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Failed trade-ins wreak havoc on credit scores
Greg Gerber RV Daily Report October 26, 2009 09:30
BELLEVILLE, Mich. -- When Robert and Donna Zarb traded in their 2005 recreational vehicle for a newer model last year, they said Walt Michal’s RV Superstore in Belleville promised to pay off the loan on their old RV.
But the store never did. The dealership now is out of business, leaving the Waterford couple on the hook for the $179,700 balance on their trade-in, plus the $256,874 cost of the new RV.
Now, the Zarbs and an Ypsilanti couple, also stuck with an outstanding $113,266 loan on an RV they traded in last year, are suing Walt Michal in Wayne County Circuit Court in an uphill battle to force him to pay off the debts.
But consumer experts say the Michigan couples are among thousands of people nationally whose trade-ins weren’t paid off as promised by dealerships — many of which went out of business during the recession. The problem is known as car-kiting.
It’s unclear how serious the problem is in Michigan because the two state agencies that handle such incidents -- the attorney general and secretary of state offices -- said they don’t code complaints in a way to identify such cases.
However, Southfield consumer lawyer Adam Taub, who has handled a half-dozen such cases over the past few years, said: “The problem is more common than people might think. ”
Although failing to pay off the outstanding loan when required by a purchase agreement is illegal, consumer experts say prosecutors rarely charge dealers with a crime, forcing consumers to sue to get their money back.
Greg Gerber RV Daily Report October 26, 2009 09:30
BELLEVILLE, Mich. -- When Robert and Donna Zarb traded in their 2005 recreational vehicle for a newer model last year, they said Walt Michal’s RV Superstore in Belleville promised to pay off the loan on their old RV.
But the store never did. The dealership now is out of business, leaving the Waterford couple on the hook for the $179,700 balance on their trade-in, plus the $256,874 cost of the new RV.
Now, the Zarbs and an Ypsilanti couple, also stuck with an outstanding $113,266 loan on an RV they traded in last year, are suing Walt Michal in Wayne County Circuit Court in an uphill battle to force him to pay off the debts.
But consumer experts say the Michigan couples are among thousands of people nationally whose trade-ins weren’t paid off as promised by dealerships — many of which went out of business during the recession. The problem is known as car-kiting.
It’s unclear how serious the problem is in Michigan because the two state agencies that handle such incidents -- the attorney general and secretary of state offices -- said they don’t code complaints in a way to identify such cases.
However, Southfield consumer lawyer Adam Taub, who has handled a half-dozen such cases over the past few years, said: “The problem is more common than people might think. ”
Although failing to pay off the outstanding loan when required by a purchase agreement is illegal, consumer experts say prosecutors rarely charge dealers with a crime, forcing consumers to sue to get their money back.
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