Owaiswahid93

Hello guys, last Saturday I "leased" a 2015 c300. The car had 34 miles on it when I took it home.

When I signed the paperwork, the car was under a business name. The dealership and I came to terms that the car would be 3k down and 424 a month, with tax. This is in Chicago where there is a lease tax of 8% and 9.5% on capitalized cost.

What I didn't realize is the dealer did a balloon sale without my knowledge. They listed the car as "used" on the paperwork and told me it was new. I also signed a copy of paperwork that said the car was to be returned on certain date with the mileage. However, I never received a copy of that paperwork.

My problem is that my accountant says that the sale doesn't allow me to take advantage of my tax benefit, and that it doesn't even say anything about the car being lease. I love the car and want to keep it. But I was fooled into thinking this was a lease. I only have paperwork that says the car has been financed and that I make payments of 424 for 35 and one final payment of 28900. I'm really upset that a dealership even did this to me. I would expect higher from a Mercedes Benz dealer.

I called the dealership on Monday to get a copy of that paperwork and they said they would email it to me. I never got that, I then followed up on Wednesday by going in. Both my sales guy and finance were off. I spoke to another finance guy that said the car would be cheaper to me this way and assured me I'd get a copy of the paperwork. However, I've lost hope after talking to my accountant on Friday.

How do I go about this? The car was a 15 but listed as used, and I was never told it was a balloon deal, and also haven't been given full paperwork. I never went in for that. I just wanted a standard lease on my car. How should I approach them? I want to keep the car because I love it but this experience is troubling me.

MASSC450

Time to call a lawyer...

...and never do business at that dealership again.

Matts2015c300

Return it. My dealer had a 30 day return policy maybe yours does as well.

StanNH

What did you actually sign and to whom is the car registered?

Larry3Jswft

Sue for rescission based on fraud in the factum or inducement.

Mike5215

Let us know how it shakes out. Good luck!

rbrylaw

That's funny, I heard the joke stated this way:

A man walks into a bar and a man is sitting at the bar crying. Sitting next to him is a 1 foot tall man playing a miniature piano. The guy walks up and sits next to the crying man and asks why he's crying. The man explains he was walking on a beach and found an old lamp, picked it up, rubbed the sand off, when out popped a genie, who offered him one wish. And this, said the man as he motioned to the one foot tall man playing a miniature piano is what I got. And the man said, why are you crying? To which the man in tears said........"what you think I asked for a 12 inch pianist?"

Owaiswahid93

Thanks for offering to look at the documents. However, I spoke to my attorney and will send him the documents today. The real problem is I wanted the lease, this is what we agreed on.

Owaiswahid93

I'm in Illinois.

Mike5215

Absolutely. Update the thread when you guys figure out how these guys turned a lease into a finance with a balloon. It would be illustrative to the forum to be aware of that tactic. That's about the depth of my interest in the issue.

Larry3Jswft

Illinois
Continental Cas. Co. v. Cuda, 715 N.E.2d 663 (Ill.App. 1 Dist., 1999)
Our supreme court has described the practice of law as:
"[T]he giving of advice or rendition of any sort of service by any person, firm or corporation when the giving of such advice or rendition of such service requires the use of any degree of legal knowledge or skill." People ex rel. Illinois State Bar ***'n v. Schafer, 404 Ill. 45, 51, 87 N.E.2d 773 (1949).

Wise decision.


Looks like Illinois spanks deceptive or UNFAIR trade practices, too, and, again you need not show fault or state of mind but merely a prohibited act:

http://www.illinoisattorneygeneral.gov/consumers/

I'll speculate that reformation is an equitable remedy consistent with the majority rule.

Owaiswahid93

I'm not sure how and why they did this. Is there an incentive to sell a car as used when it's brand new? It had 30-40 miles on it. Also, from my calculations tax would have been cheaper on the lease as it wouldn't have been on the entire car.

Larry3Jswft

You are inferring intent when it may be a simple mistake. Things happen....

Looks like Illinois follows the majority rule such that either a unilateral mistake in reducing the agreement to a writing, induced by misrepresentation, or a mutual mistake of fact therein is a prima facie showing of a claim for reformation:

http://www.illinoiscourts.gov/R23_Or...100999_R23.pdf

Mike5215

Not sure. The only reason I can think of is that the car had already been titled. You can't lease a "used" car no matter how barely used it is. You said it was in the name of a business. Who was the business?

My guess would be you wanted that specific car, they didn't want to lose the sale, so they pulled some razzle dazzle in the finance office. They gave you the payment and terms to match a lease and snuck the balloon on there to make the payment number work.

Very shady. The proof I would think would be the document you said you signed referring to returning the car and a mileage cap. If you could get your hands on that it would be helpful, because there's no legitimate way that form gets into your purchase paperwork.

That form I think could be construed as an intent to commit fraud.

Beyond that I think you're into a he said/she said. They'll say you wanted to buy and keep the payments low so they did the balloon. You'll say you wanted a lease. They'll point to the purchase documents and balloon finance agreement (which I assure you is on an Illinois sanctioned form with a simple plain English disclosure about how much you financed, how many months, etc. and is bulletproof). Obviously talk to your family lawyer but I think your signature on that form makes trying to unwind the deal a serious uphill battle.

When Jonathan refers to "reformation", he's discussing a legal remedy that would essentially rewrite the contract from a purchase to a lease, but I don't think that specific car can now ever be leased, unless MB Financial is willing to work some title magic. I think best case might be to let you return that car, then pay off the note, and give you your $3k as a credit on leasing another C300.

tivoboy

Look, If they told you it was a lease if all the discussions about price and you have any proof of that or other witness to that verbal conversation and they they presented you will alternative paperwork I think with an attorney you've got a pretty good case to have them just take the car back and call it a day. Do you have anyone else there or in the discussions that can validate that ? It could also be another employee. When suppoenad people will rarely just lie outright.

Mike5215

Right. The challenge is, how do you prove what someone said, weeks or months after the fact? The dealership's employees don't even have to lie. They can say they really have no recollection one way or the other. They do dozens of deals and deliveries a week. Not unreasonable.

And is he really going to throw good money after bad working this thing up to the point of taking depositions?

His damages aren't great either, other than he bought a used car but thought it was new. But 30 miles on it? For all intents it is new.

I think had it gone the other way...he thought he was buying the car only to find out he was just renting it.. his damages would be more significant. As it turned out, he bought a car that had been previously titled while he thought he was leasing a car that had never been titled.

Shady stuff? Definitely. Actionable? We'll see, but I'm betting not. Maybe his attorney can get MB to do something as a goodwill gesture, but I don't , as a lay person and not an attorney, see any real leverage here.

tron786

Why do they have to take the car back? Why can't they just reconfigure the finance deal to suit your needs?

Mike5215

Because you can't lease a used car, and once a car has been titled it's a used car. I think that's why the dealership did what they did in the first place.He wanted to lease that particular car. They couldn't lease him that car.

Rather than explaining that and letting him decide, they "faked" a lease. Instead of the financed amount being the MSRP less the residual and the down payment, which puts him at that $435 monthly payment for 36 months and the car is returned, they took that $435 payment x 35 months and whatever was left became a balloon.

Owaiswahid93

I don't understand how the damages aren't significant. My accountant said the lease would have been better for my business tax break, I'm not sure how/why. I was told the car was used because it was titled under the dealer as a loaner. I've leased another loaner before with the proper documentation. As it sits, I have paperwork that shows I bought a 47,000 car that I didn't want to buy, with a one time payment of 29,000. When all this was supposed to be was a 3 year payment of 425 and to give the car back.

Owaiswahid93

I didn't even want this particular car. Yes, I want to keep it. I actually really like it now. But the problem is the balloon doesn't say anything about it being optional, but when I signed paperwork they had documentation that said 12k miles a year, with a return date of 1/1/19. I didn't get copies of that documentation. They said the car was titled as a loaner, which I've personally been able to get leased. My parents have a leased ml350 with 8k miles on it when we took delivery.

Mike5215

Damages are financial. Possibly missing out on a potential tax break (and you're not even sure what that is or if it's actually the case) is just not that substantial. A service loaner, like a demo car, is not typically titled. You said there was a business name on the car. Was it the dealership or someone else?

On the tax break, whether you lease a car for yourself "through the business" or buy a car, you can't write off the car payments. You can take a deduction of business use of your car as an offset to income you receive from a business, in the form of mileage. I believe it's 28 cents per mile. That's for documented trips in the course of conducting business not including travel to and from your home to the business.

So I agree with you that it sucks, you were "fooled" as you said in your post, but you are an adult with the capacity to read what you were signing. I'm a very experienced car buyer and I have yet to do a deal where at some point, in some way, the dealership didn't try to sneak something into the deal that benefited them. You have to be super diligent and never let your guard down, especially in the finance guys office. I don't want to beat you up. I'm sure you feel bad enough already.

May I ask roughly your age? You seem like you might be fairly young.

Mike5215

There's no defect in the title. It's a used car with a previous owner and a current owner. The title is perfect. Do you actually think the State of Illinois would revise a title to hide a previous owner? That's the entire reason a title exists...to provide a clear record of ownership from the moment the car is first sold to the moment it's reduced to salvage. Imagine you're the 3rd owner of this car, who thinks you're the second, because one previous owner has been wiped off the title.

Possibly, if the first owner was actually an error on the title, the dealer could apply to the state to get that amended. Title errors happen all the time. That's why they have you sign a DMV POA in most states so they can correct title work errors. But I don't think the state is going to let someone falsify a title to make a car deal work out.

Mike5215

Amended to show what?

Owaiswahid93

I'm 22. I went in to the dealership with all the right information. I went in knowing exactly what I wanted. I took my laptop, used the excel sheet someone posted on here. Tried to read everything, and listened to what they said. I thought I understood how financing/leasing works. I just didn't think I could be fooled by someone that I was referred to by a friend, a friend who brings this dealer a bunch of business. It's not I don't understand the tax/benefits. It's a family business that the car was bought under. My accountant who saw the paperwork told my father that it doesn't work for us, there's not much I can say to change that. And at this point I have no assurance that this car can be returned.

Mike5215

Yikes! That's the spreadsheet I use. So to make that useful you also need the lease deal break out from the dealer, and the numbers for residual, money factor, upfront fees, payment, etc.

Then in the finance office again you need to compare your numbers to their numbers so you can catch any errors. There's no way each of their numbers matched the spreadsheet.

So fair to say your guard was down? Understandable and a valuable lesson. In a car deal nobody is your friend. Especially your friends.

On the tax thing, I'm not sure how your family business is structured. As a C Corp they could make you an "employee" and then provide you a company car, but the car would need to be titled to the corporation. Technically the use of that car is taxable income to you and would show up on your personal 1040 as compensation but maybe it works out better that way somehow because your effective tax rate is lower. Really it's not a good idea to play shell games with the IRS. They've pretty much seen everything and a business buying the 22 year old son of an officer a new Mercedes as a business expense probably won't fly. (I'm presuming you don't actually hold a position with the company that requires a company car.)

As far as your family's business losing a tax break, those aren't your damages.

Me, I'd chalk it up to experience and enjoy the beautiful new car. Anyone who tells you they got good at car buying without inking a few turkeys is delusional. I certainly have, and I'm twice your age.

As for a legal remedy, I think you get the family/company attorney to give the GM at MB a phone call. Explain they sent their 22 year old kid in there expecting he would be treated fairly and they took advantage of him. See if anything can be worked out on a goodwill basis. If not, I'd walk away, and I'm guessing your Dad, who would be footing the legal bills for this fight, has zero appetite for pushing it.

Nice car though, right? I had one for a couple of weeks and I loved it. If that balloon is hanging over your head, just plan on trading it in before it matures, or go refi the whole note now at your bank or CU. They love stealing deals from dealers. (Obviously your payment would go up and/or your term would be longer.)