Bad dealers can cause several problems, even if a purchaser is satisfied with the vehicle. Some of these problems are title and registration, odometer statements, and the fraudulent sale of services related to the purchase of the automobile.
Title and Registration.
A consumer purchasing an automobile from a dealer rarely has an opportunity to inspect the title before the purchase because the auto dealer probably doesn’t want you to see the title before you purchase the vehicle. If you can inspect the title you might discover that it was owned by a rental fleet, wholesaled a dozen times, purchased by an insurance company as a total loss or returned by a previous owner as a lemon. Another reason the dealer may not allow you to inspect the title is that the dealer does not even have it at the dealer location. The title may be held by a bank or other finance company so that the dealer waits until either you or your lender pays him. The dealer should then pay his lender, obtain the title, pay the sales tax, and transfer to your name. Despite its complications this process usually works. The Texas Transportation Code allows a licensed dealer twenty business days to complete the transfer although there is no reason that it cannot occur within a few days of your purchase. The longer this process takes the more likely that some problem has developed. Texas law requires that the title to a vehicle be transferred immediately after the sale. Although dealers almost always handle the title transfer paperwork and payment of sales tax they are not required by law to do so. You can pay your own tax, title, and license fees and transfer your own title if you pay cash for a vehicle. Note: IF YOU PAY CASH FOR A VEHICLE YOU SHOULD ALWAYS INSPECT THE TITLE BEFORE PAYING YOUR MONEY. However, if you have to borrow money to purchase the vehicle the dealer will probably handle the taxes and title transfer for a $50.00 documentary fee.
Detecting Title Fraud and Title Alteration Schemes
A. The following are some of the methods used to alter the front of a certificate
1. Alter the 10,000 or 100,000 digit of the odometer r
2. Mutilate, initial, smear, erase, punch holes or staples in the odometer reading, VIN, year, etc.
3. Insert a decimal point in the odometer reading.
4. Use correction tape to remove information.
5. When there is a misaligned odometer reading or other information on the title; add letters to look like a serial or stock number and type in a new odometer reading or desired information.
6. Chemically alter the information on the title.
7. Alter the previous title number.
8. Stencil over typewritten information.
B. The following are some of the methods used to alter the back of a certificate of title:
1. Alter the 10,000 digit or 100,000 digit of the odometer reading.
2. Write over the odometer reading, usually with a felt tip pen.
3. Scratch out and write in a reduced reading; initial it as if a mistake was made.
4. Punch holes or staples in the title and initial the altered information.
5. Insert a decimal point in the odometer reading.
6. Use correction tape to remove information.
7. When there is a misaligned odometer reading or other information on the title; add letters to look like a serial or stock number and type in a new odometer reading or desired information.
8. Chemically alter the title.
9. Remove reassignments or other related documents.
10. Laminate over alterations or other information on the title.
11. Combine two different titles into one.
The transfer of the title is necessary because it shows the registration and ownership of the vehicle to the State of Texas and law enforcement officials. This is one of the reasons that you will receive a traffic citation if your license and registration are not current. The two principal documents that prove that your vehicle is registered are what is often referred to as the “blue slip” (the tax assessor collector’s receipt for collection of taxes). The second document is either the pink non-negotiable certificate of title (if you owe money to a lienholder) or the blue certificate of title (if you own the vehicle outright). Each of these documents come from the Texas Department of Transportation Motor Vehicles Division.
If you have not received a blue slip or title evidence within three weeks of the time that you purchased your vehicle you should write a letter to the dealer requesting transfer of the title. If you do not receive a title within one week of that letter you should contact an attorney. The failure to promptly receive a title is an indication that something may be seriously wrong in the purchase of the vehicle and you should consult an attorney.
You should check the odometer reading of the vehicle at the time of your purchase. The odometer reading should be consistent with the age and condition of the car. For instance, an eight year old vehicle with 20,000 miles would be a very unusual vehicle.
Every seller of a vehicle must disclose the odometer of the vehicle at the time of sale. The only exceptions are for heavy commercial vehicles and a motor vehicle that is over ten years old. However, if a seller makes any statement regarding the odometer it may be responsible if the statement is inaccurate and you relied upon the statement. There are specific penalties for odometer fraud under both state and federal law. Odometer statements can be checked through services such as Carfax that are a good source of information but are not comprehensive. If you have reason basis to suspect that an odometer reading is inaccurate you may want to contact an attorney experienced in the field to make a closer inspection of your vehicle and its history.
Services Sold by Dealer With the Vehicle.
In addition to arranging loans, purchasing vehicles, and selling vehicles, automobile dealers often sell related services such as warranties and insurance. You are not required to purchase these items to obtain a loan UNLESS THE DEALER DECLARES IN WRITING THAT IT IS REQUIRED. It is extremely rare that dealers will make that requirement in writing although it is fairly common that consumers are told that it is. If you are purchasing a vehicle and are told that a warranty or insurance is necessary you should question this very carefully. You should also ask questions if you are told that you must buy a window etching service, an alarm system, a consumer package, a coupon booklet, or similar services. These are tremendous profit makers for an automobile dealer and they may tell you anything to convince you to purchase them. Other than warranties (or extended service contracts as they are often known) these services are often hugely overpriced and of minimal value.
The law discussed on this site is Texas law pertaining to Texas situations. NO advice is given for any transaction or situation that does not involve Texas law.
Mr. Aschermann is licensed to practice law in the State of Texas and is board Certified in Consumer and Commercial Law by the Texas Board of Legal Specialization but Mr. Aschermann is not licensed to practice law in any state other than Texas.
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