First, The Truth in Lending Act is a floor for consumer lending protection not a ceiling. State laws differ on whether they provide other protections. Also different state/Federal Courts have varying views on backdating.
This case from E.D Va shows the court taking a very dim view of backdating although the APR change was more than .125%.
The Court ruled in plaintiffs favor without reaching a decision on VA consumer protection claim - claimant retained right to bring that claim in state court.
So yeah, maybe backdating contracts is ok sometimes depending on a complex set of circumstances (state law, APR, how buyer was informed of issue, when buyer was informed if issue) But it’s not a best practice and no large dealership group teaches their finance people to do it.
Holy cow did you see that case? 23% apr then they back dated the contract and changed the apr to 25% with a new lender on a 5 year note!! Wow hard to believe people let themselves get into such awful deals.
I agree back dating is not good policy (in most situations) but what I was blasted for was saying 1) it’s not necessarily illegal and 2) it’s not uncommon. They were very sure of themselves and pretty insulting while passing wrong info.
In the notes to the case above (ec99) the judge actually wrote it would have remained legal if they had disclosed the new, correct apr to the buyer:
[10] Sophisticated parties can choose monthly payment rates and schedules which reflect the imposition of an agreed upon retroactive interest rate, provided the disclosed APR is calculated according to the regulations. In this case, for example, the parties could have agreed that Rucker would be charged 24.95% interest beginning on April 3. However, to protect less sophisticated parties, the disclosure form must still disclose the properly calculated APR, here the 25.35% figure.
I read that footnote has providing a clear delineation between backdating between a business and consumer and two businesses. A consumer buying a car is almost never going to be a sophisticated party. A sophisticated party is most often a represented party. The Court is telling everyone that backdating is fine for complex business dealings drafted by lawyers but does intentionally choices to not extend that ruling to consumer sales.
So yeah it’s not technically illegal but backdating is a bad idea. I bought my Honda at this dealership. The Court may consider them a sophisticated party…but I don’t. The F&I person was dumb as a brick. His ability to understand English was iffy, no chance he could carefully comply with complex state and federal law.
I think you need to re-read the thread where people chimed in to tell you that you were wrong.
At least personally, I was explaining to you that you were wrong regarding any inference that a person can be forced to re-sign a contract, your interpretation of contract provisions, and the fact that legally, cancellation and rescission are two entirely different concepts.
I never addressed anything you said about back dating contracts, but I can tell you that if a contract came across my desk that was back dated, or I had reason to believe it was back dated, it would throw off major red flags.
The other people responding with legal backgrounds in that thread (@igdigergerbs@AP919@StingerTT@28firefighter) also did not address anything relating to back dating contracts.
I never once said she could be forced to sign anything. I did say she’d be better off just signing and paying the tax than hiring an attorney to fight over $10mo. I also said if she returns the car they will charge her the rent charge stipulated in the contract.
“Under the terms of the April 3 RISC, Rucker provided a $1,000 down payment and financed $13,576.68 at 22.95% APR over 5 years.”. She was financing WAY more than the car was worth. Decision doesn’t say what trim Civic it was but new, the highest MSRP for a 1998 Civic was ~17k. Best case scenario car was worth 12-13k. Much more likely she was buying a car that sold for 13k-14k brand new and was worth under 10k.
“Internet legal experts?” Seriously? How many damn times do I need to tell you I AM A FCKING LAWYER? (Not a "fcking" lawyer, but you get the idea.) Stop posting stuff all over the forum that isn’t true.
Aside from that, the legal advice (and I use that term loosely), you are falsely PROMULGATING (using the word you didn’t know how to define the other day) incorrect legal information and it can amount to the unauthorized practice of law.
PS – Are we allowed to actually type out the full word or do I have to redact it like I did above? I’m from NY, and it’s in my language a lot.
