I know someone who bought a new car 8 years ago and paid cash for it. Back then, after he and the salesperson came to an agreement for the price to be paid, he was taken into the "finance office"** where he wrote a check for the purchase price and had him sign a bunch of forms. One form, the very last one, was a finance agreement. He thought it was rather odd that if he paid cash for the car, why a finance agreement?

So about 6 years later, he started to wonder why his DMV Certificate of Title still had a lienholder listed. He should have noticed it and questioned it then but not many people do, I suppose. You've got the car and are not being hounded for payments so who is paying attention to a little thing like that? He took the Certificate to the DMV and got a new certificate that had no lienholders listed. He had never made any payments to the finance company...he paid cash after all. So, it was chalked up as some kind of snafu and didn't think much of it until he recently bought another new car...again with cash. Again, they had him sign a bunch of papers and the last one they had him sign was the finance agreement. This time he balked at having to sign it...why, when he was paying cash, should he sign a finance agreement? They said..."well you won't get the car without signing the agreement." So, thinking back that he didn't really have any finance company chasing him for payments, even though he paid cash the last time, that he'd go ahead and sign it again. This time instead of a normal check he gave them a cashiers check for the total amount of the price of the car plus all of the fees and taxes and drove the car away.

It has been several months and he still has not yet received the DMV Certificate of Title or tags and is anxiously awaiting to see if they will have a lienholder listed on the Certificate like last time. If they do, he will immediately take it to DMV to get it corrected and ask why this has happened.

He had done some checking on the internet and found that some new car dealers have been using the customers good credit to borrow money under their name but making payments to the credit company themselves so the buyer never receives a bill from the credit company. Some dealers have been caught when they missed making payments on time and collection agencies started hounding the buyers for the payments.

I think the reason why they save the finance agreement till the very last to sign is so that you get the feeling like you've already committed to buying the car through all of the other forms you signed and that you would have a legal fight if you refused to sign the finance agreement.

I think having to sign a finance agreement, if you are paying by cash, should be illegal on the part of the car dealer.

**The finance office is also where they try to hit you up for purchasing way more warranty and insurance that you will probably never need....especially if you already have a 10 year warranty on the drive train (hint, hint...without naming the car manufacturer). But there are so many electronics in the car that could easily fail that maybe extra insurance isn't a bad idea. My friend said that some of the things that have already ticked him off about the car is the GPS system sometimes won't start when you try to select the agreement that displays on the screen. Another time he took the car to a car wash and the electronic door locks wouldn't work right...it eventually worked after whatever got wet dried out. Intermittent problems like that can be a real son-of-a-gun to get fixed.

I think another reason for the finance agreement was so that it would be easier for the dealer to snoop into your credit report...but then...I don't think it is too hard for many people to snoop into someone's credit history anyway nowadays. Everyone, including dealers are selling your personal credit information to anyone who would pay for them which is part of the reason why one gets so many pesky phone calls and email and snail mail and people knocking on the door trying to scam you out of your money.


Palindromedary's picture
Palindromedary 3 years 36 weeks ago

Another thing that I've heard that the new car dealers are now doing is partnering with SiriusXm and Blue Link to put those in new cars with 3 months of free trials. But the catch is that if you are not interested in those things you can't just let them expire...you have to call them up to cancel before the 3 months have expired...and probably 14 days prior to that. Oh, and they hound you to death with phone calls to get you to subscribe. They automatically renew and they send you the bills if you don't cancel. This is pretty sneaky!! SiriusXm will cost about $163 a year (more like $200 if you want the all-inclusive package where you can listen on your computer or tablet) and that's not really very bad unless you really don't listen to SiriusXM. And Blue Link will cost you $99 per year per package...and they have 3 packages. I think most people can find that they don't need to start their car from the house and either heat or warm their cars from the house...that's part of one package..another is being able to contact the Blue Link center in case of emergencies...but it looks like you have to have it connected to your Iphone...it won't work with anything else...it has to be an Iphone. That's kind of like Father Sarducci's Mr. Tea...put your cup in Mr. Tea...put in a tea bag in the upper chamber...then poor boiling water in the top...the tea comes out into the cup below. (that's an old Saturday live skit). And the third package has something to do with being able to remotely lock and unlock the car...it is unclear if they mean that the little remote dongles don't work anymore, or the proximity dongles (same as the remote dongles) don't let you lock the car by pressing on the door handle button. You can't start the car without the proximity dongles being in the car with you because they don't use keys anymore...it's push a button to start the car. if you don't pay $99 a year...it might mean that you can't lock and unlock your car from a cell phone but the remote dongles may still work...hard to tell just what they mean. Marketing trickery...total BS!!! But my friend told me that even without being connected to an iphone...they know exactly how many miles he has driven on a certain date because they sent him an email with the number of miles he had just driven. I'm sure they have lots of other data as well...like exactly where and when he went there. Very spooky!!

The Poor Poet's picture
The Poor Poet 3 years 36 weeks ago

Now, I'm not a man to point or judge,
To bury a will or hold a grudge,
But I think it's time I said a few choice words
About that demon the automobile,
That metal monster with the polyglass wheels,
The end result of a dream of Henry Ford's.

Well, I've got a car that's mine alone,
That me and the finance company own,
A ready-made pile of manufactured grief.
And if I'm not out of gas in the pouring rain,
I'm changing a flat in a hurricane,
And I once spent four days lost on a cloverleaf.

It's not just the smoke of the traffic jam
That makes me the bitter fool I am,
But this four-wheeled buggy's dollar'n me to death.
For gas and oil and fluids and grease,
And wires and tires and antifreeze,
And then them accessories, why that's somethin' else.

You can get stereo tape and color TV,
Backseat bar and reclinin' seats,
On top of those E-Z monthly payments.

I figure that over a period of time,
This four-thousand-dollar car of mine
Cost seventeen thousand dollars and fifty cents.

Well, now, Lord Mr. Ford, I just wish that you could see
What your simple horseless carriage has become.
Well, it seems your contribution to man,
To say the least, got out of hand.
Lord, Mr. Ford, what have you done?

Well the average American father and mother
Own one whole car and half of another,
And I bet that car's a bitch to drive.
But the thing that amazes me, I guess,
Is the way we measure a man's success
By the kind of automobile he can buy.

Well, now, red light, green light, traffic cop,
Right turn, left turn, no turn, stop,
Get out the credit card, it's time for gas.

Well, all the cars placed end-to-end
Would reach to the moon and back again,
And there'd prob'bly be some fool pull out to pass.

Now how I yearn for the good old days
Without that carbon monoxide haze,
Hangin' over the roar on the interstate.

Now if the Lord who made the moon and stars
Had wanted me and you to have cars,
He'd have seen that we were born with a parking space.

Well, now, Lord Mr. Ford, I just wish that you could see
What your simple horseless carriage has become.
Well, it seems your contribution to man,
To say the least, got out of hand.
Lord, Mr. Ford, what have you done?

Come away with me, Lucille,
In my choking, smoking automobile.

(Lyrics to the song "Lord Mr. Ford" by Dick Feller)

Palindromedary's picture
Palindromedary 3 years 36 weeks ago

anniegilson35: You quite welcome. I hope more people can realize what they can expect when they go to a new car dealer. And if they know what they are up against, perhaps, it will lead them into finding out more about the process, before they go to the dealers, so that they aren't left with the feeling that they've been hoodwinked.

I've read, on the internet, some guys boasting that they had also paid cash and when given the finance form to fill out told the dealer that he refused to sign it and when they told him that they weren't going to get the car unless he did sign, he started to walk out and said then forget it...I don't want the car. They gave in and he bought the car after all without having to sign a finance agreement which may also be called "Retail Installment Sale Contract - Simple Finance Charge (With Arbitration Provision) at the top.

Be sure that the Vehicle Identification Number matches the one in the car..usually can be seen through the front window of the car etched into the dash. It should match the MSRP paper on one of the side windows and most certainly be the same number on the paperwork you sign. And make sure all the other numbers are correct...Odometer, Make and Model, Year, New/Used says NEW. The finance agreement form requires a lot of signatures that cover various things like a Statement of Insurance, Agreement to Arbitrate, Broker fee (if any), and a lot of others.

My friend who bought the car with cash had told me that the finance agreement says near the top of the form:

Quote form:You, the Buyer (and Co-Buyer, if any), may buy the vehicle below for cash or on credit. By signing this contract, you choose to buy the vehicle on credit under the agreements on the front and back of this contract. You agree to pay the Seller - Creditor (sometimes "we" or "us" in this contract) the Amount Financed and the Finance charge in U.S. funds according to the payment schedule below. We will figure your finance charge on a daily basis. The Truth-In-Lending Disclosures below are part of this contract.
And the form is about 3 feet long with very small print on both front and back. It could take a very long time to read it all. Especially, if an impatient finance guy that you've just ticked off because you refused his offer to pay thousands of dollars more for extra warranty insurance, is constantly interrupting your concentration.

Just make sure that, if you are paying cash, the Annual Percentage Rate and the Finance Charge boxes show 0.0% and make sure that the Amount Financed...if it shows the price agreed upon that the Total of Payments equals that.

The new car that he bought for cash 8 years ago, he realized...like 6 years later when he noticed the "lienholders" listed on his Title...did not have 0.0% in those boxes and it was showing a certain monthly payment amount for the length of the "loan". Although, even with this, he never did get bills from the finance company, as he shouldn't have. But, I wonder if this was a case of the dealer borrowing money from the finance company against the buyer's name.

In the case of this last purchase, my friend finally did get his license plates and title from the DMV...which took about 1-1/2 months. And the title was clear of any liens...no lienholder listed on the title. So, it looked like he was worried for nothing in this case.

I'm not a lawyer, nor is my friend, and anything I've said should not be regarded as legal advice...it's just my friends experience as a new car buyer.

But here is a link that might be useful to someone thinking of buying a new car...doesn't look like the author of this site believes that one should pay cash for a new car. He says to finance it then when you get the first bill from the finance company..pay off the whole new car price. But, there are such things as "early payoff penalties" which may be listed on the Retail Installment Sale Contract...what I have also been calling the "finance agreement".


Palindromedary's picture
Palindromedary 3 years 6 weeks ago

Thanks, kelly.james0! Good luck!

DynoDon: Thanks for that link! I noticed the article didn't mention some of the dealership scams where they take the credit applications the buyers fill out, even though they are paying cash, and they use the buyer's good credit to take out their own loans to buy more cars to put on the lots. The dealers make payments to the credit companies and the buyers never know their credit was being used. If the dealers ever defaulted, then the credit companies would come after you, the buyer. This actually happened, which was how it became known that this was happening. The buyers started getting credit collectors calling them. I think they finally busted the dealers. But I wonder how many are doing this?

I bought a new car 20 year ago, and some since, and had paid it off in 4 years. I went to the DMV, a number of years ago, to finally get my title corrected to indicate no liens since I paid the car off like 10 years before. I had forgot about it, just sitting in my files. So the DMV took my title and looked it up in their computer and the said that the title was still being held by some dealership in the LA area but it was not what was shown on the title. I told them that I had no knowledge of that LA dealership because I had bought the car in the SF area and paid off the loan within the 4 year loan period. They finally fixed the problem and I got a new title clear of liens. But, I still don't know what the heck happened. I know, I should have checked this right after paying off the loan...maybe I should have checked it with the DMV right after I got my title the first time 20 years ago. I thought they were supposed to mail the new titles once a loan was paid off. I guess not!

Buying a new car really, really sucks! I really, really hate car salesmen... actually, I hate all salespeople.... especially the guy you have to see to sign the papers...the finance guy... they try to talk you up... sell you more... and then they lie to you about having to have a SSN and having to fill out a finance agreement even when you are paying cash.

And then, all the intermittent electronic problems...door locks...gps touch screen problems ....has given my friend, who bought the car, a lot of headaches*. But it never fails for them and they don't really do anything to actually fix the problems.
*There is a touch-screen that displays, when you start the car, a warning not to be distracted by the unit while you are driving and it wants you to touch "Agree" ** The touch-screen sometimes doesn't sense his finger so he has to shut off the engine and open the door to totally turn off everything*** and then try restarting the engine again. The touch-button-on-the-handle-door-locks sometimes don't work either...even if the dongle key is in the possession of the person trying to open the door. I know intermittent problems are hard to fix but it is a real pain to have to go through taking it back to the dealer...trying to explain the problem...and then they don't end up fixing the problem.

** It looks like a disclaimer to keep the car maker from being liable for any accidents occurring because someone is trying to operate the device while driving...something like cell phones but even more distracting. It is really, really dangerous (distracting) until you get totally use to it!

***And that's a pain too... should be able to totally shut everything down by pressing the ON/Off button and not have total shut down contingent upon opening the door. If you don't open the door, the GPS/Radio/Sat/Entertainment system will stay on and then it will warn you that it will drain the battery if you leave it on. So, you have to open the driver's door to shut it down. What if it is raining and you don't want to open the door to shut it all off?

MichaelGross's picture
MichaelGross 49 weeks 13 hours ago

Great post!!!

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