Need Advice

[olddog]

My niece is certified by the government to be mentally disabled and gets a pension. She purchased a used car from a new car dealership for $3500. The top KBB value on the car was $3500. She told them she couldn’t afford to repair the car, so it had to be in good running order. The dealership sold her an extended warranty for $2800, then told her she would need gap insurance $900 and wrote it into the loan. They wrote her an $8200 loan from a local bank, on a $3500 car.

Skipping details, the dealership said the head gasket failed and filled the crankcase with antifreeze. The engine is a total loss. The warranty does not cover gaskets. They want $3200 to put a junk yard engine in it, which she does not have.

She called the bank, explained the situation and told them to come get the car. They sent a mechanic to look at the car. The bank told her they didn’t want the car, and if she didn’t finish paying for it, they would come and take her furniture.

Now other used car lots in the area sell that same warranty with the little box checked to cover the gaskets for $600, and they tell me they still make $50. The gap insurance states that if the loan exceeds the book value it will only cover by the ratio of book value to loan amount. In other words, they will not insure an upside down loan. It only covers if it depreciates faster than the loan is paid down. In my opinion, the dealership operated in a predatory manner, and knowingly took advantage of a mentally disabled person.

I’m thinking the bank is acting no better. After all they allowed the dealership to write loans as an agent of the bank, in my opinion. The loan was secured by the title of the car. I do not see they have any write to her furniture. Seems to me they forfeited their claim, when they refused to take the car.

Honestly if you sold everything she owns, including my 6 yr old great nephew’s toys, she might have a net worth of $1500.

Normally, I would agree let the buyer be ware, and she signed the papers. However in this case she is not very smart, and it is obvious. I have a big problem with what the dealership did, and I’m not happy with the bank. I’m going to go talk to the bank, but wanted advice first.

The first point I intend to make is that the dealership wrote at least $2200 more into that loan than reasonable and customary, stuck it into their pocket, and left the bank on the hook for it. They also did not check the box to cover the gaskets on an engine that their own master mechanic said is notorious for blowing head gaskets. The dealership screwed the bank over more than anyone else, IMO.

Thoughts?