The Car Dealer Stole My Down Payment or Trade In - Legal Rights - Whitney, LLP
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By: Daniel W. Whitney, Jr., Esq.
Whitney, LLP
409 Washington Ave, Ste 750
Towson, MD 21204
410 583 8000 - Phone
[email protected]
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Hi, this is Dan Whitney with the Whitney Law Firm in Towson, Maryland. Today, we're going to talk about The Car Dealer Stole My Down Payment. So, the question is why would a car dealer steal somebody's down payment? Do they hate their customers? Maybe. More likely they're just greedy. And the fact is, they think they can simply get away with stealing the down payment. So I've sued many car dealerships here in Maryland, and they are capable of anything.
One of the most significant problems that my clients run into here in Maryland is that dealers will steal a down payment and they'll also sell trade-ins when financing is not approved. And then they leave the customer holding the bag, and they say, "We're not going to give your down payment back," or "We've already sold your trade in. You're not going to get it back." And customers have no idea what to do. It's such a terrible situation. It's completely illegal. It's totally unfair. Yet many dealers do this.
Now, in Maryland, there's something called a spot delivery. And what a spot delivery simply means is a car was delivered to a customer by a dealer. Delivery, meaning the customer took possession. The car was delivered in a sense on the spot, and financing has not yet been finally approved. So why is that important? Well, if financing is not finally approved, that means of course it may fall through. And if financing falls through, that means that the customer is not going to be able to finance that car with the bank. And what the dealer's probably going to do is you're going to call up the customer and say, "Hey, bring the car back. The deal fell apart. We need our car back." And that's it.
Now, in Maryland, when a dealer finds out that financing has not been approved, they have four days from the time of delivery to notify the customer in writing that financing has not been approved. A notice is also required to be given to customers at the time of delivery if financing has not been finally approved at the time of delivery, laying out the customer's rights. It's generally called a spot delivery notice. And what the notice sets forth is the customer's right to be notified within four days, whether or not financing has been approved or if it has not been approved. And if not, the customer has the right. As soon as they return that vehicle to the dealer, they're entitled to immediately, and that's in the law, immediately get back their down payment and their trade. And they get back 100% of the down payment.
Now, dealers almost never provide written notice within four days. Customers usually find out two, three, four weeks. Sometimes it could be even be months. They find out that financing has not been approved. Now, why is that a problem? That's a problem because in really in the scope of a week, if somebody turns the trade-in in, they still have their tags. And of course, well, at least in Maryland, if you don't turn in your license plate, you're going to start getting fined if the car is no longer insured. So people trade their car in, they think financing is done, they turn their plates into the MVA. And then when they get a call from the dealer saying, "Hey, come get your trade," they say, "Well, I've already turned in my tags. I thought everything was done. You told me financing was approved." And the dealer says, true to form, "Whatever. I don't care. Just come get your car or we're going to have it towed somewhere else." They don't care.
Now, regarding down payments when financing is not approved, what dealers will often say is they'll call the customer and say, "Okay, financing has not been approved. Bring our car back." And the customer will say, "Okay, here's your car. Now give me my trade and give me my down payment." And the dealer often says regarding the down payment, "Look, you drove our car for free for two, three, four weeks. You put a hundred miles on it. We have to reinspect it. We have to do some touch-up work." Whatever, none of it matters. They're required to give a hundred percent of the down payment back, but they will start to come up with excuses as to why the customer is not going to get their down payment back immediately.


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