The question is above my pay grade...
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 ...
Interesting times ping.
On a related note, Flywheel is a very interesting movie.
Isn’t it almost always a bad idea to trade in a car that you haven’t paid off?
>>Regulators in * * * other states, including Florida, Iowa and Washington, are seeing a surge in consumer complaints. <<
Are there state names we are suppose to asterisk out now? If so may I suggest Massachusetts?
Yes.
It sure is, podner.
Get rid of that loan first.
The car dealers should be prosecuted for fraud, at the very least.
That depends on whether the cost of operating it over the rest of its useful life is higher than the cost of just eating the difference between the balance due on the loan and the trade-in value.
“Isn’t it almost always a bad idea to trade in a car that you haven’t paid off?”
Not for the car dealer. Even before the economic crisis, dealers made very little profit on most new car sales... the gravy was from the used car side of the business...
The last car payment I had was in 1991. I traded down, got rid of the payment and never looked back.
Question...how can a “clean title” NOT be a clean title..Either it is, or it isn’t..
In these cases, the titles on the trade-ins were never clean because the loans on the cars were never paid off. Had the owners of these cars paid off the loans prior to trading the vehicle in, they would have known for sure if they had clean title or not.
Howdy Tex! Long time no see.
I’m still driving my 1990 Honda Accord and what a great little car. Of course it desperately needs a paint job, but who cares.
How you been?
The people getting burned are the buyers.
The dealership fails to pay off the remainder of the debt on the trade-in car before selling it to another party.
Then the dealer folds, and the original owner’s lien-holder goes after the purchaser.
This is the reason you research real-estate before buying. Now it looks like you’re going to have to get a lawyer to buy a new car.
I think Flywheel is a fantastic movie.
I should have been more specific. I would also add that the dealer makes a killing when they add the payoff balance for the trade-in to the loan amount that the buyer takes out for the new vehicle purchase. I would imagine that brings in thousands of dollars in interest alone.
It is sad to see how people who do this often fail to realize they are now paying for 2 cars and only driving one of them.
Probably Obama voters.
The question is above my pay grade...
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