September 17, 2007

Good News: California to Join U.S. Car Titling System; Consumers and Law Enforcement to Benefit

In good news for consumers, the California DMV announced that it would join the National Motor Vehicle Titling Information System (NMVTIS) in 2008. Being part of the system allows the state to instantly verify the validity of out-of-state ownership documents, including the VIN, odometer, and any damage history before issuing a California title. Participation will be an enormous help to law enforcement going after vehicle theft and fraud and it will allow consumers to check a current title and odometer readings.

California had foolishly refused to join NMVTIS saying is own computer system had to be updated first. Now, thanks to excellent lobbying by consumer advocate Rosemary Shahan of the non-profit group Consumers for Auto Reliability and Safety, DMV has finally done the right thing. Rosemary reports that DMV will let a contract to Carfax.com or AutoCheck.com (an Experian company) to make the data accessible to consumers over the Internet. This development is truly a great advance in providing vital data to consumers shopping for used cars and trucks.

April 26, 2007

Prior Daily Rental Cars: Rip-Off on Resale

Hertz, Avis, Budget, Thrifty, Dollar and Enterprise are all household names for daily rental cars. The ease and convenience of pay-per-day driving is a blessing to the traveler, whether on business or for pleasure. On the other hand, we've all returned from a trip saying, "Nice place to visit, but I wouldn't want to live there." The same can be said of rental cars.

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Despite what the car companies say, daily rental drivers just don’t treat those cars and trucks like their own. All too many otherwise responsible people don’t bother about running up over a curb, leaving gum in the cupholder, slamming on the brakes or stripping the gears. Day after day, someone unfamiliar with the vehicle is at the controls. Innumerable poor driving incidents will go unnoticed at the end of the day. We even heard about one fellow who drove off with the gas pump nozzle still connected to the fuel tank, ripping the fuel cap hinge off in the process. Although possibly invisible on return to Hertz or Avis, these small defects add up over the short eventful life of a Prior Daily Rental. And that’s not all. A predictably large percentage of PDRs (as Prior Daily Rentals are known in the trade) come out of service in two states: Florida and Hawaii. These two locales are great for a holiday, but the environment is tough on any car or truck. Rust and corrosion are common problems with Prior Daily Rentals. Most troublesome is the fact that many rental cars and trucks are in serious accidents involving body and frame damage that diminish the safety and overall life of the vehicle.

Did you ever stop to think what happens to all of those prior daily rental cars? After somewhere between 15,000 and 30,000 miles on the odometer, they are taken out of fleet service and shipped throughout the 50 states. They then re-enter the marketplace in a wide variety of used car markets. Some are resold at dealer-only auctions.

Consumer protection laws in California require that Prior Daily Rentals must be disclosed as such. It is a clear violation of law to knowingly fail to disclose a vehicle’s history as a PDR. Why? The public policy behind the law is clear: the fact is important to the decision to buy or not to buy a particular car or truck, and certainly material to the price someone would pay. Some experts say the difference in value is 20-25% -- but many consumers say they would not buy a PDR at any price. The risk of frame damage, invisible rust or corrosion, and just plain poor driving habits day-in and day-out over the vehicle history are deterrents about which most used car buyers really want to know. The failure to make the disclosure required by law at the time of sale is deceptive; and when a single dealer makes a pattern of this concealment, that can be a deceptive business practice.

Unfortunately, cars often change hands only to have the title sent later in the mail, or even worse, sent only to the bank as lienholder. Used car buyers should protect themselves against these deceptive practices by ordering a CarFax report when they buy a used car.Whether we handle a PDR non-disclosure case as an individual matter or a class action, a CarFax report is one step in our investigation.

If you bought a low-mileage used car that seems to suffer from a high level of driveability or suspension problems, rust or corrosion, small dents and dings – not to mention that dangling fuel cap hinge – give us a call.

April 2, 2007

Buying a Used Car? Watch for Flood Cars

Thousands of Hurricane Katrina cars are being sold in the used car market. Many vehicles were written off as total losses by the insurance companies. Many have been repaired to a point, but there may be hidden damage. You should carefully inspect (or better yet hire professionals) to check the car before you buy. Look for silt in the spare tire area; take the door apart and look for mud inside the door panel. Before you buy, go to National Insurance Bureau Crime Bureau, which has a list of flood cars by VIN number. (Go to the Theft and Fraud Awareness page).

July 1, 2006

Auto Dealer Loan Packing Banned by Car Buyers of Rights

Under the new Car Buyers Bill of Rights, dealers cannot misrepresent the cost of after-market items, such as service contracts, surface protection, debt cancellation insurance (GAP protection), and theft protection products. Some dealers in the past falsely told buyers theft protection cost only, say, $3/month, when really the cost was $35/month. The dealer hid the true cost in what the dealer said would be the monthly payment on the loan. This practice is known as loan packing. To guard against loan packing, dealers have to set out specifically the cost of each after market item in writing, such as theft protection.


July 1, 2006

Cars Dealers Loan Kickbacks Limited by California Car Buyers Bill of Rights Law

When a car dealer arranges a loan, the finance company often rebates some of the interest to the dealer. Finance companies do this to compete for the dealer’s business. For example, if the dealer placed a loan at 12%, the true finance company rate may be 9% with 3% refunded to the dealer from the finance company. The buyer was paying (a lot) for the dealer arranging the loan. Under the Car Buyers Bill of Rights that went into effective in July 2007, the interest refund is capped at 2.5% over the finance company’s rate for any loan of 60 months or less. For loans over 60 months the cap is 2%. This will save buyers some money. In the past, dealers have obtained kickbacks of as much as 6% over the finance company rate.

July 1, 2006

Dealers Must Disclose Buyers' Credit Scores in Arranging Loans

Under the California Car Buyers Bill of Rights, when a car dealer arranges financing and obtains the buyer’s credit score (from Trans Union, Experian or Equifax), the dealer must now disclose the score to the buyer along with the range of credit scores used by the credit reporting agency. That way, the buyer can determine if he or she is getting a good deal on the interest rate the dealer is offering. The disclosure will help consumers make good choices in obtaining car loans.

July 1, 2006

New California Law Protects Buyers of Certified Cars

A new California law prohibits car dealers from selling used cars as "certified" if they had been wrecked or in a flood unless properly repaired or the odometer was rolled back. Certified cars may not be sold "as is."Under the new law, cars damaged in a wreck or flood and not properly repaired cannot be sold as certified. If the repairs did not make the car safe or if the accident or flood damage, in spite of the repairs, substantially impaired the use of the vehicle, it cannot be sold as certified. Previously, wrecked and poorly repaired cars were sometimes sold as "certified."

July 1, 2006

Callifornia Used Car Buyers Get Two-Day Right of Return Option

Beginning with used car sales in July 2006, California used car buyers can pay a fee to obtain a two-day right to return the car for any reason. The fee varies from $75 to $400 depending on the price of the car. Buyers of older vehicles especially are advised to pay the fee for this protection. There are of course restrictions on the return.The buyer can return the vehicle for any reason. If the car breaks down, the buyer can still return it. However, the right to undo the deal has many restrictions, as you would imagine: a) the buyer can only put up to 250 miles on the vehicle before turning it in and b) the buyer has to pay a “restocking fee” (from $175 to $500) depending on the price of the vehicle. However, in turning in the vehicle, the buyer gets a credit for the fee paid for the two-day cancellation option. This means the net cost of returning the vehicle would be $100 to $200 depending on the purchase price of the vehicle.
Cars or trucks costing over $40,000 are not covered nor are RVs or motorcycles.
If the buyer had a trade-in vehicle, the dealer is obligated to give it back. One problem with the new law is that the dealer does not have to return the vehicle under the third day after the purchase of the car being returned. So the buyer cancels on day 2 and turns in the car and is then stuck without his or her trade-in until day 3. This means the buyer may have no transportation for a day.
If the dealer sold the trade-in in the two day period, the dealer must pay the buyer either the price the dealer agreed to pay for the trade-in or retail market value, whichever is higher.
Once a vehicle is turned back in, the dealer has to cancel any car loan it arranged.

May 18, 2006

Always Check Vehicle History before Buying a Used Car

Useful information on the history of used cars and trucks is available at www.carfax.com, www.autocheck.com, and www.Info4cars.com. Buyers are advised to always check a car or truck's history (all you need is the Vehicle Identification Number) before buying. Carfax and the other services use DMV information to warn you if you are buying, for example, a "lemon buyback."