Car Buying
Contract Issues

One Payment Option
Cause Me To Lose Rebates?

A car buying question from an Anonymous visitor in California...
Car buying contract and an out right lie about a one payment option.

I just recently bought a new car and took the factory rebate of $1500 instead of the dealer financing special 3.9% for 60 months.

I was told that I would get a better savings.

Before that I asked my credit union what their rate would be for a new car and the person I talked to said 4.45% for 60 months.

My credit union wanted me to ask the dealers financing office of a "one payment option program" (time period to get my own financing) and to fax all the necessary documents to them. Since I already took the factory rebate, the dealer is giving me 6.9% for 66 months.

I wanted to take advantage of the credit union's rate offer. However, the dealer told me that I would lose my factory rebate if I do that. I was told to wait 6 months or so to refinance.

I felt like I had no choice but to take the dealer's financing.

My question is can the dealer do such thing?

Is this legal?

If not can the car buying contract/agreement be null and void because of such action?

If so, how long do I have to cancel the contract?

Hope to hear from you soon,


Hi there,

Thanks for your question. This is a an extremely common car buying scam, in fact it's an outright lie and once again goes to show that the finance office tends to be scam central.

Based on what you've told me and my past experience, you've been lied to and I'll explain in just a second...

I'm not sure what country/state you are in or what your car buying contract says specifically, but I have never once heard of a rebate being conditional based on financing.

Read your car buying contract closely and look near the Federal Truth In Lending Disclosure, if your in the states, and look for a prepayment clause.

The Federal Truth In Lending Disclosure is where your finance rate, monthly payments, term of loan, amount financed and total of payments is disclosed on your car buying contract.

Most states that I'm aware do not allow for any prepayment penalties and you should be able to refinance your auto loan at any time and it should cost you nothing.

The finance manager probably got your loan approved for 4.9% with a lender other than the factory financing and marked your rate up 2%, which led to him/her making a $700 to $1500 profit (it depends on how much you financed).

The reason the finance manager told you to wait 6 months prior to refinancing was because they will be charged back, by the lender, if you refinance before you make 6 total payments on your new auto loan.

Disclaimer: This is not meant to constitute legal advice and for such advice I'd recommend speaking with a qualified attorney that specializes in this type of law. End.


My final suggestion would be to take your car buying contract to your credit union and have them review it to make sure you are safe to refinance...Which you more than likely are and refinance ASAP! Hope this helps...Justin

Thank You
by: Anonymous


Thank you for clarifying this for me. I did review the sections of my car buying contract as you suggested and I have inquired with several banks about refinancing and they suggest to wait until the paperwork is done, by the dealer's lender. The finance manager already submitted my application to their own financial services to be processed. The bank can't do anything now. By the way I live in the state of California.

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