Dealers asking for cash on clunkers program

August 14, 2009 7:38:13 PM PDT
There is controversy brewing over the government's popular cash for clunkers program. Some dealers want customers to hand over extra money in case the government subsidy falls through.

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Here's how it works: you trade in your gas guzzler, buy a fuel efficient car and the dealer knocks up to $4,500 off the price.

The dealer gets reimbursed by Uncle Sam but now some dealers are asking customers to write a check or sign an agreement -- promising to pay that $4,500 if the government money falls through.

Lericia and Aleator Evans wanted to trade in their 1986 Mercedes and buy a new fuel efficient car under the government's cash for clunkers program.

"When we saw the clunkers deal, we got really excited because our car started going out and it needs more repair than we really care to pay for it," said Lericia Evans.

They were offered a good deal at Hilltop Nissan in Richmond -- a new car for $13,000 minus $4,500 from cash for clunkers. But as they were closing the deal, a salesman asked them for an extra check for $4,500.

"They told us we were locked in and then they gave us the runaround and they said you know you have to write a check for the $4,500 in case it doesn't clear," said It's a big letdown and it's terrible," said Evans.

The dealer wanted the check in case the government funds didn't come through. But the couple said they wouldn't have made the deal without the financial help in the first place.

Consumer advocate Rosemary Shahan says this is happening at dealerships across the country.

"They were advertising cash for clunkers, leading consumers to believe they were getting this special deal, and suddenly the rug gets pulled out from under them," said Shahan.

She says some dealers require buyers to sign agreements promising to reimburse the dealership or return the car if the government subsidy falls through.

Consumer groups now want the Department of Transportation to investigate.

"Dealers are requiring car buyers to sign a form saying if the voucher is not approved the consumer is liable and the consumer could have to cough up $4500 or lose their new car," said Shahan.

The government agency posted a notice informing consumers they are not required to sign any such agreement, and consumers don't have to back up the cash for clunkers deal with their own money.

And that's pretty much what the Evanses decided. They refused to front the extra $4,500 and wound up without a deal.

7 On Your Side contacted Hilltop Nissan and it said it was concerned the government money would not come through.

That it has made 50 cash for clunkers deals and so far it hasn't received any reimbursement, they estimate they are on the hook for about $225,000 in all.

The Department of Transportation has loosened one qualification: if your new car isn't at the dealership yet, you can still qualify for cash for clunkers. It's enough just to show it's coming off the assembly line.

Related Links:

  • Helpful cars Q&As for consumers
  • Car Allowance Rebate System

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