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Gallagher Urges Consumers to Be Well-informed before Buying a Car


CONTACT: Tami Torres

TALLAHASSEE — In response to recent consumer inquiries about automobile insurance and financing, Chief Financial Officer Tom Gallagher is urging consumers to be well-informed before making what is often a sizeable financial commitment.

"Next to a house, an automobile is the biggest purchase most people will make," Gallagher said. "As with a mortgage, automobile financing often involves a variety of contracts that can lead to confusion for consumers and even abuse by unscrupulous dealers. A well-informed consumer will be less vulnerable to fraud and abuse."

One area of confusion involves the type of insurance required when financing an automobile:

· Florida law requires Personal Injury Protection (PIP) and liability (property damage) insurance, and lenders may also require collision, fire, and theft insurance on the vehicle to protect their investment.

· The purchase of Credit Life Insurance, Disability Insurance, and extended warranties is always optional. Regardless of what a dealership or sales person may imply, consumers are not required to purchase these types of insurance to obtain a loan.

· The buyer must sign a disclosure form indicating that the purchase of additional insurance coverage is voluntary.

Other issues to review carefully include:

Buyers Order: This document is not an installment sales contract. It is used to establish the price the consumer agrees to pay for a vehicle. Consumers should check carefully to ensure that the figures appearing on the installment sales contract match those on the Buyers Order, because if there is a discrepancy, the installment contract is the binding document.

Spot delivery: A spot delivery is the acceptance of a vehicle when the contract is not fully completed. Spot deliveries are often made before a credit application has been processed, and after banks have closed for the day, or on weekends and holidays.

Many dealerships will take a consumer through the purchasing process, including the consumer signing the installment sales contract. However, until that contract is signed by the dealership or an authorized agent, the contract is only binding on the consumer. If, under these circumstances, the consumer drives off the lot, and the dealer is unable to find a lender to purchase the contract, the dealer could require the return of the vehicle and charge the consumer for any mileage or damage done.

Gallagher also suggested other tips to follow when financing an automobile, including:

· Never sign a blank installment contract or any contract that has not been filled out in its entirety. Regardless of what a dealership may say, or any verbal agreement a buyer has with a salesperson, the information on the contract becomes the binding terms of the agreement.

· Read the fine print and understand what you are signing. If there are any questions regarding a contract or what a dealership is requiring before financing a vehicle, buyers can contact the department's consumer helpline at (800) 342-2762. Helpline staff can verify that the dealership is licensed as a motor vehicle installment seller or licensed to sell service warranties, as well as whether any complaints have been filed against the dealership.

The department also offers brochures free of charge with information and tips for purchasing automobiles, car insurance and vehicle service warranties. Brochures can be obtained by calling our helpline or visiting and clicking on "Consumer Guides."