Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Folding dealers shock car buyers with unpaid liens

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Latest Breaking News Donate to DU
 
Tab Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:09 PM
Original message
Folding dealers shock car buyers with unpaid liens
Source: Associated Press

SACRAMENTO, Calif. – 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, a Sacramento-based nonprofit that lobbies on behalf of vehicle owners. "Their credit is destroyed for no fault of their own because the dealer defaulted."


Read more: http://news.yahoo.com/s/ap/20090201/ap_on_bi_ge/dealer_defaults
Printer Friendly | Permalink |  | Top
K Gardner Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:17 PM
Response to Original message
1. Oh come on !!! This can't possibly be LEGAL ! Outrageous !!
Printer Friendly | Permalink |  | Top
 
Sen. Walter Sobchak Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:31 PM
Response to Reply #1
3. it is pretty rare for a bank to go after the owner of a used car sold retail
Even if "legitimate" it is rarely worth the effort to even try recovering the vehicle which by that time usually retains little value.
Printer Friendly | Permalink |  | Top
 
Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:36 PM
Response to Reply #3
6. But they will go after the previous owner for the loan amount...
It's sort of like signing the deed over to your house to someone assuming the loan. If they default, well, guess who the mortgage company goes after. And of course legally it becomes a mess because legally you don't own the house anymore. Just like legally you don't own the car any more. It doesn't really matter that most won't do this or that. You know what matters? That the law allows them to if they decide to.
Printer Friendly | Permalink |  | Top
 
lizziegrace Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 10:16 PM
Response to Reply #6
19. Happened to me in the 90's
We traded a car for a new vehicle. 5 days later, Bank One came in and closed the dealership. My car was on the lot, unsold with an unpaid loan. The police on the lot wouldn't let me near it. GE Capital kept calling about the lease on the Honda - night after night after night. I faxed the sales documents to them and kept telling a different collector over and over that I traded the vehicle in good faith.

Finally, 2 months later, Bank One paid the loan and GE stopped calling me. It was a nightmare, but for me, the outcome was favorable. Today, I don't think I or anyone else would be so lucky. :(
Printer Friendly | Permalink |  | Top
 
liberalhistorian Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Feb-02-09 12:43 AM
Response to Reply #6
21. A deed has nothing to do with a mortgage.
When it comes to a mortgage, it doesn't matter whose name(s) is on the deed. It matters whose name(s) are on the mortgage, which are two very separate things. If you sign a house's deed over to someone else, but you don't refinance the mortgage to get your name off or pay off the mortgage first, then you're still on the hook for the mortgage. This is what so many divorcing couples don't understand and why things often get messy financially after a divorce. Creditors aren't bound by a divorce decree, only by the terms of their original contract, which supercedes the divorce.

In the same way, if a car is sold without the original loan being paid off first, then the person whose name is on the original loan is still on the hook for it. There's nothing illegal about that. What should be illegal is these damn dealer sharks who don't pay off loans on trade-ins and who sell the cars with a clouded title, i.e., a lien from the first loan.
Printer Friendly | Permalink |  | Top
 
Usrename Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:08 PM
Response to Reply #3
12. Around here they do. You can bet on it.
They get the car back and the person still owes the money. Happens all the time.
Printer Friendly | Permalink |  | Top
 
Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:32 PM
Response to Reply #1
4. Completely legal...
And completely outrageous. But life in America has become outrageous.

Some worry that some lenders may "accelerate" home loans on the "loan to value" and if you don't understand that it simply means that if you owe $250,000 on the house but the house is only worth $125,000 the lender can ask for the $125,000 difference between the loan and the value of the house. It happened to quite a few people during the 1980s particularly in the condominium markets around the country.

I was told Congress addressed it but I suspect Congress didn't and the provision is probably still there hidden away in the "fine print" in the loan papers that no one reads at the closing tables.

How did people get scammed on the ARMs? They trusted the lender and didn't really read the loan papers at the closing table. Although some did read them and were told not to worry about it. So they didn't. Until their monthly payments doubled.

Our society is not only predatory but sociopathic. And some of the worst of the sociopaths are in Congress. On both sides of the aisle.

Printer Friendly | Permalink |  | Top
 
truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:49 PM
Response to Reply #4
8. It's so outrageous that when things of this nature affect
Edited on Sun Feb-01-09 08:49 PM by truedelphi
The middle or lower incomed person, it's all "Well if only they'd paid attention to the loan terms," etc.

But when Madoff makes off with billions by preying on richer people, we are told to cry and cry for the poor victims. (Like Spielberg didn't have lawyers who might have advised him on the deals.)
Printer Friendly | Permalink |  | Top
 
Tab Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:33 PM
Response to Reply #1
5. I would think not

But apparently so.

I don't know how those things are written. But if I traded in a car while I still owed money (and I never have, I always drive them until the end), I'd assume I wouldn't be liable for the balance after the trade. So, as I said, I don't know, and it would be dependent on the deal as it was written, but if you could read closely and figure it out, I'd also like to assume you wouldn't make such a deal. I'd also like to assume you wouldn't HAVE to read it closely to avoid something like this, but hey - welcome to America.
Printer Friendly | Permalink |  | Top
 
surrealAmerican Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 10:02 PM
Response to Reply #5
18. I understand that part. What I don't get ...
... is how the dealer can resell a car that they don't completely own.
Printer Friendly | Permalink |  | Top
 
DavidDvorkin Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:48 PM
Response to Reply #1
7. It's always legal when it's the little guy getting the shaft
That's a basic principle of our legal system.
Printer Friendly | Permalink |  | Top
 
Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:07 PM
Response to Reply #7
11. Legal fraud...
The dealers probably know they're about go under. So they hope they can sell the used cars knowing they won't pay the loan off. In most states the buyer gets temporary title. The state sends the actual title anywhere from 30 to 90 days later. Which will show the lienholder. Which the buyer may or may not notice. Assuming it's just the actual title.

Bottom line for all is to remember that it is always "buyer beware" and also "seller beware" in some cases.

Printer Friendly | Permalink |  | Top
 
quidam56 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 08:20 PM
Response to Original message
2. Only in America.
Politicians and Profit Machines come first, people don't matter as long as everybody is raking in the dough. http://www.wisecountyissues.com
Printer Friendly | Permalink |  | Top
 
MiaCulpa Donating Member (741 posts) Send PM | Profile | Ignore Sun Feb-01-09 08:51 PM
Response to Original message
9. test driving my new (1st!) avatar
Sorry, just had to see how it looks. :)

-diane
Printer Friendly | Permalink |  | Top
 
Tab Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:01 PM
Response to Original message
10. The other problem, I think...

with the credit adjustment rules going into place by the end of the year (where they can't just crank it up to 30%), there's going to be a lot of capitalizing between now and then on existing laws, and a lot of cranking up, because, come November (or whatever) they won't be able to do it anymore.
Printer Friendly | Permalink |  | Top
 
whistle Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:13 PM
Response to Reply #10
14. That whole concept is usury and should be stopped dead in its tracks
Printer Friendly | Permalink |  | Top
 
whistle Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:11 PM
Response to Original message
13. More credit swindles and legal fees for strapped U.S. consumers
Printer Friendly | Permalink |  | Top
 
LevelB Donating Member (181 posts) Send PM | Profile | Ignore Sun Feb-01-09 09:20 PM
Response to Original message
15. Stories like this
Will not restore confidence in the financial system.

These folks better get their act together, before greed and incompetence bring the whole house down.

B
Printer Friendly | Permalink |  | Top
 
Crowman1979 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:32 PM
Response to Original message
16. This justifies the reason for a national mass transit network!
So people won't be a slave to car dealers and become screwed like this.
Printer Friendly | Permalink |  | Top
 
ileus Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-01-09 09:50 PM
Response to Original message
17. another reason to nationalize auto dealers and finance.
Printer Friendly | Permalink |  | Top
 
Psephos Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Feb-02-09 12:14 AM
Response to Reply #17
20. Because, you know, there's no chance of corruption in government n/t
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Thu Dec 26th 2024, 05:03 PM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Latest Breaking News Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC