Loan payoff by dealership on RV trade-in Options

[canthony]

We want to share a situation that we are having with the purchase of our new motorhome. We traded for a new motorhome Nov 19, 2008 while wintering in Summerdale, Alabama. We financed our transaction on our own through Pen Air Federal Credit Union. Otherwise, we did not use the dealership to get our financing, although they did recommend Pen Air. Anyway, we borrowed the money for the difference between our trade and the new vehicle, along with enough money to payoff our tradein. Pen Air provided us a check payable to myself (and wife) and to the dealership. Pen Air used the purchase agreement that we and the dealership had signed to come up with the amount of money we needed, i.e., difference, our trade-in payoff, and even the sales tax. Well, it is now mid Feb 09 and the payoff still has not been made. We have hounded the dealership on numerous occasions. We made a payment on our trade-in for november which the dealership reimbursed us for, then Dec still no payoff, so I went to the dealership and they made that month's payment. At first things started off with they were behind administratively, and that our payoff would be made. Well, in Jan 09 I kept hounding them and they made Jan's payment, and about a week later they overnighted the payoff. Finally, we were seeing the light at the end of the tunnel. A few days after they overnighted the pay off I went on line and seen that the payoff had been made. I was so relieved. We even received a letter from the bank congratulating us for paying off our loan. Just for the heck of it I went on line to check our account and found out that the payoff had been reversed. When I asked what had happened they said that the dealership's check had bounced for insufficient funds. I immediately went back to the dealership, not a very happy camper at this stage of the game, wanting some answers. Well, now they are telling us that they will send a payment electronically, for the month of Jan until they could rectify their apparent cash flow problem by the end of the following week. I waited a few days and called to speak with the owner (that's who I've been dealing with), and she was not available, however, I spoke with her son, and he stated to me that his mother, the owner, was currently with lawyers discussing filing bankruptsy. Also, that they would not be performing any warranty work. We've been waiting over a month for parts. Now it looks like we won't even get any warranty work done.

Now, to compound this situation even further, the dealership has already sold our tradein (sold the first day it arrived on the lot). I've been talking with the people that bought it and they are also not happy campers. By the way they also done their financing through Pen Air and Pen Air is wanting the title to our tradein. The new owners of our tradein paid their sales tax and was able to register the vehicle in Illinois without the title. A new one on me. More complications, the people that purchased our tradein also had a tradein, and it has been sold. From talking with the new owners of our tradein, the people that bought their rig is having problems too. By the way, this is a fairly major dealershp that I'm told has been in business for some 35 year.
Oh, Pen Air did get the title to our new motorhome, however, when I called Springfield, Illinois the actual check that our dealership sent them had not been processed. So, who knows, that check may even bounce.

Sorry this is so lengthy, but didn't know how to make it any shorter and get our point across. There's even some more stuff that I haven't even mentioned in here. I can only say, buyers beware. I asked Pen Air why they didn't just make the payoff and they said they didn't do that, that the dealership has to do that. Bunk! Of course I know that it has always been that way, dealership pays off tradein. Not in this day and age with the economy the way it is. Dealerships will do whatever they can to save their butts. Hey, any advise or info any of you have would be greatly appreciated. I do have an appointment to see an attorney next week. He has already told me that this is a mess.
I hope that by reading this horror story others will be careful in their transactions with RV (or any other) dealerships.

canthony

[Bill B]

I think that I would be at the lawyers filing a credit lien against the dealership tomorrow (Monday, President's Day, bank and Courts will be closed but the lawyers, I don't know??) morning. If they are in bankruptcy proceedings, you might end up owing on both units. I'm surprised that Pen Air cut the a single check for everything and not 2 checks, one for the new unit with you and the dealer and number 2 to pay off the old unit with you and the bank.

I would also be looking at suing for a rebate of the expected cost of future warranty work and either get a side warranty policy or gamble. Part of the cost of the new unit went to pay for that service.

I am NOT a lawyer and this is just an opinion.

[Rif]

The really ugly part of this is that it is going to cost you a lot no matter what. Attorneys are not cheap either, but I don't know what other alternative you have. Thanks for posting about this. Maybe it will keep someone else from getting into the same situation. At this point in time I don't think I would trust any RV dealer. Period.

[Walkerl]

I am not familiar with Alabama but in California it is by far best to IMMEDIATELY contact an enforcement agency. There are some CRIMINAL violations rolled up in this tranaction and if it is allowed to remain a civil matter and they file for bankrupcy then you will be responsible for the payoff. The enforcement people will probably want to make it a civil case but if it is filed criminally, it does not preclude you from also filing a civil action.

If you can persuade the enforcement peopla to file it as criminal, then someone can go to jail and it is amazing how it once again becomes important to them. At criminal trial their job is not to collect your money but to punish the offender. However, it is usually possible to negotiate a plea bargain that makes restitution a condition of their probation. Then if they don't pay, they go back to jail and you still have the Civil action available.

I have seen this happen a multitude of times and as you say it is ALWAYS a real mess. Look for any/all leverage you can get. Unfortunately, many times these things get charged off to just bad business practices (which is not illegal) and the dealer can walk away from the whole mess with little or no pain (and if (s)he chooses - with a lot of money).

Good luck

Walkerl

[LindaH]

I agree: 1) Get a lawyer, 2) Call the AG's office in the purchase state

[Tennessee Travel...]

Hope you have the title for the new one - - - suspect this dealer hasn't paid the floor plan lien holder for that one either! The others are right, file a criminal complaint with the County DA's office, the dealer sold your old unit out of trust - - - thats criminal!


Denny

This post has been edited by Tennessee Traveler: Feb 15 2009, 05:57 PM

[Kirk]

My wife, a former loan officer, states that the bank has no interest in, nor right to pay off the old loan since it was no part of the loan agreement. The total loan principle is secured by the new RV, alone. Most loan officers do not make loan money available to the seller without the title, or the MSO (manufacturer's statement of origin) in their possession. The MSO is what you get for a vehicle that has not been titled yet. In that case, the bank then sends through the MSO for issuing of the title and so has it as soon as it has been issued. More than likely the "check" was actually an envelope draft, which is only paid by the bank when it is returned with the title or MSO inside.

The loan on the RV traded in is a separate issue from those problems with the new loan. The lender on the new loan has no reason to be involved in any payment of the original loan, nor any interest in it. If the dealership has now filed bankruptcy then you may have a really major problem. While criminal charges might well be filed and conviction result, it will not relieve you of the liability for the two loans. That is an entirely different issue. The problem arose from having trusted a sales organization.

It is time to listen to the advice of your attorney and keep the fingers crossed!

[RayIN]

An ugly mess to be sure. Hope you get it resolved to your satisfaction.

[Rex]

RV dealers in Alabama are licensed like auto dealers. You need to file a complaint with the Alabama Attorney General's Office ASAP.

[Kirk]

After Pam read this thread, and also some discussion, she suggests that this story is one to be considered by every person who is considering a purchase of any major kind in the current economy. The fact is that many long time businesses are in serious trouble as are many lenders. In a sales organization, where lying to the customer has always been a part of business, one needs to be especially careful because building trust, whether justified or not, is a part of the trade and most professional sales people are very good at it. When scrambling to save a business, many owners or managers who are normally honest and ethical will become desperate and do things which are not proper, in the belief that they will be able to find some way out and cover their questionable moves before they are caught. Desperation brings out the very worst in many people. It has become a time of "every person for himself."

Clearly the money sent by the new RV lender to the dealer was enough to pay off the note on the old loan as well as the money he owed to the RV manufacturer for your new RV. Also this dealer was in trouble with other creditors and they used the proceeds of your new loan to pay other bills, rather than your original loan on your trade-in.

The person who bought your trade-in does not have a title to it as the original lean holder still has it. That means that he can not sell the trade and more than likely it will be repossessed by the original lender. In all likelihood, the original loan that you had will remain your responsibility unless that lender is able to sell the trade-in for enough to pay the balance. With the dealer in bankruptcy, they may well be shielded from any action by that buyer for recovery of any down payment.

Where your difficulty comes in is that you are the one who signed for the note on the RV you traded in and as such any repossession actions will reflect on your credit record, since they had no part in the trade or sale of that unit. On the new RV you should be in good shape since Pen Air would not have made payment unless they had the required paperwork to get a title issued. On the warranty work, contact the manufacturer of your new RV and ask them what needs to be done. Unless that manufacturer is in trouble, they should be willing to support any warranty work through some other dealer. In all probability, your dealer has past due bills for parts and that is the reason he has not been able to do your warranty work.

[canthony]

After Pam read this thread, and also some discussion, she suggests that this story is one to be considered by every person who is considering a purchase of any major kind in the current economy. The fact is that many long time businesses are in serious trouble as are many lenders. In a sales organization, where lying to the customer has always been a part of business, one needs to be especially careful because building trust, whether justified or not, is a part of the trade and most professional sales people are very good at it. When scrambling to save a business, many owners or managers who are normally honest and ethical will become desperate and do things which are not proper, in the belief that they will be able to find some way out and cover their questionable moves before they are caught. Desperation brings out the very worst in many people. It has become a time of "every person for himself."

Clearly the money sent by the new RV lender to the dealer was enough to pay off the note on the old loan as well as the money he owed to the RV manufacturer for your new RV. Also this dealer was in trouble with other creditors and they used the proceeds of your new loan to pay other bills, rather than your original loan on your trade-in.

The person who bought your trade-in does not have a title to it as the original lean holder still has it. That means that he can not sell the trade and more than likely it will be repossessed by the original lender. In all likelihood, the original loan that you had will remain your responsibility unless that lender is able to sell the trade-in for enough to pay the balance. With the dealer in bankruptcy, they may well be shielded from any action by that buyer for recovery of any down payment.

Where your difficulty comes in is that you are the one who signed for the note on the RV you traded in and as such any repossession actions will reflect on your credit record, since they had no part in the trade or sale of that unit. On the new RV you should be in good shape since Pen Air would not have made payment unless they had the required paperwork to get a title issued. On the warranty work, contact the manufacturer of your new RV and ask them what needs to be done. Unless that manufacturer is in trouble, they should be willing to support any warranty work through some other dealer. In all probability, your dealer has past due bills for parts and that is the reason he has not been able to do your warranty work.

[canthony]

Hey, we really appreciate all of the good information on our situation. I spoke with the people that purchased our tradein and they have contacted Pen Air and from what they were told, a lawyer from Pen Air and a bank rep is going to confront the dealershiip to see if they can find out for sure what's going on. This situation could come down to us owing on our tradein and after it gets repossessed (if that's what happens), the people that purchased our tradein will be obligated to Pen Air for their loan too.What a mess. I do know that Pen Air has the title to our new unit.

Now, I'm dealing with another hurdle. The dealership took care of sending in our application for title and registration (they offered to do this since we are out of state purchasers). They got the proper documents/forms needed for this process from the Illinois Department of Revenue. Knowing that the dealership was late in sending in these documents along with a check for our sales tax, I called and spoke with a person in the sales tax department to see how much penality I would have to pay. I think it was around 4% for the first thirty days and then it goes to around 12% after 60 days. Another ouch if your sales tax are not paid on time. I provided this individual with the MV number off of the tax form and he stated that they had the check for the sales tax, however, it had not been processed. I asked him how come they would issue a title and registration without processing the tax payment. He said that's the way they did it. I just tried calling Springfield and was on the line waiting for darn near an hour and couldn't get a rep on the line. Didn't want to use all of my cell minutes up. Will try again tomorrow. My concern now is, if the check bounced on the payoff, maybe that tax check will bouncetoo. I sure hope not. That would really be the straw that breaks the camel's back.

This situation is getting more serious each minute. I do have an appointment to see an attorney. The quickest I could get the appointment forwas Thurday.I called the County Sheriff's office and filed a complaint, but to be honest with you, he didn't think it would do much good. The deputy said that he would turn it in to the investigators to see what they thought. I sure hope that this situation doesn't cause us to file bankruptsy. We are looking at all options. Can't afford two RV payments. We are not giving up. Keeping our fingers crossed that the attorney will be able to give us some good news. We sure need it.

I wanted to make mention of this sales tax situation to give other buyers a heads up for their future transactions.

[canthony]

Hey, we really appreciate all of the good information on our situation. I spoke with the people that purchased our tradein and they have contacted Pen Air and from what they were told, a lawyer from Pen Air and a bank rep is going to confront the dealershiip to see if they can find out for sure what's going on. This situation could come down to us owing on our tradein and after it gets repossessed (if that's what happens), the people that purchased our tradein will be obligated to Pen Air for their loan too.What a mess. I do know that Pen Air has the title to our new unit.

Now, I'm dealing with another hurdle. The dealership took care of sending in our application for title and registration (they offered to do this since we are out of state purchasers). They got the proper documents/forms needed for this process from the Illinois Department of Revenue. Knowing that the dealership was late in sending in these documents along with a check for our sales tax, I called and spoke with a person in the sales tax department to see how much penality I would have to pay. I think it was around 4% for the first thirty days and then it goes to around 12% after 60 days. Another ouch if your sales tax are not paid on time. I provided this individual with the MV number off of the tax form and he stated that they had the check for the sales tax, however, it had not been processed. I asked him how come they would issue a title and registration without processing the tax payment. He said that's the way they did it. I just tried calling Springfield and was on the line waiting for darn near an hour and couldn't get a rep on the line. Didn't want to use all of my cell minutes up. Will try again tomorrow. My concern now is, if the check bounced on the payoff, maybe that tax check will bouncetoo. I sure hope not. That would really be the straw that breaks the camel's back.

This situation is getting more serious each minute. I do have an appointment to see an attorney. The quickest I could get the appointment forwas Thurday.I called the County Sheriff's office and filed a complaint, but to be honest with you, he didn't think it would do much good. The deputy said that he would turn it in to the investigators to see what they thought. I sure hope that this situation doesn't cause us to file bankruptsy. We are looking at all options. Can't afford two RV payments. We are not giving up. Keeping our fingers crossed that the attorney will be able to give us some good news. We sure need it.

I wanted to make mention of this sales tax situation to give other buyers a heads up for their future transactions.

[canthony]

It's me again. Since I was unable to make contact with the Illinois Department of Revenue I thought that I would call the dealership and speak to someone in their accounting area. Well, I was able to speak with someone whom I've spoken with in the past. Anyway, I told her my concerns about that sales tax check and ask her to see if their records show whether or not the check cleared their bank and she said that she needed a few minutes to check. Anyway, she called me back with the number of the check and the date it posted. So, unless she's not telling me the truth, maybe that hurdle has been overcome.

Also, I called another attorney's office to see if they could do something for me TODAY. They took a bunch of information and are supposed to call me back TODAY. I told them that this situation is urgent, since the dealership is pursing bankruptsy. From talking with the person at the dealership she said that the owners were meeting with lawyers today and tomorrow. Anyway, I mentioned about the credit lien filing and they seemed to be positive about that. They also mentioned something to the effect that dealerships have a specified time within which they must pay off tradeins. Will know more, hopefully when they call back. Trying to get a face-to-face with an attorney.

I just hope that my situation will help others in the future. And you know, I've learned a lot from all of your comments. Thanks.

[Kirk]

canthony,

It is good to hear some good news for a change. I would stay on top of that part but it does seem hopeful.

All of this, and our Congress wonders why people are not buying major purchases?

[HBarlow]

Back in late 1994 I traded an '80s Airstream for a 1993 34' triple axle Airstream at one of the pioneer Airstream dealers in Texas and the nation, Land Yacht Trailer Sales in El Paso, TX. I owed a balance on the '83 Airstream which had been financed by Navy Federal Credit Union. The contract provided for Land Yacht to take the older Airstream in trade and pay off the unpaid balance.

A few weeks after I took delivery of the newer Airstream I received a statement from NFCU showing I still owed the full balance on the note. I called NFCU and determined that NFCU knew nothing about a payoff by Land Yacht.

On reflection I realized that Land Yacht was then a second generation business and had seemed very eager to complete my transaction. The founder had passed on and his adult son and daughter were running it and each of them, with their families, plus the founder's widow were all trying to extract a living from a dealership that was experiencing a decline in sales due to the growing popularity of fifth wheel travel trailers.

I called Land Yacht and spoke to the daughter who was sales manager and the person I had contracted with. Her explanation and promises didn't seem credible to me and I was concerned. I politely but firmly advised her I would wait 72 hours then call NFCU again to determine if my loan balance had been paid off. If not, I advised her, I would assume fraud and my next phone calls would be to the El Paso County District Attorney and the Texas Attorney General. When I called NFCU a few days later my balance was paid in full.

About a year later Land Yacht Trailer sales closed their doors for the last time. It was the sad end to a once proud high volume Airstream dealer.

I would encourage canthony to contact the local district attorney who has jurisdiction in the area of the selling dealership as well as the state attorney general's office. Time might be of the essence.

This post has been edited by HBarlow: Feb 19 2009, 05:54 PM

[Rex]

canthony, perhaps I can be a bit more help than my previous post. I live in Foley, AL just south of Summerdale, and would be glad to check the dealership for you to see if they in fact look like a viable going business. Perhaps what they are telling you about filing for Bankruptcy is just smoke. You can post their name here, or to me directly rbdtanasi@yahoo.com and I will check them out. There are several real dealers in this area, and several that pop up for a few months and then are gone.

From what you have said about the transaction, I think they may be guilty of Fraud, and have broken state and possibly Federal Laws. I still feel you should contact the Alabama State Attorney General's Office and file a complaint, or at least discuss this with them. If they get involved, you may be surprised how fast this gets resolved.

[motojavaphil]

Canthony,

I know this will not help but we recently had a major Chrysler Dealer go under in Albuquerque. Very similar problems have happened to people who traded in cars. As a lay person I would have thought a trade-in would become an asset or liability to the dealer and you would be free and clear. The contract is yours until satisfied/paid off. We sure trust dealers a bunch considering we blindly give them our asset/RV with no credit check or recourse and assume more debt after going through giant hoops to achieve a loan for an RV. Like many other things we need to do business differently as this situation stinks and is rife for theft. In these times I can only say trust no one when it comes to money. I am really sorry this happened to you as this should have been a happy time for you.
Phil

This post has been edited by motojavaphil: Feb 20 2009, 10:48 AM

[jjwicklund]

Canthony,

I know this will not help but we recently had a major Chrysler Dealer go under in Albuquerque. Very similar problems have happened to people who traded in cars. As a lay person I would have thought a trade-in would become an asset or liability to the dealer and you would be free and clear. The contract is yours until satisfied/paid off. We sure trust dealers a bunch considering we blindly give them our asset/RV with no credit check or recourse and assume more debt after going through giant hoops to achieve a loan for an RV. Like many other things we need to do business differently as this situation stinks and is rife for theft. In these times I can only say trust no one when it comes to money. I am really sorry this happened to you as this should have been a happy time for you.
Phil

Oh great looks like we'll have to close auto and rv purchases in escrow now!

Canthony I hope everything works out to your satisfaction.

[canthony]

Oh great looks like we'll have to close auto and rv purchases in escrow now!

Canthony I hope everything works out to your satisfaction.