agreement." At the end of that paragraph, it further says: "If, for any reason, the balance of the Dealer's Reserve Account should fall below the THEN minimum amount THEN required, by CF, the Dealer unconditionally agrees upon demand to pay additional amounts into its Reserve Account as may be necessary to restore the balance to the required amount." I think that is what puts current dealers at their mercy...they are holding a signed document whish says that the dealer agrees to pay an unspecified amount "to the extent required by CF"...I don't see any way out of it, other than to try and negotiate the percentage down...maybe offer to give them .25% rather than .50%...who knows? they might take it and run. Good Luck!
I love this board:D
So do I. I just wish it were about 100 times larger. :)
The information that possum and DealerEx supplied is fantastic - it's better than anything else out there. There's no other place I know of where a Dealer Principal can get answers like the ones provided here.
It's also interesting to learn that CF is willing to negotiate - that's good information to have.
Special thanks to possum and DealerEx - thanks for the great posts. :thumbsup:
gingersnap
07-28-2009, 11:55 AM
POSSUM,Re member that as well. We were NEVER floored with CFC and they insisted on us signing that letter my father never would. Finally after Months and Months of them begging us he did 2 weeks later they had a judgement on us in the County Court House. Totally not legal said they could do it because we were storing REPO Cars here for them. Needless to say my DaD went CRAZY judgement was off 2 days later. Never heard any more about it. We have seen nothing in are statements but again we are very small in RURAL PA.
possum
08-06-2009, 06:15 AM
We received our CFC Wholesale Statement for July on Wed. It just seems crazy to pay for wholesale that was impossible to sell, and was only here because of the incompetance of Chrysler.
Oh well, I feel better now.
dodgequality
08-06-2009, 10:24 AM
Today is my deadline for signing "Walk Away".
My attempts to get answers to questions is useless.
Answer - this is the same for everyone and it's fair.If you opt not to sign, we will take the legal route.
That begs the question , "what is the legal route?'. Asnswer -"I don't know".
We are a member, now, of the third world.
littleman
08-06-2009, 11:39 AM
Just rec'd our via email today. What a crock! Yes we are a NEWCO dealer and have units through GMAC. Please post if you have been able to negotiate this "Recommended Amount to be held". I am going to try and get some real info from our old rep, not the NEWBE used to send these letters out.
Do you know of anyone successfully negotiating this charge down?
littleman
08-06-2009, 12:59 PM
I was told you could pay 75% of the "recommended" amount. Once all your notes are off the books and if you have no chargebacks you would be refunded the 75%. Still waiting for that agreement to show up via email. Also in our case CFC is still holding 1,000 of our reserves from day one with them. Whole thing is nuts to me....Paying for a future "possible" chargeback.
Whole thing is nuts to me....Paying for a future "possible" chargeback.
I've been thinking about that too - where do they think these chargebacks are going to be coming from?
I understand that CF wants to reserve for customers who pay-off their loans and request a pro-rata refund on their service contracts, GAP plans, etc. But aren't these chargebacks typically handled by the company that issues the service contract or GAP plan?
In the case of Chrysler Service Contracts they issue the customer a pro-rata refund based on the amount the customer paid for the service contract and then they chargeback the dealer for the un-earned gross profit.
Maybe I'm missing something, but how would CF be exposed to a loss that they'd need to recover from a dealer based on a customer's pre-payment of their car loan?
Kitfox
08-06-2009, 05:44 PM
I decided to pay my .43% because my rep made it clear they would take the entire 1% from my parts account. No option to pay as charges occur or negotiate a lower amount. Robery for sure but felt it was the best financial decision.
DealerEx
08-07-2009, 07:48 AM
In any other situation, this would be considered extortion. What they are doing is no better than paying the mob for "protection". They are demanding payment for non-existent losses, that may NEVER occur, and holding the money they owe the dealers as hostage. There is no legal way they can demand payment--in advance--for losses that haven't been incurred, but they are bulletproof because of the BK situation. If the dealer refuses to pay them and they take it out of what they owe the dealer, the dealer's only recourse is to sue them, and both sides know that they are judgement proof. No different than an armed robber telling his victim to "give me your wallet without a fight, and I'll let you keep your watch". On top of everything else, they know the dealers will never see a dime of that money refunded, because CFC won't even exist by the time all the contracts have been paid off.
s32741bb
08-08-2009, 08:55 AM
I think Chrysler Financial needs to be investigated on this issue . It seems illegal to me . I was told they can not change my amount which is way too high considering I wrote all my gap;life/a&h warranties with another company. We need some help on this with the NADA and Congress
possum
08-08-2009, 09:27 AM
NADA will not help with anything, except collecting dues.
It was suggested to me to take the 75% choice since we haven't funded a contract with CFC in over 6 months therefore the potential chargebacks should be much less than the 2 year average they are showing. I think this 2 year figure is inflated anyway since we can recoup some of the chargebacks on service contracts and gap.
It was suggested to me to take the 75% choice since we haven't funded a contract with CFC in over 6 months therefore the potential chargebacks should be much less than the 2 year average they are showing. I think this 2 year figure is inflated anyway since we can recoup some of the chargebacks on service contracts and gap.
I've wondered how much chargeback exposure their really is too.
I think for some dealers they're willing to write the "walk away" check so they never have to think about CF ever again.
Kitfox
08-19-2009, 04:20 AM
I agree. I wanted to not pay anything and take my chances with chargebacks but that was not an option so I decided to pay the full "Walk Away" amount which was an additional $600 just to be done with the dirty *******!
blauto
08-20-2009, 04:36 PM
I posted this in the wrong section. I think it is better suited here.
For those Chrysler dealers who had the "walk away" conversation. I looked
into the deal. First of all it only applies to those dealers who have had
their floor plans with Chrysler Credit. If Ford Credit was your primary
source, there are no UCC's on your business. They will all be secondary,
and it won't affect any financing options you might need. The other part
that is really dirty pool on Chrysler's part is that the walkaway was set
up so the dealer could walk away and sleep at night. HE was given the option
to pay the "walkaway" amount or stay with the portfolio. It was not set up
for Chrysler. They are just trying to grab some cash. They have no right
to that money. Ask them for the agreement. I would be surprised if it
contains any such language.
I posted this in the wrong section. I think it is better suited here.
No problem, I'll delete your post in the other section to eliminate confusion. :)
You make an excellent point concerning which party originally intended to use a "walk away" provision. I'm sure when the dealers signed those documents they never envisioned a day when CF would be split-off from Chrysler and left to die.
possum
08-21-2009, 04:57 AM
Does it make any difference that for Oldco Dealers, all contracts were void on June 9? If you signed, or not, THEY voided the contract. Does that matter?
If the tables were turned, would they honor a void contract and pay us? I doubt it.
littleman
08-21-2009, 07:39 AM
Update: I was told to make a decision by the end of Aug.. I have contacted my rep. again and again over the last week to see what (said she would have an answer for me a week ago) she has found out about our 1,000 being held from day one. (I was going to apply that towards my 75%) She called back earlier this week to inform me that there has been an urgent issue with CFC and my inquiry has been put on hold due to more pressing issues. I called our GMAC rep to research if it would have an impact on us getting permanent financing. He replied "Yes". Still waiting for reply on our 1k. Anyone else have an update?
possum
08-21-2009, 07:57 AM
The CFC letter says they are offering the Dealership the "OPTION" of.......
Why not just don't take the option?
The CFC letter says they are offering the Dealership the "OPTION" of.......
Why not just don't take the option?
To the extent that ALL of CF's dealers now have the "pay as you go option" I imagine most will take that option.
In fact, it will be interesting to see how many of the dealers who had written "walk away" checks will want their money back and go with Option 1 instead?
I wonder why CF is making the change and allowing dealers to use the "pay as you go" option? After putting up such a fight it seems strange they would change their position.
possum
08-21-2009, 08:12 AM
If you do a "walk a way" check, and it is not used up, there is NO refund.
possum
08-21-2009, 08:27 AM
My first thought on why CFC would change, is because nobody was going to pay the "Walk a Way". Or at least, Oldco Dealers were not.
They may feel at least there is a chance with an option, albeit slim to none.
My first thought on why CFC would change, is because nobody was going to pay the "Walk a Way". Or at least, Oldco Dealers were not.
They may feel at least there is a chance with an option, albeit slim to none.
While that may be true with the OLDCO dealers, CF has total control over the NEWCO dealers who want to transition to GMAC flooring. The fact that CF was not going to release the UCCs gave them all the power they needed.
I'm wondering if their change in policy is due to some political pressure?
I doubt that it's rooted in their concerns for dealership cash flow because of the CARS program as was stated in the letter. :rolleyes:
Kitfox
08-21-2009, 11:00 AM
This Forum is the BEST! After reading here that they had changed I just called my rep and told her to send my check back which she said they would do. Thanks
littleman
08-21-2009, 11:39 AM
I have not been contacted. Guess the urgent issue was CFC getting their ass in a crack. Can some one send me a copy of the letter with the pay as you go option? Thanks in advance
Can some one send me a copy of the letter with the pay as you go option? Thanks in advance
PM (Private Message) sent. :)
This Forum is the BEST! After reading here that they had changed I just called my rep and told her to send my check back which she said they would do. Thanks
That's awesome, thanks for the post and the kind words. :)
I get frustrated sometimes because the forum grows so slowly, but I remain convinced there's a real need for Dealers and their employees to communicate with one another.
This place will rock once we have a couple hundred active members who post on a daily basis.
Still waiting for reply on our 1k. Anyone else have an update?
Concerning the $1,000 "memo" issue, the last post in that thread was from dodgequality. He pressed the issue with his DRM and received an e-mail back indicating that it was out of his DRM's hands and he would be contacted by CF's attorneys.
I don't know of anyone who has received credit for the $1,000 "memo." For more information you may want to review the "memo" thread that's in AREA 51.
The StraightShooter
08-21-2009, 12:29 PM
PM (Private Message) sent. :)
shoot me a copy too please...
shoot me a copy too please...
I'll be happy to do so. :)
I just sent you a PM.
The StraightShooter
08-21-2009, 01:07 PM
I'll be happy to do so. :)
I just sent you a PM.
pm's are inop for me
pm's are inop for me
That's strange, I just received two PMs from you. :)
I removed your e-mail address from your post because I don't want you to get a bunch of SPAM. Google, Yahoo and MSN all scan the site and they've been know to grab e-mail addresses.
Regarding the letter from CF, I'll make sure you get a copy.
mumblypeg
09-03-2009, 06:12 AM
Would it be possible to get a copy of the letter, also ?.
littleman
09-03-2009, 08:52 AM
Our rep. noted that we are going to choose the pay as you go plan, but still has not sent any paperwork regarding it.
Would it be possible to get a copy of the letter, also ?.
Absolutely. :)
I sent you PM - I just need to know what e-mail address you want me to send the letter to. (Please do not post your e-mail address in this thread as it will likely result in more SPAM e-mail for you.)
dodgequality
10-14-2009, 04:51 AM
Walkaway, my a$$.
It was promised that once they had the check, all UCC's would be removed so that we could proceed with floor plan financing.
Chrysler filed a Financing Statement Amendment. -"debtor grants the secured party a security interest in:"
So much for promises and trust!:mad:
possum
10-14-2009, 04:58 AM
We have not heard anything from CF in a long time now. No more word of the "walk a way". Are they still after that, or did it die a way?
Walkaway, my a$$.
It was promised that once they had the check, all UCC's would be removed so that we could proceed with floor plan financing.
Chrysler filed a Financing Statement Amendment. -"debtor grants the secured party a security interest in:"
So much for promises and trust!:mad:
That has to be frustrating - the stream of bad news from Chrysler and CF has been non-ending for your dealership. :(
Like possum mentioned, it seems like CF has dropped off the radar screen lately. Is there any chance this is just an administrative mistake on their part?
Hang in there, we all know you have more determination than anyone at CF. :)
dodgequality
10-14-2009, 04:37 PM
No administrative snafu.
Explanation - all Dealers who had any retail business with CFC wil get the same if they request elimination of UCC's.
It then becomes a question and decision on the "new" floorplanner.
And, an inquiry today from CFC re our signage.
No administrative snafu.
Explanation - all Dealers who had any retail business with CFC wil get the same if they request elimination of UCC's.
It then becomes a question and decision on the "new" floorplanner..
This must be part of the "soft landing" that Press kept promising. :mad:
I'm sure you'll be able to get it sorted out with your new flooring source, but it's just another hassle that doesn't help you develop your business.
And, an inquiry today from CFC re our signage.
Do you mean Chrysler or CFC?
Was it just a form letter like the one discussed in AREA 51?
dodgequality
10-15-2009, 02:04 AM
Letter first, then phone call from a firm representing CFC saying that someone would be in contact in 10 days to arrange removal of signage.
It appears that signs were owned by either CFC or Chrysler Motors depending on when the contract was signed.
Don't think there was any relationship to letter and phone call.
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