Posted on 02/03/2009 10:29:10 AM PST by ex-Texan
The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.
When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.
"It's devastating for people when it happens because they have two car payments and they can't afford them," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, * * * "Their credit is destroyed for no fault of their own because the dealer defaulted."
Regulators in * * * other states, including Florida, Iowa and Washington, are seeing a surge in consumer complaints. They warn the problem [will grow] this year because of the deepening recession and trouble in the auto industry.
About a quarter of all car buyers are vulnerable because they still owe money on their trade-in * * * It's become more common for a driver to owe money on a trade-in as people stretch their car payments over six or seven years to make them more affordable.
* * *
DMV spokesman Mike Marando said the agency had 319 open investigations on dealers for failing to pay off liens or register a vehicle as of December, up from about 200 cases at the same time a year ago. It fielded 1,655 vehicle-transfer complaints against dealers from July to September, nearly double the number of consumer complaints for the same period in 2007. * * *
(Excerpt) Read more at cbs13.com ...
Yup.
It’s almost always a bad idea to trade in, period. You almost always get more cash from selling the car outside of the new car transaction - i.e., privately.
I have two Jaguars, a Nissan truck and a Honda motorcycle. And no car payments; all four are paid off.
Even the repairs to, say, the Jaguars are cheaper and less regular than a car payment.
I haven't worried about resale value since I had kids. I keep cars until they are dead. When a car is over 300k miles, and in bad enough condition that it's not worth fixing, it doesn't matter who made it. The nice thing about Honda/Acura/Toyota and a few others is that their cars make it that long if you treat them right.
I owned a Honda dirt bike and now I have a Honda ATV and I tell you they have both been indestructible. And I’m not the kind of guy that does a lot of maintenance on his equipment. When I need a new ATV or I am ready to buy my son a dirt bike it will be Honda.
I was thinking of doing this to my '92 Jeep.
Scroll down to see the project Suzuki Sidekick they painted with it. Probably cost less than $100 in total supplies.
It's a better idea to buy privately, as well. Both parties save money, if they don't put a dealer in the middle.
It IS sweet, isn't it?
That one depends on what vehicle you want, if it’s available used, if the dealer is having a real blowout sale, etc., etc.
At 250K or so, I finally had to put another transmission in the older Jaguar. Still cheaper than just four payments on a new Camry or Impala.
It still sounds, looks and drives better than either of those, too.
Actually, the only thing you need to do is get a lien waiver from the dealership at the time of the deal. That will protect you from kind of thing.
This is just a matter of routine practice in the building trades. Although a contractor has paid his bills completely, if the supplier has not made payment to its supplier; the supplier will track down the final possession of those materials and collect from there. New home buyers should be acutely aware of this fact and get the waivers.
I have never in my life financed a car. I only buy what I can afford to pay cash for and then keep it until it can no longer be repaired economically.
Or, take it and have them spray bedliner on the entire Jeep.
That, too. But the Krylon way is much, much cheaper. Just your time and about 16 cans. Plus, when you're done, you don't have to worry about locking it, cuz the thieves can't see it!
I heard about this on the Clark Howard show. What a PITA and real problem to have to sort out. At worst, you are screwed and you own and have to make both car payments. What a nightmare.
It was getting common for people to trade in cars for less than they owed on them, meaning that loss rolled overonto the new loan they carried. Crazy.
My current Acura is 4 years old, is halfway to it's first scheduled tune-up (at 115k miles) and is just wonderful. I was always "right-side up" under the financing for it and will drive it for a long time as well.
Anyone who is the focus of this article - was not thinking very hard about their auto transactions- and was going to be victimized sooner or later. The fact that it was in an auto transaction is coincidental.
My former 1985 Nissan 300ZX Turbo got to 250K on the original clutch as well; though it was showing signs of age at the end. Car’s still running around Dallas, too.
Guess those clutch dampers that Nissan used that everyone derided really did have a purpose.
We used to hang horse thieves. I guess we’re all “civilized” now. Too bad.
And the only one who ends up with a new car is the lawyer.
Drove my 1986 Thunderbird until 1999. Leased 4 years, paid the balance in 2 years, and drove (almost) for free for 7 years. (Needed one $700 trans rebuild and a couple sets of tires).
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