Supreme Court Limits Damages to $1,000 for Misleading Loans

November 30, 2004
Court Limits Damages for Misleading Loans
By THE ASSOCIATED PRESS

WASHINGTON (AP) -- The Supreme Court ruled Tuesday that car buyers can
only get limited damages when they are misled about automobile loans.

Justices ruled 8-1 against a Virginia man who alleged he was a victim
of unscrupulous tactics by a car dealership in Alexandria, Va.

A jury ordered Koons Buick Pontiac GMC Inc. to pay Bradley Nigh more
than $24,000 in damages, but the high court said that he was entitled
to no more than $1,000 under the federal Truth in Lending Act.

A ruling the other way could have opened the door to more than $1
billion in annual damages nationwide, auto dealers and banks said. On
the other side, consumer groups had maintained that $1,000 is not
enough to deter shady dealers. About 45 million cars are bought and
sold in the United States each year.

Justices used Nigh's case to clarify the 1968 federal lending act,
which was intended to force details of loans into the open and allow
consumers to better evaluate the cost of credit.

Justice Ruth Bader Ginsburg, author of the opinion, said from the
bench that "less-than-meticulous drafting" of an amendment to the law
caused confusion.

She said interpreting the statute to allow larger damages would lead
to an absurd result because it would cap damages at $2,000 for larger
credit deals such as mortgages, but allow unlimited damages for car
loans.

"There is scant indication Congress meant to change the
well-established meaning," she wrote.

In the only dissenting opinion, Justice Antonin Scalia argued it
wasn't the court's role to fix Congress' mistakes in sloppily writing
the statute.

"The court should not fight the current structure of the statute
merely to vindicate the suspicion that Congress actually made -- but
neglected to explain clearly -- a different policy decision," Scalia
wrote.

Nigh's experience began when the then-22-year-old put money down on a
1997 Chevrolet Blazer, signed a sales contract and drove it home the
same day. The Fairfax, Va., man was told later he must put down an
additional $2,000 to get a loan. Nigh tried to back out when the
dealer called him back a third time and, Nigh claimed, threatened to
have him arrested for auto theft if he did not sign a different
contract.

Chief Justice William H. Rehnquist participated in the ruling, even
though he is absent from the bench as he undergoes treatment for
thyroid cancer.

The case is Koons Buick Pontiac GMC v. Bradley Nigh, 03-377.

^------
On the Net:
The Koons v. Nigh opinion is available at:
http://wid.ap.org/documents/scotus/041130nigh.pdf

"MrPepper11" > wrote in message
om...
> November 30, 2004
> Court Limits Damages for Misleading Loans
> By THE ASSOCIATED PRESS
>
> WASHINGTON (AP) -- The Supreme Court ruled Tuesday that car buyers can
> only get limited damages when they are misled about automobile loans.
>
> Justices ruled 8-1 against a Virginia man who alleged he was a victim
> of unscrupulous tactics by a car dealership in Alexandria, Va.
>
> A jury ordered Koons Buick Pontiac GMC Inc. to pay Bradley Nigh more
> than $24,000 in damages, but the high court said that he was entitled
> to no more than $1,000 under the federal Truth in Lending Act.


Why anyone would finance an investment you expect to depreciate in value is
beyond me.
Furthermore, anyone stupid enough to finance a vehicle through a dealer
deserves whatever they get.

"Bobby" > wrote in message
news:3dard.190552$hj.119856@fed1read07...
> "MrPepper11" > wrote in message
> om...
>
> Why anyone would finance an investment you expect to depreciate in value
> is beyond me.
> Furthermore, anyone stupid enough to finance a vehicle through a dealer
> deserves whatever they get.

I'm curious--if you don't finance through the dealer how do you get those
incredibly low interest financing deals they're always advertising. Is it
really a bad thing? I'm not talking about 20% interest on a beater off of
Honest Abe's Used Car Sales lot. Is that what you meant?

MrPepper11 wrote:
> Nigh's experience began when the then-22-year-old put money down on a
> 1997 Chevrolet Blazer, signed a sales contract and drove it home the
> same day. The Fairfax, Va., man was told later he must put down an
> additional $2,000 to get a loan. Nigh tried to back out when the
> dealer called him back a third time and, Nigh claimed, threatened to
> have him arrested for auto theft if he did not sign a different
> contract.

shoulda done what a friends uncle did... brought it back.

cept it was brought back on a flatbed truck, since hed taken it off
roading and ****ed up the whole suspension doing a few jumps.

Chloe wrote:
> I'm curious--if you don't finance through the dealer how do you get those
> incredibly low interest financing deals they're always advertising. Is it

you get them by being frugal and having an excellent credit score.

Bobby wrote:
> It also may require you to forfeit any manufacturer rebates. If you do end
> up qualifying for the best rate and
> find matching car, the salesmen will emphasize what a great financing deal
> you're getting, so that you're less
> likely negotiate the actual price or to realize you're getting gouged on the
> price.

or maybe they just wanna get rid of the azteks and get an easier-to-sell
G6 in there to replace it.

GM has been advertising up to 0% on all their models, and if you turn
the car in after its paid off you ill get the same rate if you buy a new
car. supposedly...

>> Furthermore, anyone stupid enough to finance a vehicle through a dealer
>> deserves whatever they get.
>
>I'm curious--if you don't finance through the dealer how do you get those
>incredibly low interest financing deals they're always advertising.

Since some of the deals are stated as "0.001% financing OR $2000
off", it's not hard to see where the low rate is coming from. I
haven't seen any of the dealers yet try a *NEGATIVE* interest rate,
but with minimum payments, late penalties, and a limit on the length
of the loan, they could do it.

>Is it
>really a bad thing? I'm not talking about 20% interest on a beater off of
>Honest Abe's Used Car Sales lot. Is that what you meant?

If the cash price (that is, the best price you could negotiate for
a cash deal) of a $40,000 car is $10,000, the dealer could give you
a 33% down, 0% interest, INTEREST-ONLY, INFINITE-TERM loan. For
the cash deal, you pay $10,000 and you get the car. For the
extraordinary financing deal, you pay $13,200 down and you get the
car, with a lifetime of zero dollar payments thereafter. Gee, isn't
that financing a great deal?

Now, that was an extreme example, but the same sort of thing applies
to any car deal: they can get you on the price, or the financing,
or on your trade-in, but they'll get you.

Gordon L. Burditt

"SoCalMike" > wrote in message
news:kWard.125021$5K2.55287@attbi_s03...
> Chloe wrote:
>> I'm curious--if you don't finance through the dealer how do you get those
>> incredibly low interest financing deals they're always advertising. Is it
>
> you get them by being frugal and having an excellent credit score.

DH and I do have an excellent credit score, although n fact it's unlikely we
would finance a car because it's unlikely we'd ever buy a new one. But now
I'm even more curious as to what you mean. Where you can find that zero or
one percent financing other than through a dealer? Got any links, names,
etc?

> The buyer should have taken the vehicle back to the dealer and left the
> keys
> with the dealer.
> Taking back his deposit, of course.
> With the presence of a police officer in full uniform and a squad car.

Nope.

The buyer was foolish enough to sign a sales contract that was contingent on
approval of financing (aka the infamous "spot delivery" scam). They are
usually worded in such a way to give the buyer little choice when the
financing isn't approved; simply returning the now-used car is not an
option. It is, unfortuately, a common practice of car dealers to use this on
people with middlin-to-poor credit (including the threat to report the car
as stolen if they don't play along, although I've never heard of a dealer
actually going through with such a threat) because the buyer will usually
roll over and pay the extra money and / or the higher rate demanded. A buyer
in this position has little choice other than taking a chance in court. I
doubt that any sane police officer would risk his / her job by doing what
Richard suggests - no crime has been committed, so an on-duty officer can't
be involved, and such an act by an off-duty officer could easily result in
reprimands and lawsuits (based on casual conversations with friends in law
enforcement about what off-duty police can and can't do while in uniform).
What's really sad about this is that the local news stations and newspapers
will seldom, if ever, report on these stories (or on any story that casts
auto dealers in a negative light) as they are far to dependent on revenue
from car advertising.

If you are thinking about purchasing a new or used car from an auto dealer,
my advice is to never, ever, ever even consider financing through the
dealer. You will almost certainly get better rates and terms from your bank
or credit union. You should also read a good book or two on buying cars (I
recommend "Don't Get Taken Every Time" by Remar Sutton), most of which
discribe this (and many other) car-dealer scams in excrutiating detail.

--
John Goulden

"Bobby" > wrote in message news:<3dard.190552$hj.119856@fed1read07>...
> "MrPepper11" > wrote in message
> om...
> > November 30, 2004
> > Court Limits Damages for Misleading Loans
> > By THE ASSOCIATED PRESS
> >
> > WASHINGTON (AP) -- The Supreme Court ruled Tuesday that car buyers can
> > only get limited damages when they are misled about automobile loans.
> >
> > Justices ruled 8-1 against a Virginia man who alleged he was a victim
> > of unscrupulous tactics by a car dealership in Alexandria, Va.
> >
> > A jury ordered Koons Buick Pontiac GMC Inc. to pay Bradley Nigh more
> > than $24,000 in damages, but the high court said that he was entitled
> > to no more than $1,000 under the federal Truth in Lending Act.
>
>
> Why anyone would finance an investment you expect to depreciate in value is
> beyond me.
> Furthermore, anyone stupid enough to finance a vehicle through a dealer
> deserves whatever they get.


Wrong! Anyone stupid enough to believe Bobby's cop out in giving
dealers a free hand in screwing the public-deserves what he gets!

Don't expect fairness in the marketplace. Next time- show the dealer
your great credit rating, that you are a family man who pays his bills
( that you are not a crook); give him $200 down to let you drive the
car for two weeks and have it inspected. when you're satisfied that
the car is worth its price- then take out the loan!