wijgalt

Forced sell of vehicle vs. trade-in.

5 posts in this topic

I purchased a car with a trade-in vehicle from a dealer that has a "5-day return garauntee". Since I wasn't 100% sure on the car, the dealer repeatedly mentioned the 5-day return and if I didn't like the car within the 5 days I can return it and all the paperwork would be "torn up."

I also explicitly asked a number of times about my trade-in, and both the sales and finance folks said the trade-in is simply held on the lot for 5 days before they process it so I can get it back later.

After taking the car to dealer service center, I found the rear-end was damaged and repaired. The manufacture warrantys were void as a result.

On day 3 after receiving the car, I went back to the dealership and told them the car isn't acceptable and I want my original car back. After fumbling for an hour a finance manage came out and said my original car was already processed, and they paid my lein. They said they couldn't sell my original car back to me and the only option I had was to find another car to buy from them directly, or accept the pay out for the trade-in value.

After trying to work with them on finding another car, I actually found a car at another dealership at a better value, less expensive. This forced me to use the pay out option so I could ultimately buy the desired car.

So here's my problem - Since I had no trade-in at the other dealership, I had to pay taxes on 100% of the value of the new car. On a trade, I would only pay the delta between the trade-in value and the new car. As a result I'm out around $2500 dollars from the first dealers manangement of my trade-in.

I feel I need to pursue the collection of the $2500 from the first dealer since they forcably caused the situation by excuting on my trade-in early.

Advise? Dealership #2 recommended legal action and reporting the event to the "Dealer Board of Colorado". Any recommendation would be appreciated!

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So here's my problem - Since I had no trade-in at the other dealership, I had to pay taxes on 100% of the value of the new car. On a trade, I would only pay the delta between the trade-in value and the new car. As a result I'm out around $2500 dollars from the first dealers manangement of my trade-in.

You are correct that the sales taxes on a new car purchase in Colorado is on the net sales price (i.e. the cash price less the value given for the trade-in). But your trade-in would have had to be worth quite a bit to result in a $2,500 difference. In the city and county of Denver, which has one of the highest combined tax rates in the state (state, city and RTD taxes combined) totaling 7.62%, that means the trade-in would have had to be worth $32,808.40 to save you $2,500 in sales taxes ($32,808.40 x .0762 = $2,500). If you bought in a lower tax jurisdiction, the trade-in would have had to be worth even more to save you that much. Was the trade-in really worth that much? That’s more than what a lot of new cars cost. I point this out to make sure you’re good on your computations before proceeding.

If the first dealer breached the contract (which I don’t know as I’ve not read it), you may sue in small claims court in Colorado so long as your damages are $7,500 or less. I think you might well succeed in suing for the extra cost in tax you incurred, since that is easily a foreseeable consequence from the breach of the contract in this case if the contract was as you described it. In any event, it’s inexpensive and pretty simple to sue in small claims court, so you don’t have a lot to lose by trying it.

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Thanks for the feedback. The 5-day guarantee is in the contract and it was never disputed. I have sent a complaint to the dealer board as advised. The trade in value if the car was $23,000 and the new car is near $32000. I have to get the actual number off the paperwork, but I'm looking at roughly $9000 @ 7.62% = $685 vs $32000 @7.62% = $2438. So..... If I'm seeing the issue clearly the amount to seek for is around $1763. I have to clarify the actual numbers obviously.

Thank you for the advise! I'll post my progress.

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