Trade-in troubles

March 21, 2008 12:31:20 PM PDT
If you're thinking about trading in your car for another one, you need to watch this Special consumer report. The Pennsylvania Attorney General's office is seeing a dramatic spike in complaints regarding an issue that could affect you. The AG believes the spike could be attributed to the country's current credit crunch.

Charles Young of Overbrook said when he bought his Kia Optima; he thought he was trading in his other vehicle. And as is customary when trading in a vehicle Charles drove his new Optima off the dealer's lot and left his Sedona van there expecting the dealer would pay the van off.

"But the problem is I'm still in debt for this 18-thousand dollars."

The dealer never paid off the Sedona van. Charles got letters and phone calls alerting him he had defaulted on the loan and the van would be repossessed!

Charles said he recorded conversations he had with the salesman at the Value Kia on Essington Avenue who handled the transaction.

Charles: "I traded this van in for a new car and they're talking about I still own the van. I'm still liable for the payment on the van."

Salesman: "No, you're not. You do not own that vehicle. Sovereign Bank owns that vehicle. Sovereign Bank is coming to pick up that vehicle. Sir, all you're responsible for is your new vehicle."

But that turned out not to be true: "I was just very hurt and disturbed. I have nightmares, it haunts me," Charles said. It haunts Charles financially; too he once had excellent credit but not anymore.

"It can really kill your credit rating because here you are not only have you defaulted on your old loan you've got another loan at a higher interest rate than the first one," said Pennsylvania's Attorney General Tom Corbett.

Value Kia is owned by Metro Auto Sales Inc. Corbett sued the company alleging this illegal practice among others. And the Attorney General's office is seeing a pattern of complaints similar to Charles Young's, a couple dozen just this year about various dealerships mostly in Philadelphia.

"They make it appear they are taking a trade-in," Corbett said.

But the old vehicles are essentially abandoned left for the original bank to locate and repossess. Meantime, Value Kia's general manager told Action News Charles was told it was too early to trade in his van and the paperwork clearly shows a trade-in was not part of the transaction. And in fact, the box where the trade-in value and lien payoff information should be listed is blank.

"I would never buy anything again unless I'm allowed two or three days to take paperwork home and examine it for myself."

Because Charles said he was misled.

"It was a total lie. I was deceived."

Value Kia did eventually settle with the Attorney General and agreed to pay restitution in the amount of 150-thousand-dollars to customers like Charles.

To avoid having this happen to you:
-Make sure the pay-off total for your old loan is included in your purchase agreements
-Do not sign any sales agreement that has missing items or blank spaces
-And finally, call your old bank or financing company to make sure your trade in has been paid off.
-If the dealer doesn't ask for the terms of your old loan, including pay-off information
-If the dealer doesn't give you time to go through each page of your sales contract carefully before signing

Also, some dealers will throw out the term voluntary repossession. That is a red flag and a clear indicator your trade-in is not going to get paid off.

Click here for more information.