Issue by Daniel K: What occurs when you really don’t pay out your automobile loan?
K, so heres my story, it really is a small various than most people.
I purchased a car in February of ’09 and the dealer failed to get the title to my financial institution as well as getting the plates to me. I ended up filing a case with the motor vehicle enforcement division. And I known as my financial institution to allow them know the scenario. What the seller did was they marketed me a auto that a person else traded in, but nevertheless had a loan on it from another financial institution. ten months soon after I purchased the automobile, the lender from the earlier operator came and repo’d my car that I’ve place a 5k down payment and been generating payments for the final 10 months to my very own lender. The dealership shut down extended ago (pretty significantly a couple of weeks soon after I bought my vehicle), and are now obtaining criminal expenses filed in opposition to them. They’ve accomplished this to almost certainly thirteen other people, according to my investigations officer. Problem is the vendor does not have any money and I don’t think I’m obtaining my cash again anytime soon.
I named my financial institution and talked to them about what to do and they stated I’ll nonetheless want to be paying off my loan, but I require to get an lawyer to file in opposition to the dealers bonds. I very doubt the seller has any income left from the bond and even if they did, I’ll probably get pennies to the dollar because I have to split it among thirteen other folks.
So, I talked to a friend of mine who is also a automobile seller and he was shocked. He said normally financial institutions do not give out loans except if they get the title 1st. And he asked me why hasn’t my financial institution checked the title to make confident it was clear prior to giving me my loan, banks ought to have all the instruments and sources to do so. And he mentioned he couldn’t think they gave me an vehicle mortgage to use with this fraudulent dealer with no even retaining or checking the title very first.
So due to the fact of this I got even a lot more pissed off. If the financial institution had checked the title and informed me that there is nonetheless a lienholder from the earlier proprietor or at least asked the dealer for the title initial prior to providing the loan, none of this would have occurred. I would have obtained up and left that dealership and get my $ 5000 down payment again. What the vendor did was illegal, but if my bank did their job and examine what they had been intended to examine, I wouldn’t have unknowingly bought a fraudulent automobile.
And if I cease having to pay my loans and notify them the purpose why, what will they do?
Also, the scary point is I also lender with them. Will they just achieve their hands into my checking or savings account and just consider cash considering that I have accounts open with them?
Please read just before answering.
Notice that automobile was already towed by lienholder from prior owner, and my lender for some explanation did not check to make confident there wasn’t previously a loan on it, just before they gave me my loan.
Finest reply:
Remedy by Vipassana
“it is a little diverse than most people.”
No, it’s really not.
Bottom line is that the lender owns the automobile. Do not shell out the loan, they repo the auto.
Stop of tale.
Add your personal reply in the responses!
Forget any “opinions” that you get and seek out a lawyer with experience in this sort of fiasco.
It sounds to me like the bank is guilty of not dotting their I’s and crossing their T’s and now they want to hold you totally guilty.
If you don’t pay the loan they repo the car when you by a used car you have to look at the title to make sure there are no leans recorded when a loan is in progress on a car the title says one lien recorded and once the last payment is made you will get a new title saying no liens
Since the dealer sold the vehicle out-of-trust, and then went under, the only recourse you have is through the courts. I would definitely consult with an attorney.
And, as alluded to before, it’ll get messy.
***Add – Folks, he already mentioned that the car was repo’d by the original lender on the original owner’s loan. Only remedies he could get at this point would be to get his money back on the payments made and downpayment. I’m amazed that the current loan is still being enforced since there is no collateral.
You borrowed money from a bank to buy a car. Regardless of whether it was a legit deal, the money was spent by the lender, You signed a contract promising to repay the bank for that money. Nothing you have written here changes that. The contract was signed by you, you owe the money.The bank can use whatever remedy they have at their disposal to recover that money. They can repossess the vehicle, they can take you to court, they can garnish your wages. You are going to have to prove the bank was negligent and failed to act in good faith in the process of approving your loan. This would happen in court, and could take months or even years. In the meantime, you are still on the hook for that monthly payment. The loan is totally separate from any other issues you have described. Until a judge rules in your favor, the loan is still valid.
you need a lawyer/thats why they were invented/protect your interests
The bond may be on a first come, first served basis.
The bank doesn’t really have any liability here.
Its fairly typical for dealers to sell cars, put the bank down as lien holder without actually having the physical title. The bank couldn’t have avoided this without a big inconvenience to you. Would you want your bank to tell you that you have to wait weeks to buy the car because less than 1% of dealers scam people ?
You don’t really have a lot of options here. Pay the bank or get your credit ruined and possibly get sued. Sue the dealer but you may not ever get anything.
For sure follow up via the DMV. If the guy had a $ 10k bond, would you rather have part of that $ 10k or none of it ? And maybe the bond amount is larger in your state ?
You aren’t the only one this kind of thing has happened to. Bigger dealers with cash flow problems did it to LOTS of customers last year from what Ive read.
I wish I had better news but the bank is not responsible here. Now, some banks can be hard tails and insist that THEY do the title work, but most of them presume a copy of the title application will suffice because in 99.9% of the cases, it does,
This situation has nothing to do with your checking or savings accounts. They cant just take your money. Unless you fail to make your car payments, then they may be able to. My credit union this year sent me notification that they could seize any & all savings accounts to pay any & all amounts due to them under any & all loans that were past due.
You might look for an attorney who will work on a % of amounts recovered. It may be too small for them to deal with though.
You could probably win a judgment against the dealer but collecting it is a totally different situation and if the dealer is broke you judgment isn’t worth anything.
If you stop paying your loan, they will report it on your credit and potentially sue you and later garnish your wages. You still owe them. Unless you want to chance it that the judge sides with you and agrees they are at fault for the dealers going belly up.
That’s a big risk for you to risk your credit on.
What a mess! First off, your friend told you wrong. The money goes to the dealer who processes the paperwork through the DVM who registers an encumbrance to the bank and lists the bank as the lien holder on the title. Usually the DMV will send the title to the lending institution. But then again that’s with a normal dealer. I will admit that I’ve never come across this type of trouble but some common sense might be large here. The first owner traded the car thinking that the dealer would pay it off before resale. So that guy got screwed first. That guy’s bank stops receiving payments and chases after him who tells them the car was traded. But the dealer blew it and did not forward funds to get the title. They track the car through the dealer to you. The repo guy grabs the car for bank #1. The first guy gets charged with a repo. But your bank wants to be paid. They can’t repo because the first bank owns it. You may make arrangements with the second bank to accept interest only payments until the dealer’s bond company settles the claims. You have a claim, as does your bank, and possibly the guy who traded. Most states require that a used car dealer post an insurance bond of at least $ 150,000, but usually more. The insurance bond is registered at the DMV. Start filing those claims for your down stroke money and payments made. Your bank needs to do the same. My guess is the insurance company will pay. Hopefully this dealer did not let it lapse. One year paid up front is usually required. Hopefully he renewed. You might choose to not pay your bank. They can’t repo the car. They have only one recourse and that is to keep billing you and showing late payments on your credit bureau. They won’t list a repo. My gut tells me that you and your bank will be paid by the bond. You will undoubtedly have some bruises on your credit but they will go away in time. It will not show a repo. Your bank can’t legally tap into your account without signed permission from you but prudence says to move your money to a different bank. Hopefully you did not sign up for direct withdrawal. You may be wrong about the pennies on the dollar. Get your claim in. Wow. What a nightmare……………………………ALSO the bank that loaned to you for the purchase did everything proper. They don’t check each car on every application. Don’t even go there. You weaken your position when you base your argument on hearsay that is incorrect. You did right. The bank did right. The bad guy is the dealer. Period.
When you buy a car from a private party, the bank will often ask for a copy of the title prior to issuing a loan. When you buy from a dealer, they do not. They issue a check payable to you and the dealer (or just to the dealer) and on the back there is a notice that endorsement of the check constitutes an agreement to record a lien in the banks favor on the title.
What happened here is that the dealer took the check, and your down payment, and failed to deliver title to you, or to record the lien. You were a victim of fraud, but the bank did nothing wrong. You still owe the bank the money you borrowed. The only involvement that the bank had in this transaction was loaning you money. They did not guarantee the title, or recommend the dealer. They just loaned you a sum of money to make a purchase.
If you loan me $ 1000 to buy a new computer system from Dell, and after I get the computer, someone breaks into my house and steals it, would you think that I should not have to repay you? Of course not! This is the same situation with the bank. They loaned you money, they want to be repaid.
Get a lawyer involved and file against the bond of the dealer. You may also want to file suit against the dealer and try to seize any assets that they may have.
Another thing the lawyer could look at is the possibility that you could have a claim under your auto insurance.The car was insured against theft, and it was in effect stolen from you.
Pay the car payments until you can get money from the bond or an insurance claim to pay the loan off. You borrowed the money and owe it. If you do not pay, the bank can sue you, and seize your assets (bank accounts) and attach your wages.
Good luck