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Car Dealers Who Break The NHTSA CARS Rules
Consumers from across the country are reporting that dealers are not allowing them to take their new cars off the lot when they submit their qualified clunker.
These irate consumers claim that dealers are holding their new car hostage and transferring the burden of liability for the CARS transaction to the consumer.
Consumers reporting on www.cashforclunkersfacts.com tell stories of how dealers are requiring them to sign paperwork which makes the buyer assume 100% of the liability of the CARS rebate if the transaction is not approved.
Dealers are reportedly also completing CARS transactions and telling consumers to drive home in their clunker until the transaction is approved. These and other consumer experiences can be viewed on the SPEAK UP forum on this website by clicking on the blue button on the right column.
Dealer Justifications
When we were asked why dealers are being allowed to make up their own rules, we made some calls to our network of dealers and have come up with some possibilities:
- Dealers who allow consumers to take the car off the lot have to make a payment to their financing floor plan normally with 3-5 days. If dealers are tight for cash, the practice of holding delivery of their new car may be their way of pushing off payments until they get paid from the NHTSA. Dealers have hundreds of thousands of dollars tied up in payments owed to them by the NHTSA.
- Dealers who are backed up or who are having problems entering in sales are wary and concerned when and if they will get paid. To make themselves feel better about the CARS rules they have created a fall back plan that places the burden on the consumer. They have created documents requiring consumers to pay back the rebate and/or return the car. (This is money the consumers never had in the first place and the reason they participated in the program.)
- Dealers who are allowing consumers to drive home with the clunker may be tight for storage space since the car does not have to be disabled now until the transaction is approved. This is a variation of the CYA practices in number two which is an attempt to pacify the consumer that they still have a car to drive while the government approval process takes place.
We would like to note that this is the first time dealers have had to deal with a program like this, so they are as concerned as anyone that the system will eventually work and they will get paid.
One dealer said that the only form that he requires consumers to sign is one that states that if they have lied or misrepresented any information they submitted, that they can unwind the deal. That seems fair.
We Urge the NHTSA To Speak Up
All of these “practical” reasons for protecting dealers seem to violate the rules in the bill and the document called the Final Rule. These tactics seem to place the burden on the consumer which is not what we interpret from the program rules and procedures. Since we are not lawyers, who hope the NHTSA will address this immediately.
Dealers may be entitled to do all these things, we just need to know that from the NHTSA. If they are able to conduct business like this, then consumers will be able to direct their anger to Congress and not car dealers. We would like this clarified quickly since car dealers no not need any bad press that is unjustified.
One dealer told us “If a dealer cannot afford to play by the rules because of cash flow, storage space or manpower, they should not start the sale and take in a Cash for Clunkers qualifying vehicle. ”
Dealers we have spoken with today have confirmed that if a consumer’s paperwork is all in order, they will leave the lot with their brand new car.
This is what we believe the NHTSA and Congress intended.
Consumers Are Not Responsible For CARS Operations
Consumers have no control over:
- How organized a dealer is pertaining to CARS sales submission.
- How well trained dealers are in scanning and verifying required documents.
- How long it takes the NHTSA to review and approve submission.
- How long it takes for dealers to get paid.
Consumer have a checklist of things that they need to bring to the dealer. If they do their part, they should be able to leave with a new car.
Confusion and Frustration Persists
However, consumers on the forum who have called the official CARS hot-line have been told that dealers can hold your new car for as long as they want. This may not be the official position of the NHTSA but this confusion should be addressed by the NHTSA.
We are seeking clarification from the NHTSA which clearly states whether these practices are being allowed by the NHTSA. One active consumer on our blog summarized his thoughts this way
Stanley Writes:
“Both the law and rule clearly call clunkers “trade-ins” and the rule clearly intends a dealer to take FULL responsibility if they accept a clunker as part of a new car purchase. Everything in the rule puts the onus to get the reimbursement squarely on the dealer both by getting everything right BEFORE selling a new vehicle and by submitting the materials properly and appropriately.
But dealers are subverting this process in ways that are neither in the law or rule nor are fair to the consumer.
Neither dealers nor consumers should be allowed to make up new rules; both should play the game as it’s written or not at all.”
What have you experienced in the field? Let us know by sharing your comments below.
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140 responses on “Car Dealers Who Break The NHTSA CARS Rules”
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In Minnesota, my dealer has refused to submit my new vehicle title until they get paid. The salesperson said if I get cited to bring the ticket in and they will pay it. Others in the forum have said the same. I paid in full without a loan, my three week temp tag expired a week ago, and the new vehicle is parked idle without plates in my garage. I wonder if the state minds the dealer holding onto my $2,000 of paid sales tax and registration fees. Technically I own nothing right now, neither old nor new. Help!
(please forgive the my multiple forum cross posting)
I read the comments below- appears no answers are given to people’s plentiful and persistent questions. Perhaps it simply serves as a way to vent versus solve anything. Would a dealer’s misuse of the CARS program by withholding the new car, not taking the old car (except the title), not taking the customer’s money, only a deposit (what are they thinking) UNLESS the customer signs an agreement to pay $4500 prior to the government paying the dealer-would all that cancel the deal-hurting the buyer AGAIN-is that the bit that prevents people from reporting dealers? It has my attention. I would like my new car, for the dealer to take my old car (they have my signed title but will not physically take the junker or let me pay my part of the deal( I will pay cash). This is crazy, irritating and so wrong!
I bought a car from flemington mazda on july 31st. Here it is august 26 and I still have no car. Almost a month later. My car needed work so it had to be dropped off at the dealer so It ran and would still qualify. I didn’t want to repair a car that was going to be disabled. Basically I’ve been left to scrounge for rides to work andwherever I needed to go . I feel like I am15 again. Not only has this left me stranded without a car it took away some of my dignity. I called the cars hot line about two weeks ago and they haven’t done anything but taken my information. At this point I don’t know what to do other than wait and hope I have a car sometime this year.
Well, here I am again folks. I knew it wasn’t going to go smoothly. The last time I commented was August 12th or so saying I finally received my car from the dealer, only with dealer plates and not the transfer of my plates. Well, today those dealer plates expired and of course the dealer called. They are ready to put my plates on the car and the registration will be in my name, BUT, I’ll have to sign a waiver!! This waiver has nothing to do with money, it only is to say if the Gov’t changes their policies, requirements, etc., I will be responsible for following those within 48 hours. I told the dealer No flipping way!!! He told me that per the owner, if I don’t sign it the deal is off. The deal is done – I’ve made my first payment, they cashed my check a month ago, etc. It is their fault they sat on registering my car for the past two weeks. I’m so tired of this. What to do now??? I again contacted our AG’s office and actually spoke to an investigator specifically put in place because of so many issues with the program and he said no way. Our congressman also agrees. My next call is to DMV enforcement. My problem is I also have to work and this takes up much too much time. I wish it would all just go away. I love my new car but such headaches!
I am getting pushed around by a dealer in Charleston, SC. This dealer stated to me Saturday evening when I signed all the paper work for the car that I could not take the new car home because they had to make sure they get paid…… BULLCRAP…. Unfortunately the dealer has control as I did not have time when they told me this to go to another dealership. This dealership is in violation of the law and I intend on sticking it to them!
I tried to purchase a car at Maroone Toyota (Auto Natiion) in South Florida. I ordered a vehicle and gave a $500 deposit and agreeing to pay the balance when the car was ready for pickup . When I was paying off the car I was told that if the US government did not pay the dealer that I would have to pay the $4500. I was also told that the dealer would not only not sell me the car unless I signed their agreement and that they would not release the title until they are paid in full. I have bought two cars from this dealership but I cannot see myself purchasing another vehicle there. BEWARE.
Susan,
Try contacting your state’s DMV enforcement division and see what they say.
What can I do about the kia dealership that is not sending me the title documents, but has cashed my check for the vehicle. The title documentation is being held until they receive the rebate. I have one week left before I must register the vehicle and pay the sales tax.
If they wouldn’t have cashed my check, I wouldn’t have such a gripe, but they did. so, where’s my title?
Hi,
Good to see this site! I have bought a new Prius in Herb Chanmbers Toyota of Boston, MA and submit my all paperworks for the cash-for-clunker though them. They originally told me 3-4 days to get approval, and now they don’t release my new car after three weeks of waiting. The dealership tries to blame on the NHTSA agency for this but I really become the hostage. They even have cashed my check for the rest of the amount of the new car right after the new car is sold to me.
I have talked to the General Manager of the dealership and he said
only less 5% cash-for-clunker gets approved so far and my car will only be release if they get the govement approval first. Is that leagal? Please advise what I could/should do.
Thanks,
Mark.
If they filled out/scanned in the paperwork wrong or one thing was missing, the paperwork would have been rejected and the clock reset to a minimum of 10 days from resubmission. If the dealer is reported by anyone for not turning over any vehicles or taking clunkers prior to submission of the paperwork, that we all know is a direct violation of the rules and who knows what happens then to their deals. I have my payment book, no vehicle since signing all paperwork on 7/31 and am due to make a payment. Dealer is stonewalling, not returning calls, etc. I am now needing to find out how to save my credit rating and withhold payment from the bank, perhaps in some escrow situation, until the situation gets resolved. If I pay the bank, they will have no incentive to go after the dealer, who for all intents and purposes, falsely sent in our loan financing paperwork, received money from them and did not deliver the vehicle to their customer.
Day 21 and still no car…
My dealer told me that he is only waiting for approval to release the car, not the rebate. I am OK with this, believe it or not! (at least until the payment book shows up in the mail-box, then my feelings will probably change pretty quickly!!!) What have people experienced as a turn-around time for getting an approval or a rejection. We had all of our paperwork signed and ready to submit on July 29 but our submission didn’t make it into the system until July 30. How long of a wait time should we be expecting for ANY type of reply from NHTSA, whether it be a rejection or an acceptance?
Tony,
I sell only referrals at my dealer. I do online advertising and different marketing. But we did have a great weekend here. Thanks for the support.
Side note.. I do see where you are going with the doctors analogy. But they get a pre-approved or qualified customer in and do the work or whatever is done. Now say the insurance company does not pay. Who is responsible? hmmmmmm
And that is by no means saying I think the consumer should be held accountable for this amount. But they should understand why the dealer wants to get approval before releasing the cars.. We do not need the said cash to be in hand. Just the approval. That would of made all the difference in the world with this program.
I do hope you all have your cars by now!
Don said … actually this is a regular business practice. It’s called an insurance pre-authorization.
Preauthorization, not prepayment. That is, the patient does not have to wait until payment is actually in the hands of the service provider to reap the benefit. No different than C4C. In fact, if we use this analogy, C4C goes a step further and puts the onus of transaction eligibility determination on the dealer (doctor). The dealer has “every reason” (language from Final Ruling) to reject any transaction that doesn’t pass the sniff test. The dealer in essence conducts their own “pre authorization” which is then approved by Citigroup, or not.
Regardless, we both can agree that a prompt turnaround time from submission to approval followed by payment to dealer in short order would build the confidence required for most dealers to play by the rules. Hopefully this is just around the corner. In fact I am sure this operation will eventually run like clockwork … right about the time when funds are exhausted.
Good luck with your Grand Caravan. Had my Blazer not qualified, I just might have made you an offer so I could be be prepared for the next iteration of this marvelous program.
Best to you, Don.
Hey JME, did you knock ‘em dead today?
Tony says:
August 15, 2009 at 11:43 am
“Hey guys, when you go to get a prescription filled, or go see a doctor, does the provider take your insurance card (or Medicaid or Medicare card) and phone the insurer (or Social Security office) demanding payment immediately? My doctor verifies active insurance coverage, immediately grabs the copayment from me, PROVIDES THE SERVICE, and bills the insurer for the balance. Then they WAIT to be paid.”
Tony, You refer to an established system where doctors are familar with the insurance company’s and you have been pre-introduced by showing your insurance card at the doctor’s office. In essence you have a pre-approval to have services rendered.
_______
Can a health care provider decide to make up their own rules by submitting a claim for services that have yet to be rendered…
Tony, actually this is a regular business practice. It’s called an insurance pre-authorization. On questionable ‘services rendered’ areas, unless the end consumer wants to be held liable for the bill, the end consumer waits for the pre-authorization approval.
_________
Now Don, if your previously written sentence (pasted above) read: the NHTSA should have made arrangement to provide “approvals” immediately, I might agree with you. JME said it well in his post immediately below … “a shorter time for turn around to approve the funding… Why could they not have a 24-48 hour turn around after they receive payment to approve a deal? Even 72 hours.. Anyone would be willing to wait that amount of time for there new car. That is acceptable.”
Tony, I would agree!
______
It is my understanding that the workforce handling dealer claims for dealer rebates is about to triple. This will shorten the authorization window considerably. Dealers will soon be awash in cash and everything will be right in their world.
Tony, That’s great because the 3 million is probably nearing it’s end.
______
I do buy my cars from dealers, I don’t have to live with or marry them.
Tony, My view is buying a car is not like buying a coffee pot. These days, cars are very complicated pieces of equipment. Warranties extend out into a number a years. I’d like to build a good relationship with my dealer, when it’s my time to buy.
___________
I don’t sell cars but if I did, and I knew it was going to be 30 days before I see my $4.5K then I would simply build the $20 into the price of every new vehicle sold.
Tony, I don’t sell cars either. But if I did, I see the issue as, this is a new program with no track record. 10 days becomes 20, 20 becomes thirty, 30 becomes? There’s nothing like being a nationwide test market. Thanks for (hopefully) paving the way for me at a later date.
__________
Get out there JME and sell, sell, sell. You too Don. Best to you both.
Tony, Yep, I’ve been trying to sell my EPA rated 19MPG 2000 Dodge Grand Caravan. I’ve been letting people know that my 2000 is much more fuel efficient than the exact same EPA rated 18MPG 1998, 1999,—-, 2001, 2002 models. So buy this highly EPA rated 2000 Grand Caravan now and a after a year of ownership and a new C4C program surfaces, with new guidelines, this vehicle could be the next ticket to clunker Euphoria! ;~)
Variation on the same theme of not releasing the new car: Now my dealership has had my fully driveable clunker that would have gotten close to $4K as a trade-in without cash4clunkers, and let us drive off the lot with our new car. They got full registration docs and insurance docs going back 2 years, so there should be no probs getting it processed. But they aren’t titling the new car to us and say that they won’t til C4C gives them the full 4500 credit for our car. We paid cash plus the clunker, and they made us sign a promissory note for the 4500, but are in no hurry to process the C4C so that we no longer owe $4500. And we don’t own the new car, even tho they have had our money for 2 weeks, because it isn’t registered yet. Shady shady shady. They know all the tricks and make up more as they go along.
Tony,
Thank you very much! And we are out here selling. As far as monies are concerned.. We have deals and have been paid on the customers end. Just waiting for the gov. Hope to start having funds start trickling in this week.. FINGERS CROSSED. lol.
My friends Don and (possibly) JME subscribe to the notion that, as Don wrote: If the NHTSA expected the dealers to release cars immediately then the NHTSA should have made arrangements to fund the rebates immediately.
Hey guys, when you go to get a prescription filled, or go see a doctor, does the provider take your insurance card (or Medicaid or Medicare card) and phone the insurer (or Social Security office) demanding payment immediately? My doctor verifies active insurance coverage, immediately grabs the copayment from me, PROVIDES THE SERVICE, and bills the insurer for the balance. Then they WAIT to be paid.
Does a health care provider have the option not to participate with insurance companies or accept public health insurance? Of course. Can a health care provider decide to make up their own rules by submitting a claim for services that have yet to be rendered and withholding these services until AFTER payment is made by insurance company or Medicaid/Medicare? Sure, if they want to go to jail.
Now Don, if your previously written sentence (pasted above) read: the NHTSA should have made arrangement to provide “approvals” immediately, I might agree with you. JME said it well in his post immediately below … “a shorter time for turn around to approve the funding… Why could they not have a 24-48 hour turn around after they receive payment to approve a deal? Even 72 hours.. Anyone would be willing to wait that amount of time for there new car. That is acceptable.”
I agree … and help is on the way.
It is my understanding that the workforce handling dealer claims for dealer rebates is about to triple. This will shorten the authorization window considerably. Dealers will soon be awash in cash and everything will be right in their world.
JME wrote: “We have about 60 cars delivered through this program as of right now. With not a cent paid.” Oh no? Have not the customers paid at minimum, a deposit, if not their end in full? I paid IN FULL and still had to wait a week until NYS Attorney General chest thumped AND Cars.gov website CLEARLY stated that dealer MUST release car. So, are you saying JME that your boss has not one cent from any of the 60 consumers? C’mon.
JME is concerned that people will have “a negative look at all dealers.” I can’t speak for all people. For me, business is business. Next time I am in the market for a car, I will shop every dealer in town until I get a deal that I can live with. That includes my current C4C dealer. I do buy my cars from dealers, I don’t have to live with or marry them.
JME does not understand how anyone can think it is fair for a dealer to be on the hook for the $3,500-$4,500. My response to my dealer … sixty-three cents a day. That’s the float on $4.5 at 5%. I looked him in the eye and told him he was risking a lifelong customer for .63 per day. I don’t sell cars but if I did, and I knew it was going to be 30 days before I see my $4.5K then I would simply build the $20 into the price of every new vehicle sold.
JDP wrote: “I do think what we’re dealing with here is a body of businessmen who are not prepared to cooperate with the government”
My hope is that the government buries one …just one… offender/dealer who is flagrantly thumbing their nose at the final ruling by holding hostage new vehicles paid IN FULL by the customer. Other dealers would take note and fall in line. The bitter taste of compliance will be more than offset by the sweet smell of 3 billion dollars received days (or yes, weeks) later. Those that are not in compliance should be precluded from future participation in any government sponsored schemes and not allowed to have the customer attracting CARS logo on their websites.
If you are a dealer like JME’s boss and are playing by the rules (which I believe many finally are), then you have nothing to worry about. Just make sure your work is meticulous (vast majority of rejections are dealer errors), your transactions are air tight, and when the money starts rolling into your account, you will soon forget all the aggravation associated with this program.
Get out there JME and sell, sell, sell. You too Don. Best to you both.
BTW, my dealer just called. They never had me sign my title so my submission (opps, I mean their submission) got rejected. I will happily drive there first thing Monday morning in my new car and do whatever I need to do to help them get their money.
Tony,
Now where I understand that it is the overall view to not care about the dealer here… But just in business. You get paid then deliver. I am not saying that every dealer out there is doing the right thing. We are delivering the new cars to our customers. It is not there fault and should not have the burden. But FACT. We have about 60 cars delivered through this program as of right now. With not a cent paid. They are in the “pipeline” I am not the owner of this organization but I can only imagine smaller dealer groups that can not handle that type of money being held up..
As far as the paperwork issues. From what I do know we sent in our “first round” of submits. All correct info in the package to be emailed in after scanning. They did not know how to open the attachment with our submission. So we had to re-format into another type of attachment (adobe) and re-submit. Now you would think this might take a priority due to already waiting 10 days to find out its not acceptable… But no. You are put back in the 10 day waiting. So I am just and have been saying this program seems to be designed to use others money for now. When as you stated.. The dealer should release the car when paid in full. We are not paid in full until this program accepts the deal. This should of had more thought from the admin side before rolling out. Yes they had 30 days to put this program together.. Definitely not enough time to properly see how this would play out. I do think the idea of this program is great!
Maybe you have had a bad experience at a dealer… But I do not understand how anyone can think it is fair for a dealer to be on the hook for the $3,500-$4,500. And as of right now that is truly the case. Where there should not of been a shorter time for turn around to approve the funding. We have to reg a car for new plates for them to take the car. We have 7 days on a transfer. Why could they not have a 24-48 hour turn around after they receive payment to approve a deal? Even 72 hours.. Anyone would be willing to wait that amount of time for there new car. That is acceptable. To say 10 days? I do not believe that is at all.
As far as changes go… The program “opened” on the first. Yes the website and other places said to wait til the “official” rules where in place. We were supposed to try to sign up. And the web site was up. Mpg listed where changed on the 24th. The program rules did not come out til the 27th. Dealers could not sign up til this date either. The program that was supposed to start on the 1st.. was then the 24th.. then pushed off til the 27 due to the 24th being a friday and I guess someone thought it better to start on a monday. 78 cars that were before eligible where not on the 25th that where on the 23rd.(they changed MPG on there site on the 24th) So yes there have been changes to this program. Many in fact. Yes its allot of money but I will continue to say I do not understand where it is the Dealerships responsibility to guarantee this money.
As far as you say you do not feel any sympathy for a dealer trying to protect himself.. That’s bad.. So to think its ok to let your friend borrow $200,000 in hopes to get it back… Because that is how I would define this. The Gov ( the dealers friend here) is basically borrowing the dealers money until refunded. As long as all goes well. So play by there rules cross your fingers the money doesn’t run out before all your deals are refunded. And wait… Hey.. We are doing just that.
I guess in all I feel that I am reading allot of negative about dealers in this and that is what hits me most.. I hope that at the end of this that people do not have a negative look at all dealers. I happen to work for a great one. That is able to put these cars out on the road. As the rules and guidelines are wrinkled out. I am just seeing a bigger picture that this program that was put together buy people not in the car business and may not of understood some things. But these are things that I would think are normal business procedures.
Who knows.. Maybe I am wrong to think this way. $3 Billion Dollars is a lot of money to ask to borrow for 10 days. No matter how many people it gets out into the market. And to think it will be acceptable for a dealer to be responsible for the $3,500-$4,500 if something is to go “wrong??” To me is just wrong.
I personally am sorry to any consumer out there that feels like they have been put out by this program or any dealer.
Again,
Concerned Salesman.
I should have added to the last post the car was held by the dealer for three weeks and my first payment is already due in 10 days-GRRRRRR THey told me to get financing ASAP so I got my check the next day and have been holding it since- Could have taken my loan yesterday-Whatever Thankfully I have my new car
Dealer called on Wednesday and I picked up my car last night woo hoo!!