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Car loans and trade ins / used cars - Ex Isle Forums
AP :
Quote: 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.
I hope no one here is buying a new car before paying off the debt on the car being traded in, but it's alarming that if you buy a used car from a dealer, it could be repossessed because the car dealer never paid off the previous owner's loan.
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Interesting, that really doesn't seem legal in some ways.
I mean, it would from now on and the dealers are upfront about it (if we don't sell your car right away, you're on the hook for continued payments).
But if there was an agreement of transfer of title along with transfer of outstanding payments, then it seems like they're breaking their end of the deal.
So my question would be, (provided the dealer would be obligated to state those terms listed in the article), why on earth would a person buy a new car from them then and trade in their old one?
Nevermind, I re-read that, seeing it's the financial company allowing the loans and not the dealers (who have already defaulted and are out of business).
Okay, my misread.
Still doesn't seem legal.
A transaction of property and concessions have taken place.
The deal is done.
If the car-dealer goes bankrupt, those open lines of debt are simply to be absolved as part of a liquidation.
Bankruptcy laws (for liquidators) would have the assets of the dealership broken down, sold off and a small percentage going to outstanding debts in a certain order.
This would be very little different than another company which goes out of business.
Companies who were in dealings (suppliers, distributors, property owners...so on) with the business which went out of business would suffer a loss.
Reason for edit: because I misread
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Quote: 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.
Take note of that.
(looks at Lyric)
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