When the Car is Not Yet Fully Paid

Another reason why you should get a brand new car instead of used car - outstanding loan or unpaid bills. Imagine buying a second-hand car and years into the ownership, you find out that the previous owner has not yet paid the car in full and you are left to foot the bill.

Some car owners approach car dealers to trade the car that they already own with a new one. If there is still an outstanding balance on the car loan, the car dealer volunteers to pay for it and then proceeds to resell it. Given the current global crisis and the fact that some auto dealers are closing down, car dealers have left the new owner, who expects the car to be have been full-paid by its previous owner, to foot the bill.

According Consumers for Auto Reliability and Safety president, Rosemary Shahan, “It’s devastating for people when it happens because they have two car payments and they can’t afford them. Their credit is destroyed for no fault of their own because the dealer defaulted.” In the United States of America, for example, there has been an increase in complaints among consumers in Washington, Florida, and Iowa. Such complaints might even increase, given the global economic crises and the recession.

It is difficult for car owners who find out that the previous owners of the cars that they have bought still have outstanding loans. They can end up paying a huge amount on loans that they never knew existed. Such an amount can definitely put a strain on their respective budgets. As if difficulty with meeting the payments and keeping creditors at bay aren’t enough, the delay in payments will affect their credit score. What was previously a good credit rating will become a negative one. This is what happens when you are not fully aware of the car’s history.

There is some hope because some groups have decided to take action to protect the rights of the consumers. Some states also have programs that would oblige the car dealers to pay consumers through insurance bonds. However, this is not the case in some areas. So car owners have no choice but to file a case and hope for the best - a small amount of payment or a chance to rebuild their credit rating.

If there is any hope for owners of pre-owned vehicles, it is the fact that more groups and government officials are looking into this and taking steps to avoid such problems. Meanwhile, if you intend to purchase a car, make sure that you check the vehicle’s history and title. Ensure that there are no oustanding liens on the vehicle that you intend to purchase.