By: Robert J. Nahoum
THE PROBLEM
You’ve decided to take the plunge and buy a new car to be used as a Rideshare like Uber and Lyft. Like most people, you don’t have enough cash on hand to buy the car outright so you are planning to finance the purchase of your new car. You get to the car dealership, find the car you want and negotiate a price. Now, it is time to handle the financing; but how will you really know how much it’s going to cost you and if you are being protected from dealer fraud?
THE RULES
The federal Truth in Lending Act (TILA) protects consumers in their dealings with lenders including car dealers by requiring full disclosure of the cost of credit. Full disclosure allows consumers to shop around for the best deal. Under TILA, information that must be revealed includes:
- The term of the loan (how long it will take you to repay),
- The total amount of the loan (the price of the car plus the cost of finance),
- The annual interest rate,
- The number of payments,
- The amount of the payment, and
- The due dates of all payments.
In most financed auto sales, the dealer initially acts as the lender. Â However, the dealer immediately sells the car loan to an actual bank to whom you will be making payments. Because the dealer was the one to initially offer the credit, the dealer is required to give the TILA disclosures.
There are some unscrupulous auto dealers who, in violation of TILA, try to hide or disguise the finance charge. In this situation, the cost of purchase is greater to a credit buyer than a cash buyer. However, the difference in the cost is hidden in the sale by adding things like GAP insurance, extended third party warranties and other add-ons. These hidden costs are not included in the TILA disclosure and thus violate the law.
However, many people may wonder if TILA applies to vehicles used as Uber or Lyft rideshare cars. TILA applies specifically to consumer credit transactions. TILA provides that “(i) The adjective “consumerâ€, used with reference to a credit transaction, characterizes the transaction as one in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes.â€. Rideshare cars, as with taxis and limousines, are generally not used primarily for personal, family or household purposes, but rather are used for the commercial purpose of operating a business.
WHAT YOU SHOULD DO
If you think a car dealer has not given you the full TILA discourse you are entitled to, or if you think the dealer has hidden or disguised the cost of finance, call an experienced consumer protection attorney familiar with auto fraud to discuss your options. Under TILA, an aggrieved consumer can sue for up to $2,000 is statutory damagers, actual damages and attorneys’ fees.
The Law Offices of Robert J. Nahoum, P.C
(845) 232-0202
www.nahoumlaw.com
info@nahoumlaw.com