Automotive

Open Loan and Bill of Sale Agreement (Help)

  • Last Updated:
  • Jun 7th, 2015 8:30 pm
Newbie
Jun 6, 2015
7 posts
2 upvotes
Unionville, ON

Open Loan and Bill of Sale Agreement (Help)

Hi, yesterday (Saturday) my dad rushed and decided to purchase a used car from a Toyota dealership.
It should be noted that my dad is not very fluent in English, if at all.
My dad wanted to trade in our old car that we had not driven to the dealership as we had driven our other vehicle.
They wanted us to complete the "bank stuff" as they called it, then and there because they said the bank representatives were there today and they would not be staying for very long (don't know the truth in that).
My dad did not want to sign any contract or anything binding until we confirmed that the price that the dealership provided us for our trade-in car was set in stone, obviously they can not give a definitive price until they have inspected the car, which we did not bring so the manager and my dad said that they would take the deposit only and give us a receipt for that and then we would finalize all of the paperwork later.
However, after my dad was led into in office by the sales person who was helping us in the beginning said that it was only a bill of sale and not the "final contract" and it was not the "bank stuff" and we were helped to complete the paperwork by some guy who said he was "representing the banks and in charge of the paperwork in the dealership".

Well, later we found out that they had made us sign a vehicle purchase agreement (we did not give them a void cheque, although they did take our credit card to take the deposit) even though we wanted to only receive the receipt of our deposit because we wanted to confirm the trade-in price of our car.

Overall, my dad is bitter because not only did they try to mislead us but they told us to only finance the vehicle for 3 months (of a 48 month term) as a favor to the dealership manager for reducing the car to the price that we wanted (and that he got some kind of "brownie" points from the banks for having had us financed a used car, even though my dad could pay off the car all at once. My dad is concerned because although the car finance/loan is an open loan, they told us to finance for three months and then we could pay it all off and there would be no penalties. My dad is concerned that he will have to pay off the interest or suffer some penalty.

I was wondering if 1. there is a possibility to cancel the vehicle purchase agreement because some information is mismatching e.g. the online page for the car said it was push to start whereas in reality it uses a key to start.
2. If we are unable to cancel, could we pay off the "loan" that they made us sign all at once as it did not say anywhere that we have to finance for 3 months and then pay it all off. In addition would we have to pay a penalty/fee/interest for not financing for the 48 months that is noted on the vehicle purchase agreement.

Thank you very much and any help is much appreciated.
4 replies
Deal Fanatic
Apr 16, 2007
8134 posts
3485 upvotes
Financial District B…
The CSC Contracts(bills of sale) that all licensed auto dealers, new and used, in Ontario use are 3 part NCR.(white, yellow, pink)
If your father only has the yellow NCR then all he has signed is the bill of sale.
Finance contracts are also NCR format but they will clearly state and show the actual name of the lending bank. Your fathers voided chq for PAD won't be needed until that time comes. Usually at delivery.

The 3 month finance-then-pay-off verbiage you're getting is nothing more than the dealer circumventing dealer reserves. Nothing for you to worry about except if your father wants it to be a cash deal then do so. Don't be pressured into agreeing to a finance contract if he doesn't want to be.

Does your contract show the complete agreed purchase pricing with possible trade-in evaluation at a later date?
If it does then an easy way out is to bring your trade in and expect the moon for it. Whatever they quote tell them that's a lot less than expected and the deal is dead.

Auto loans in general use simple interest formula and are all open loans that can be settled in full at any time during the loan term without penalty from the funding financier.
Again, the 3 month verbiage is disturbing. The one-stop-shop lending services provided to retail dealers by their network captive finance divisions should not be sold or offered as such to retail customers.

#2 answers:
If he does commit to a finance purchase deal he will be subject to PPSA fees for the 48 month term. The fees should show on the finance contract once finalized. Not a huge deal as it will be approx $52.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Expert
Aug 22, 2011
41788 posts
30051 upvotes
Center of Universe
Name of the dealership?
If your story is true and they mislead your father, time to shame them so noone else falls as victims.
Newbie
Jun 6, 2015
7 posts
2 upvotes
Unionville, ON
Hey thanks for the reply!
Yeah my father only has the yellow NCR form as they took the white and pink forms.
Yeah, I thought it was strange how it was only for three months as my dad was more than happy to pay it off in one lump sum.
The used car manager wanted use to finance for three months because again apparently he obtains some incentive or something, which he did not clearly specify other than that the "banks" want him to show that people signed up to finance used cars (at least that's what he told us) so that he could get some kind of points.
The contract does already show the pricing of the trade in vehicle and on the back of the contract it says that the price is subject to change after dealer inspection so I don't know if the purchaser (my dad) is able to ask for a higher price.

Does that mean that my father could theoretically just pay off the entire lump sum/ price of the car at once instead of actually financing the car for three months like the dealer wants us to? It was not written on the contract so I'm pretty sure he's just banking on the fact that we are clueless/don't know and follow through with his request.

So as of right now it seems that we should follow through with the purchase? We have not handed in the void cheque or signed any other documents aside from the above bill of sale form.

Thanks so much for your help!
Deal Fanatic
Apr 16, 2007
8134 posts
3485 upvotes
Financial District B…
At this point everything I will post is going to be subjective and speculative to your detailed points and is in no way accusatory to any company, group or person(s) of wrongdoing or fault.
mindthegap wrote: Hey thanks for the reply!
Yeah my father only has the yellow NCR form as they took the white and pink forms.
Yeah, I thought it was strange how it was only for three months as my dad was more than happy to pay it off in one lump sum.
The used car manager wanted use to finance for three months because again apparently he obtains some incentive or something, which he did not clearly specify other than that the "banks" want him to show that people signed up to finance used cars (at least that's what he told us) so that he could get some kind of points.
Majority of all dealer supported financiers either captive or 3rd party finance services remunerate them what's usually called a dealer reserve. This dealer reserve is a monetary sum that is performance rated to an APR interest rate scale. Each lender will vary and not all offer dealer reserves.
The purpose of dealer reserves is to somewhat award the financiers retail dealer network for sending them retail paper(contracts) that they would not normally get or capture - usually referred to as captive financing.
To sum this up in short, you send us a finance customer we pay you a small commission.

All I will say is the advisory you're are getting from the dealer is suspect and won't get into any more details.

mindthegap wrote: The contract does already show the pricing of the trade in vehicle and on the back of the contract it says that the price is subject to change after dealer inspection so I don't know if the purchaser (my dad) is able to ask for a higher price.
So they committed a trade value for your trade untested and unseen. That's not totally unusual especially if its a fairly aged vehicle.
As per contract law everything is subject to change. So as long as all parties are agreeable to the change in terms.
Because there is a shown trade value and the fact your father signed the bill of sale the trade value will serve as a mutual agreeable amount by both parties. Your father may state he had second thoughts and thinks the trade is worth more and therefore request more but that may not happen knowing a trade value is notated and already agreed upon via his signature.
mindthegap wrote: Does that mean that my father could theoretically just pay off the entire lump sum/ price of the car at once instead of actually financing the car for three months like the dealer wants us to? It was not written on the contract so I'm pretty sure he's just banking on the fact that we are clueless/don't know and follow through with his request.

So as of right now it seems that we should follow through with the purchase? We have not handed in the void cheque or signed any other documents aside from the above bill of sale form.

Thanks so much for your help!
Without knowing the lenders policies its impossible to state if there is or if your'e subject to any fees for such an early termination. In this regards I would not rely on what the dealer personnel is telling you.
Here's a bit of a sneeky way to confirm their statements. Ask the finance manager for the phone number of the financier they have utilized or plan to utilize to secure the auto loan for your father. Tell him/her you want to confirm that exercising the payout of the loan within a couple months is okay and you will not be subject to penalties or fees. I'm willing to bet he won't give you their number.

Before any other process will occur your father first must supply a completed application for credit which gives the financier consent to pull his credit bureau file and perform underwriting on the vehicle purchase.
If he truly just wants to treat this as a cash purchase then he is best not to submit a credit application of any kind.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again

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