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Defending Lawsuits by Auto Finance Companies

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Let’s say you bought a car from a dealer, but it turns out the car is a piece of junk, rather than the reliable, high quality car they promised.  Or the dealer misrepresented the condition of the car or its mileage.  Perhaps the financing is not on the same terms you were promised.  Maybe the car broke down right away and doesn’t even run anymore.  You call the dealer, and they refuse to help; maybe they even try to sell you a second, more expensive car.  You call the finance company to which you are making payments, but they tell you to take it up with the dealer, and that it’s none of their business.  Meanwhile, they insist that you keep making your monthly payments because “we have a contract”.  You’re stuck . . . Or are you?

In many car sales, the Federal Trade Commission regulations require the contract to contain what lawyers call the Anti-Holder Clause.  This clause can be the key to winning your case.

This clause of the contract states the finance company to whom you are making payments is subject to all the claims and defenses you had against the dealer who sold you the car.  It doesn’t matter if it’s a well-known dealer chain or a “Buy Here, Pay Here” local car lot.  It doesn’t matter whether you are dealing with a car company’s finance company or a bank or a credit union.  If your contract contains this clause, they are bound by it.

What this means is that if you had any claims against the dealer, you can also bring those claims against the bank, finance company or credit union.  If the car dealer engaged in fraud or misrepresentation, deceptive or unfair acts or practices, breached a warranty, engaged in odometer rollback or violated any other state or federal laws, you can sue either the car dealer, the finance company to whom you are making payments, or both.  Depending on the facts, it may also allow you to stop paying the finance company or credit union as a result of the dealer’s violation of law.  However, that bank, finance company or credit union can then potentially recover their money back from the dealer.

The moral of the story is don’t give up.  Just because the dealer and the finance company tell you that you have no rights, it’s not necessarily true.  As an experienced auto fraud attorney and consumer protection lawyer, I would be honored to review your paperwork and to advise you of your rights during a free initial consultation.  Just call the Rudnitsky Law Firm at 407-333-0001 or send us an email through our contact form.