Do you have to agree to arbitration to buy a car?

Dear Driving for Dollars,
When I recently bought a new car, the business office had me sign a third-party arbitration form saying that I agree to mandatory arbitration in the event of a dispute. It seems that means if I wanted to sue the dealership it wouldn't go to court. When I asked if I had to sign this, the business manager said "Yes, if you want to buy the car from us," pretty much forcing me to sign. Is this true? Do people have to sign the forms?
-- Katie Kar-buyer

Dear Katie,
What a scam!

First, no one is under any obligation to sign anything. I recall a friend who once was told that she couldn't get financed unless she bought the extended warranty. Another crock.

As the buyer, you have the ultimate power -- you can walk away. Try that and you'll see how badly they want your business. Specifically, what the dealer is trying to set up is a shield to keep you from suing and would likely preclude you from using any "lemon law" provisions to get satisfaction. A lawyer might tell you that you could break such an agreement in court, but why face the hassle?

When confronted with such tactics, just say no.

If you have a question for Terry, e-mail him at Driving for Dollars.