Due to financial difficulties a financed vehicle needs to be returned. Refinancing has been tried. The finance company has been asked to reduce the payments. Were told that if vehicle was returned or repossessed, wages could be garnisheed and full financed amount would be taken, even if the company resells the vehicle.
The finance company is for one of those "buy here pay here" lots.
2007-10-12 00:48:42 · 11 answers · asked by ? 6 in Business & Finance ➔ Credit
There is no definitive answer for this query.
The first thing to look at is an alternate source of financing. Borrow elsewhere, arrange favorable terms of payment and pay off the original loan. You are likely paying very high interest to a private/self-financing company, so a bank could provide a loan at considerably less expense to you, and with lower monthly payments.
If this has been tried, and failed, then the situation is as follows:
The dealer initially obtained the vehicle at a wholesale price, perhaps did some work on it, and then sold it to you at a price that included their purchase cost, plus all repair / improvement costs and then their profit.
Your loan would cover the final sale price, plus any applicable taxes, plus interest on the entire balance. The interest would continue to accrue until the vehicle is returned, and the loan company will likely claim continuing interest until the vehicle is re-sold and the proceeds of sale are in his/her hands.
This means you may be exposed to an additional month or two of loan interest.
When the vehicle is repossessed it would be reclaimed at its current wholesale value, at best, and possibly less than that if it is determined that work is required to restore it to prime selling condition.
Note the "current wholesale value" as this may be considerably less than you paid, as these values change constantly.
Normally a repossessed vehicle can be re-sold by the company and the proceeds of the sale are applied against the loan, leaving the initial borrower (you) to pay the difference, also called balance.
There may be no legal obligation for them to sell it at the highest possible price and apply all of the sale proceeds against the loan.
You should expect there will always be a balance to be paid, for the reasons described above.
This is often required by law, but you would have to check on this in the area where you reside, as the law may not be the same where you live.
The "buy here pay here" situation is a further cause for concern, as it opens the door to unknowns, and is a greater concern after your noting they may demand the full financed amount even after a resale.
If the selling company is self-financing the loan then this law can be partly circumvented by the company selling the item to a shell company or individual at considerably less than wholesale value, and that amount would then be placed on their books and used to determine the balance demanded from you.
An additional step then could occur, which is to have the original company buy the vehicle back from the shell at their agreed price, and return it to inventory.
Alternatively, there could be two companies that work together and practice this recovery and claim of balances. In this situation the asset (the vehicle) would be shown as purchased by the second company and shifted into its assets at the low purchase price and all would appear legal, on paper.
These methods are unfair, and may be illegal, but tracing it and then determining legality can be difficult, and the onus of proof would likely fall upon you if there is no public agency to intercede on your behalf. The companies expect you to be unable to afford the costs.
You may be able to sell the vehicle privately and then apply the money received against the loan, but that will not clear the lien that is almost certainly registered against the car, so you would still have to pay the balance and the vehicle would continue to be subject to repossession from the new "owner" until the full amount of the loan is paid.
Your best bet is to speak with a lawyer in your area before doing anything else. It is imperative that you take the original sales and loan agreements with you on that visit so that the exact wording can be seen.
Follow the advice you receive from the lawyer.
2007-10-12 01:26:31 · answer #1 · answered by Ef Ervescence 6 · 2⤊ 0⤋
Unless there are provisions for returning the vehicle (and I'm sure they would only apply in the first few days) the finance company is owed the full amount. You're not really returning the car like you would a sweater, meaning you can't just take it down to the dealership and expect your debt to go away. The dealership has nothing to do with the transaction at this time, it's the finance company. The company, if they repossess the car, will sell it (at a reduced cost, possibly at auction), reduce your debt by the amount left over after the cost of repossession, then you will have to pay the rest.
If you truly cannot pay for the car, the best thing to do is sell it on your own ands try and settle with the finance company. If you have a large percentage of the debt value after sale, you may get away with it.
2007-10-12 01:01:34 · answer #2 · answered by smartsassysabrina 6 · 0⤊ 0⤋
The laws vary from state to state. Also you have to read the contract you signed COMPLETELY! You are probably going to get screwed in one way or another. Also keep in mind the finance company is lying to you. There is no way they can garnish wages unless you go to court. Even then, a judge will not garnish wages if you are trying to pay what you can. You need to save your financial statements and keep track of all your living costs (not going out to eat, etc...) in case you have to prove your ability to pay and keep it at a minimum.
You might be ably to contact your local BBB and meet with someone about the contract. At the very least, they will be able to point you in the right direction.
2007-10-12 02:18:49 · answer #3 · answered by bmcbrewer 3 · 0⤊ 1⤋
You are obligated to pay the difference of the sale price. If the vehicle sells for $5,000 and you owed $10,000, the difference is what you must pay. There are a lot of people who can just take up the notes of a vehicles who are looking for a reliable car, have income but very poor credit.
2007-10-12 01:08:17 · answer #4 · answered by Anonymous · 0⤊ 0⤋
How can you sell a vehicle that isn't paid for yet? You can't possibly have given the broker a title. I'd report the vehicle stolen, and tell the police you know who has it. Even if you've given the guy a bill of sale, he doesn't OWN the vehicle because YOU didn't own it -- the finance company still does.
2016-05-22 01:30:46 · answer #5 · answered by ? 3 · 0⤊ 0⤋
If the loan balance is $15000 and the vehicle is repossessed and sold for $10000. The difference $5000 is still your responsibility.
2007-10-12 00:55:36 · answer #6 · answered by Itsok 3 · 1⤊ 0⤋
Yup, sure can. The party borrowed money, it has to be repaid. The only way out would be if the vehicle was worth much more than is still owed (and gets the price at auction).
2007-10-12 09:34:25 · answer #7 · answered by kitkat94670 4 · 1⤊ 0⤋
Depends on your written contract and the laws that govern in your State...I would check with your attorney General in your State as to what the laws say. They cannot TAKE money from wages UNLESS they have a judgement against you
2007-10-12 00:56:22 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Have the car lot put that in writing before you return the auto then return the auto then call an attorney. I do believe that falls under consumer fraud. You can only be held responsible for what you owe before you return the auto.
2007-10-12 00:55:49 · answer #9 · answered by Linda S 6 · 0⤊ 2⤋
Yes, because you signed a legally binding contract to pay them for the car.
2007-10-12 05:43:03 · answer #10 · answered by Steve R 6 · 0⤊ 0⤋