Reminder to Dealers – Financing Representations
- Published On
- January 1, 2019
Originally published January 1, 2014
OMVIC reminds all dealers and salespersons of their responsibilities under the Motor Vehicle Dealers Act (MVDA) to conduct business with honesty and integrity and to be clear and truthful in describing the products, services, programs and prices connected with the vehicles sold; this includes representations made in relation to the financing dealers arrange for customers. Further, OMVIC reminds dealers of the Consumer Protection Act (CPA) requirement that no dealer make a false, misleading, deceptive or unconscionable representation.
Recent national media attention has raised concerns about sub-prime financing in the automotive industry (see links below). The stories focus on credit-challenged consumers who purchased vehicles and had financing arranged by dealers. The consumers claim dealers told them they’d be able to renegotiate the high-interest rate loans after a year of payments. When consumers attempted to do this, the banks/finance companies refused as it was not allowed in the loan agreement. This has led to claims of dealer misrepresentation in describing the terms of the loans.
While most dealers provide valuable financing options for their customers it is expected that the terms and interest rates provided serve the best interest of the customer and it is vital, in fact, it is the law, that dealers ensure consumers fully understand the terms of any finance agreement.
Compensation from Lenders
If a dealer receives a payment from a lender for assistance in arranging a loan to a vehicle buyer, OMVIC reminds dealers of their obligation under the MVDA to disclose the existence of the payment on the purchase agreement: this disclosure must be initialled by the purchaser.