How financing that new car can quickly turn traumatic

Life went on for about a week. The 56-year-old showed off the new ride to friends, drove it to work and enjoyed sitting in a car no one else had used.

On the fifth day, though, the dealership called to tell him his loan was not approved and to come back and sign a new deal. Scroggins did, for a slightly higher interest rate.

When the new application was disapproved several days later, the dealer offered yet another finance plan with an even higher rate. Scroggins asked for his trade-in back. But the dealer refused to give up the deal.

Turns out that Scroggins' old Jeep had been stolen from the dealership. And the dealer didn't want to pay him what he offered on the trade.

The Everett man called the state Attorney General's Office in desperation. Representatives there had the matter cleared up within 48 hours.

Little did Scroggins know at the time, but he had been "bushed."

Mike Ciocco, general manager at Doug's Everett Hyundai, said that while "technically" what happened to Scroggins amounted to bushing, he didn't do it intentionally. (Note: The lot was misidentified when this article was originally published.)

Bushing is Washington state's legal term for a practice auto dealers use across the country to hook buyers into a new car.

It typically works like this:

A consumer walks onto a lot, wants to buy a specific car, but needs financing. The dealer gives the buyer a pre-approval and lets the consumer drive off of the lot. Once the buyer has had a chance to show off the new ride and get attached to the car, the dealer will call back and rescind the deal, often forcing the buyer to sign a contract with unfavorable terms. The dealer may or may not make an effort to find reasonable financing.

This is what happened to a 22-year-old Fairfax, Va., man who sued a dealership for violating the federal Truth in Lending Act. A jury awarded Bradley Nigh about $24,000.

The U.S. Supreme Court said Tuesday that it will hear the dealership's appeal of that case. Arguments likely will be heard in October.

Virginia and most other states do not have specific statutes against the practice. But in Washington, the Legislature is hearing an appeal from the state's auto industry to revise the nearly 30-year-old anti-bushing rule.

In Washington, if the dealership cannot find the promised financing in three days, the contract is automatically canceled and the buyer must return the car. It is up to the dealership to renegotiate with the buyer for another deal, usually with higher terms.

"It is getting harder and harder to find financing for consumers within the three days we're given," said Theresa Gamble, executive director of the Washington State Independent Auto Dealers Association.

House Bill 2656 would extend the time dealers can take to find a buyer financing to five days. It would also protect dealers from being accused of bushing if a buyer gave the dealer bogus credit information.

"We need to get better information on the applications. We fully admit that," said Jim Boldt, an Olympia lobbyist representing the Washington State Auto Dealers Association, another industry group.

But the franchised dealers he represents are stuck, he said. Consumers are demanding, wanting to take their cars home right away, yet lenders, often from a state that doesn't recognize bushing, "are taking their sweet little time" approving loans.

Boldt added that dealers have no argument about the intention of the law and that consumers need protection from typical bushing schemes.

Boldt worked on the bill last summer with representatives from the state Department of Licensing and the Attorney General's Office, neither of which are supporting it. The bill is sponsored by Rep. Steven Conway, D-Tacoma.

The Washington State Auto Dealers political action committee donated $1,250 to Conway's 2002 re-election campaign, the maximum allowed that year, according to state Public Disclosure Commission records.

Conway was among about three dozen legislative candidates who received the maximum contribution from the auto dealer PAC that year. Overall during that campaign season, that PAC donated nearly $100,000 to parties, political causes and candidates for state office, including more than $75,000 to legislative candidates.

But Conway has reported no contributions from that PAC for his re-election campaign this year, according to the PDC.

The problem with bushing actually arises from the practice of "spot delivery," said Doug Walsh, a state assistant attorney general who specializes in auto law.

Spot delivery is the term for allowing a buyer to drive off the lot. Consumers like it because it gives them instant satisfaction. Dealers like it because they secure the sale, particularly if they can take advantage of a consumer's impulsiveness.

"What happens is the consumer gets psychologically wedded to the vehicle," Walsh explained.

He added that consumers are typically at a disadvantage when buying a new car because of the complex contract law involved. "Even lawyers will have a hard time."

Walsh said that he believes bushing takes place in Washington almost every day. Most bushing complaints are taken by consumer advocates with the Attorney General's Office over the phone. Usually, one call from a state consumer attorney to the dealer resolves the matter quickly.

Walsh is not sure of the origin of the term "bushing," but said it amounts to being "bushwhacked" or "ambushed" by a dealer.

"I don't know what they call it," Scroggins said about his busted deal. "I just call it getting screwed."

Ciocco, of Lynnwood Hyundai, said his dealership was caught at the short end because it had to pay for the stolen trade-in.

"I wish we could have made him a deal," Ciocco said. "Three days is tough, even if you've got the best credit in the world."

Scroggins said he wouldn't have taken the new car home if he knew financing would be such trouble.

"If it was my new car and they weren't approved for it, I wouldn't let them drive off the lot with it," he said. "That seems kind of stupid to me."

DON'T GET BUSHED

Consumer attorneys say that the best way to protect yourself from possible "bushing" is to secure your own financing before going to the car lot.

If you finance through the dealer, though, and the dealer has not finalized your purchase after three days, you can contact the state Attorney General's Office for help. State attorneys usually resolve bushing complaints quickly.

800-551-4636 statewide, or 206-464-6684 in King County.

Or file a complaint online at www.atg.wa.gov/consumer/forms/

P-I reporter Angela Galloway contributed to this report. P-I reporter Candace Heckman can be reached at 206-448-8348 or candaceheckman@seattlepi.com

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