Target 8: Can a used car dealer keep your down payment?

KENTWOOD, Mich. (WOOD) — When a crash wrecked Summer Lodewyk’s car, her hunt for a replacement put her in the center of a dispute over when a vehicle dealer can keep your down payment.

She says she called Allstate Auto Sales on South Division Avenue in Kentwood.

Vehicles sit on the lot of Allstate Auto Sales, Inc. on South Division in Kentwood.

“They said, Come in, we’ll get you approved (for a car loan)…’ and I told them I have bad credit.”

Lodewyk says she put $1,000 down and signed some paperwork. Soon she found the salesman was having trouble getting the financing.

“He’s like, ‘We can’t get you approved for $1,000 (down payment,) can you put $1,500?’” Lodewyk said.

She says she scraped together another $500 but even that didn’t do any good.

“He told me that I couldn’t get the car and he wasn’t giving me my money back,” she said.

The car dealer was keeping her deposit.

“So that’s when I got the Kentwood police up there and he (the officer) tried talking them into giving my money back,” Lodewyk said.

Beyond that, there was nothing the police could do because there was no crime. In a report, the officer wrote that he told her and the man running the car lot, Alan Anderson, that it was a civil matter, meaning she could file a lawsuit if she wanted, to try and get her money back.

According to the police report, Anderson told the officer that Lodewyk signed a sales contract that allows Allstate Auto to keep her deposit. The report says Anderson told the officer that the deposit “is to allow the company to attempt to acquire financing and (is) not refundable.”

The police report quotes Anderson as saying that the car dealer “tried numerous financial institutions” but “were having a difficult time” getting a car loan for Lodewyk.

Anderson also disputed the amount of the deposit. He said he has paperwork showing only the $1,000 deposit. Lodewyk said she didn’t sign any additional papers or get a receipt when she handed the salesman another $500.

Anderson said pretty much the same thing.

Target 8 investigators asked to see the contract Lodewyk signed, since she said the dealership didn’t give her a copy. Anderson said we could get it through his attorney but the lawyer didn’t return our call.

IS IT LEGAL?

Terry Glenn with the Better Business Bureau Serving Western Michigan said his agency gets a lot of calls from customers about businesses keeping down payments when sales fall through.

“Consumers assume that any time they make a deposit, they can get it back if they change their mind. And that’s simply not the case,” she said.

Michigan law is clear that if you agree to buy something and you back out of the deal, the seller can keep at least some of your deposit to cover any losses.

But Glenn said it’s different when the seller is the one to back out.

“It would depend on who was to get the financing,” she said. “If the dealer was supposed to get the…

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