credit insurance from dealership...illegal?

He should go back and sort out this issue. If dealer refuses, then report to the provincial regulator for further discussion on your next course of action

Thats tied selling and its illegal in Ontario. No legitimate financing company will force a customer to accept a credit insurance or life and disability policy in order to qualify for financing. Its actually in the fine print of the conditional sales agreement.

booblehead wrote: ↑He should go back and sort out this issue. If dealer refuses, then report to the provincial regulator for further discussion on your next course of action

Where can I find info regarding the provincial regulator

dealership said no, its been signed. whats his next course of action? can OMVIC do anything?

Which dealership?

vkizzle wrote: ↑ Which dealership?

scarsview chrysler in scarborough

Thackers wrote: ↑Thats tied selling and its illegal in Ontario. No legitimate financing company will force a customer to accept a credit insurance or life and disability policy in order to qualify for financing. Its actually in the fine print of the conditional sales agreement.

shoei wrote: ↑dealership said no, its been signed. whats his next course of action? can OMVIC do anything?

booblehead wrote: ↑ He should go back and sort out this issue. If dealer refuses, then report to the provincial regulator for further discussion on your next course of action

No. It's definitely legitimate if it's like you say in the OP.

Coercive Tied Selling is when the lending approval is contingent on getting another product. Preferential pricing is NOT an example of tied selling and offering a lower interest rate if you apply for another product is perfectly legal.

seems to some extent similar to mortgage insurance where you have less than 20% down.

shoei wrote: ↑ scarsview chrysler in scarborough

Scums, taking advantage of a situation.

superfresh89 wrote: ↑ No. It's definitely legitimate if it's like you say in the OP.

Coercive Tied Selling is when the lending approval is contingent on getting another product. Preferential pricing is NOT an example of tied selling and offering a lower interest rate if you apply for another product is perfectly legal.

But he didnt ask for it and how does he know that they're not just adding it to make an extra 2k? Im sure the bank will agree that once its approved for x% financing, it cant change just because someone adds finance insurance to it.

It's legit only if the consumer is aware of it before signing and the offering of this insurance is optional and does not tied into getting the car directly.

If this insurance calls for $200 per month per se, on top of the car payment, will you buy/lease this car from this dealer ? Think about it.

The dealership does not provide the insurance, it would be a 3rd party. He should contact the 3rd party insurance provider to cancel the insurance.

shoei wrote: ↑ But he didnt ask for it and how does he know that they're not just adding it to make an extra 2k? Im sure the bank will agree that once its approved for x% financing, it cant change just because someone adds finance insurance to it.

He doesn't need to ask for it. It's perfectly normal to offer insurance in exchange for a lower rate.... Try it with any loan from any financial institution.

As long as your friend had the option to accept the loan without insurance at the 16.99%, that's all that matters and the dealer is in the clear. They would have the documents to prove that your friend was indeed approved at the higher rate.

Kkhan15 wrote: ↑ The dealership does not provide the insurance, it would be a 3rd party. He should contact the 3rd party insurance provider to cancel the insurance.

but would he get back a refund or will they just cancel it and he still has to pay the $1899

What is his rate now?

With bad credit will be higher interest rate. Shouldn't get a new car in the first place with bad credit. What is the current rate? Your friend could build up his credit score and get another loan to pay it off if he could get a lower rate from a new bank.

shoei wrote: ↑ Hey Guys,

so my cousin just bought a new car and i was reading the bill of sale. He paid $1899 for "health and accident insurance". When i asked him what this is, he said that they included so that he can get a lower interest rate (his credit isnt too good). He said that if he didnt take it, they would have to charge him 16.99% interest for the loan. My question is can they do that? They never mention it anytime during the credit check or sale. I was looking around online and came across Consumer Law Group CP and their site reads "When financing your loan through the dealership, pay attention to the details. Some dealers will include a credit insurance policy in the terms of the loan without telling you. Others will not approve your loan unless you agree to purchase the insurance. Both of these practices violate federal Truth in Lending laws and are considered fraud." Can he go back and have them remove it?

shoei wrote: ↑ Hey Guys,

so my cousin just bought a new car and i was reading the bill of sale. He paid $1899 for "health and accident insurance". When i asked him what this is, he said that they included so that he can get a lower interest rate (his credit isnt too good). He said that if he didnt take it, they would have to charge him 16.99% interest for the loan. My question is can they do that? They never mention it anytime during the credit check or sale. I was looking around online and came across Consumer Law Group CP and their site reads "When financing your loan through the dealership, pay attention to the details. Some dealers will include a credit insurance policy in the terms of the loan without telling you. Others will not approve your loan unless you agree to purchase the insurance. Both of these practices violate federal Truth in Lending laws and are considered fraud." Can he go back and have them remove it?

“Truth in Lending” laws Sounds like an American reference and wouldn’t be applicable in Canada. That said there are other Disclosure requirements that must be met depending on the jurisdiction and the lender. And as another poster has pointed out there are “Tied Selling” and similar coercive practices that are regulated, but again it depends on where the justification is and who the lender and insurer are.

Need to know:

— in what Province did the deal get done?
— who is the Lender on the loan paperwork?
— who is the Insurance Company on the paperwork?

And also, getting into the details of the deal:

— is the Insurance being paid for as an addition to the monthly payment? ie is it a monthly premium?
— did the paperwork get done so that it looks like the down payment cash up front paid for the policy? Or did it get structured where the Insurance was rolled into the Loan and the Lender paid the Insurer?

Need above info in order to advise on potential recourse via insurance cancellation and if there’s any case to be made for a regulator to get involved.

shoei wrote: ↑ but would he get back a refund or will they just cancel it and he still has to pay the $1899

Depends on their policy. He could try and contact them to find out. They might not, might do a retro charging him a month or 2 worth of premium. Hard to say.

CanadianLurker wrote: ↑ “Truth in Lending” laws Sounds like an American reference and wouldn’t be applicable in Canada. That said there are other Disclosure requirements that must be met depending on the jurisdiction and the lender. And as another poster has pointed out there are “Tied Selling” and similar coercive practices that are regulated, but again it depends on where the justification is and who the lender and insurer are.

Need to know:

— in what Province did the deal get done?
— who is the Lender on the loan paperwork?
— who is the Insurance Company on the paperwork?

And also, getting into the details of the deal:

— is the Insurance being paid for as an addition to the monthly payment? ie is it a monthly premium?
— did the paperwork get done so that it looks like the down payment cash up front paid for the policy? Or did it get structured where the Insurance was rolled into the Loan and the Lender paid the Insurer?

Need above info in order to advise on potential recourse via insurance cancellation and if there’s any case to be made for a regulator to get involved.

sent you a pm