Crooked Dealers Fail to Pay Off Loans on Trade-Ins
Buyers often trade in cars with outstanding loans on the the dealer's promise it will pay off the loan. Honest dealers promptly do so, but a small number of dishonest dealers do not pay off the loan. When that happens, the lien-holder finance company usually finds the car and reposses it leaving the consumer out the down payment, payments, and no car. Alternatively, the car is not repossessed, but the buyer cannot get clear title because of the lien.
Dealers engaging in this type of fraud are often about to go out of business. When DMV finds out about the practice, DMV revokes their license to sell cars. The dealers usually disappear.
This law firm has represented a number of clients who have been the victim of these practices.
On January 4, 2009, the New York Times reported on such dealer practices. The article quotes Bryan Kemnitzer of this firm who represents a consumer who bought a car from Vacaville Ford with a lien on it resulting in her inability to register it with DMV.
On January 7, 2009, the San Francisco Chronicle reported on the same practices quoting victim Stephanie Feliciano, Roseville, CA. Feliciano traded in a Camry to a Sacramento dealer who failed to pay off the loan on the Camry. Mark Anderson of this law firm represents her in a pending action against the dealer bond company.
Recourse is against the dealer's bond company and against any new lien holder. All California car dealers must post a $50,000 bond to protect consumers who are defrauded by car dealers. If the buyer obtained a new loan that was arranged by the selling dealer (on top of the existing loan), the buyer may sue the new lien holder for damages since the new finance company is subject to the same claims the buyer has against the dealer.
