Dealer Promises to Pay off the Loan on Your Trade-In Car & then Goes out of Business, What Protection do you Have?
Car dealers routinely accept trade-in cars promising to pay off the existing loan as part of the deal. But what happens when the dealer goes out of business without paying off the loan? That leaves the consumer owing money on the trade-in with the finance company looks to the consumer to keep paying. With many car dealers going out of business in the past year, consumers are stuck with loan payments on a car they no longer own. Some folks end up with two car payments--one on the trade-in and one on the car they bought.
A bill of the California Legislature, SB 95, would help deter this abuse and would add protection to victims. The bill would raise the dealer bond to $100,000 and would add a requirement that dealers pay off loans on trade-ins within a short time period.
KABOB client Stefanie Feliciano is a typical of persons caught in this scenario. A dealer failed to pay off the loan on a trade-in car leaving her with the loan obligation. This weekend a Sacramento TV station, KCRA, featured a story and video on Ms Feliciano and the bill, SB 95, accessible at http://www.kcra.com/money/19553191/detail.html.
