Folding dealers shock car buyers with unpaid liens:
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."
[...]
Inga and Brian Randle of Elk Grove, a Sacramento suburb, are among those who got burned.
In 2006, they bought two 2001 Mercedes vehicles, a CLK430 convertible and an E320 sedan, finding out afterward that the small Sacramento dealer had not paid off the previous owners' liens.
Creditors called, and the Randles found they owed $40,000 on the old loans.
[...]
"The problem is once they've gone out of business, there's no money. You can't get blood from a turnip," Lobdell said.
[...]
Before they land in trouble, used-car buyers should insist on seeing a vehicle's title to make sure it has no liens, consumer advocates say. They also say buyers offering trade-ins should first pay off the loan themselves if possible, or deal only with high-volume dealers who are part of a larger auto group and thus are less likely to fold.
[...][/i]
Brrrr.
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."
[...]
Inga and Brian Randle of Elk Grove, a Sacramento suburb, are among those who got burned.
In 2006, they bought two 2001 Mercedes vehicles, a CLK430 convertible and an E320 sedan, finding out afterward that the small Sacramento dealer had not paid off the previous owners' liens.
Creditors called, and the Randles found they owed $40,000 on the old loans.
[...]
"The problem is once they've gone out of business, there's no money. You can't get blood from a turnip," Lobdell said.
[...]
Before they land in trouble, used-car buyers should insist on seeing a vehicle's title to make sure it has no liens, consumer advocates say. They also say buyers offering trade-ins should first pay off the loan themselves if possible, or deal only with high-volume dealers who are part of a larger auto group and thus are less likely to fold.
[...][/i]
Brrrr.