Dealership sued for failing to disclose Finance Reserve

[XDCX]

A Ford Dealership in Texas has been sued for misrepresentation because they failed to disclose that there was a difference between the "buy rate" and the "contract rate."

What made this lawsuit newsworthy was the fact that the plaintiff's attorney placed a copy of a deposition on YouTube.

Here's a link to the news report: http://www.myfoxhouston.com/myfox/pages/News/Detail?contentId=7996863&version=2&locale=EN-US&layoutCode=TSTY&pageId=3.2.1

According to the news report the dealership added 300 basis points to the "buy rate" and earned 75% of an $1,800 finance reserve. The vehicle was purchased in 2004.

I wonder how many deals are written today with a 300 basis point spread? My guess is that it's not too many.

[SHACOS]

Is it a requirement that the spread is disclosed? Call be dumb, but I didn't think it was a requirement. The spread is dictated by the bank, not by the customer. I guess I don't get the point of the lawsuit if it isn't.

[goodone414]

Is it a requirement that the spread is disclosed? Call be dumb, but I didn't think it was a requirement. The spread is dictated by the bank, not by the customer. I guess I don't get the point of the lawsuit if it isn't.

In NC it is NOT required that we disclose the spread, however it IS required that we disclose the fact that lenders may compensate the dealer for arranging,processing and submitting the vehicle loan to the lending institution.

[dafuzz1956]

In NC it is NOT required that we disclose the spread, however it IS required that we disclose the fact that lenders may compensate the dealer for arranging,processing and submitting the vehicle loan to the lending institution.

It sure is a shame that a Car Dealer would try and make some $ so he is able to pay his bills and continue to keep his staff intact. Stories like this really get my blood pres. up. Did this butt heads attourney disclose how much proffit he would make from the law suite ? or did his grocery store disclose how much they make on him every week ? va er;lgy;w3es g0nhudrs;lg I am mad now!!!!!!!!!

[XDCX]

Is it a requirement that the spread is disclosed? Call be dumb, but I didn't think it was a requirement. The spread is dictated by the bank, not by the customer. I guess I don't get the point of the lawsuit if it isn't.

I agree with you - my experience has always been that there's a statement in the Buyer's Order or Application for Credit that discloses that the dealer may be paid a fee by the finance company.

What I thought was most interesting was the fact that the deposition appeared on YouTube. Was this just an effort to induce a settlement by the plaintiff's attorney? Is this what the future holds for dealership/customer legal disputes?

[XDCX]

It sure is a shame that a Car Dealer would try and make some $ so he is able to pay his bills and continue to keep his staff intact. Stories like this really get my blood pres. up. Did this butt heads attourney disclose how much proffit he would make from the law suite ? or did his grocery store disclose how much they make on him every week ? va er;lgy;w3es g0nhudrs;lg I am mad now!!!!!!!!!

This was the other part of the story that I thought was interesting. :)

It's getting harder and harder to make money in the car business. The Internet has compressed grosses on new and used vehicles and finance reserve keeps falling.

What profit center is going to get attacked next?

[dafuzz1956]

Probly the money paid at the scrap yards for rotors and such.