Can I Sue a Car Dealership for Not Paying Off the Trade In?

Yes, in Maryland you can sue the dealer for not paying off your trade in. When the dealer does not pay off your trade in, and they told you they would pay off the bank loan on the trade in as part of the deal, the car buyer has many legal rights and can file a lawsuit.   

When you sue the dealership, you can seek to make them pay off the loan on your trade in, and to make them pay you for payments you made on the trade in, and other compensation for losses you suffered because of their negligence and fraud, including damage to your credit score and credit report. In Maryland, car dealers are not allowed to commit fraud to sell a car.  

You can also demand that the dealer pay your attorney’s fees. The law in Maryland, called the Consumer Protection Act, allows lawyers for car buyers to have their attorney’s fees by paid the dishonest car dealership.

The auto fraud lawyers at Whitney, LLP have experience suing car dealerships for customers who were tricked and scammed, including their trade not being paid off. We have successfully represented customers who were victims of fraud, forgery, spot delivery violations, illegally taking the car back after financing was not approved, not returning down payments, stealing the GAP and warranty money, credit application fraud, not disclosing past accidents or that it was a rental car, and other schemes.

Here are reviews from what some of our past clients have said about us, and here are some of our past settlements against car dealerships. We offer Legal Consultations. Call us at (410) 583-8000 or use our online form to get started.

Why Did the Dealer Did Not Pay Off My Trade?

The dealer did not pay off the trade in because they would lose money if they did. However, they did not want to lose the sale, so they did a scam in order to sell the new car. That scam is to sell the new car, and to make the customer think they were paying off the trade, but they really did not. Instead, they let it sit on the dealership lot until it is repossessed by the bank after the customer stops making payments because they are now making payments on their new car. 

When a new vehicle is purchased, most customers have a trade in car that they no longer want or need.  Many customers still owe money on the trade in on a loan to a bank or credit union.  If that loan on the trade in is higher than what the car dealership will offer to pay the customer for the trade in, then the difference is called “negative equity” or being “ under water.”

An example of this is a used car that the customer owes the bank $10,000 on, but the car dealership will only offer $5,000 to buy it.  The $5,000 difference between what is owed to the bank and what the dealer will pay is the “negative equity amount” or the amount that the customer is “under water.”

What is supposed to happen to the negative equity is that it is added onto the loan for the new car the customer wants to buy. However, if the negative equity is too much, or the customer’s credit score is too low, the bank may not allow the negative equity to be added.  That creates a problem for the dealership, because they still want to sell the new car, but the customer needs to get rid of the trade in.

So, they scam the customer, tell them the trade will be paid off, have them leave the trade in at the dealership, and eventually it gets repossessed. It is a dirty trick that car dealers do routinely as a business practice.

How Long Does It Take for a Dealer to Pay Off a Trade In Maryland?

Dealers have to pay off the trade quickly and before the next payment is due. As part of the trade in process, they obtain a 10 day or 14 day payoff quote from the finance company who holds the loan on the trade in.  That number gives them some time to make the payment. If they do not pay the trade off quickly, and force the customer to make another payments, the customer has legal rights and can sue.  Whitney, LLP’s attorney can help you sue the dealer at no cost to you. 

Dealers that do not pay off the trade in promptly are usually unorganized, financially in trouble, or they are not paying it off because they are scamming the customer.

Problems that arise from the dealer not quickly paying off the trade include the bank calling the customer and sending collection letters asking for the payment, the customer’s credit score going down, the vehicle being repossessed by the bank, and having collection agencies harass the customer. 

Why the Dealer Sold My Trade In But Did Not Pay Off the Loan

Dealers will also sell a customer’s trade in, but not pay off the loan.  When this happens, the customer is in a bad position due to the payments still being due, but no longer possessing the trade in, and now they are making payments on their new car.

Dealers that sell a trade but do not pay off the bank loan are in violation of Maryland law, negligent, and sometimes fraudulent, if they intended to not pay it off.

Often times it is the used car manager who wants to quickly move the trade in off the lot, and sells the trade to another customer, or to a wholesale car dealer. Once the trade in is off the lot, the dealer often loses track of it, and it can end up slipping through the cracks. The only person who pays attention to it is the customer who is now getting calls from the finance company that wants its payments.

Customers whose trade is sold by the dealer without the loan, when they were told it would be paid off, have legal rights and can recover their financial damages. If this happened to you, Whitney, LLP’s attorneys can help. 

The Bank Repossessed My Trade In After the Dealer Did Not Pay It off

Repossessions occur when a bank loan is not paid on time. Dealers know that a trade in will be repossessed if the payments are not made, but they often do not care.  All they want is to sell the customer a car.  Although they know that the repossession will hurt the customer’s credit score, and cause distress and problems, dishonest car dealers do this as a business practice.

Some dealerships are basically parking lots where trade ins sit before they are repossessed.  The bank or credit union will eventually file a repossession action against the customer, and the customer explains that the dealer told them the trade would be paid off. The bank will quickly realize that the dealership scammed the customer, and understands that the dealer basically caused the repossession to occur just so they could sell a new car.  

It is a dishonest practice that only the most dishonest and ruthless car dealerships engage in. Fortunately, customers who are victims of repossessions due to the dealer not paying off the trade can sue the car dealership for their damages. Whitney, LLP can help.

Maryland Law Prohibits Car Dealer Trade In Fraud

Maryland law prevents car dealers from committing fraud and making misrepresentations in order to make a sale. If a car dealer told you they would pay off the trade as part of the deal, and did not pay it off, they have violated the law. If so, the car buyer has legal rights, and should contact Whitney, LLP’s attorneys to discussing suing the car dealership for their trade in fraud.

Here are two Maryland laws addressing car dealer fraud and misrepresentation. Click here to read full Maryland Transportation Code Section.

1. The Maryland Transportation Code Ann., 15-312 titled “Prohibited Acts – – Vehicles Sales Transactions,” reads as follows:

(b) “Making material misrepresentations in obtaining vehicle sales contracts. – A dealer or an agent or employee of a dealer may not make any material misrepresentations in obtaining a vehicle sales contract.

(c) “Fraud – – A dealer or an agent or employee of a dealer may not commit any fraud in the execution of or any material alteration of a contract, power of attorney, or other document incident to a sales transaction.

Lawyer Near Me for the Dealer Not Paying Off My Trade In

The attorneys at Whitney, LLP have successfully sued many car dealerships in Maryland. There is no end to the illegal practices the dealer engage in, and we are very familiar with their illegal actions. 

The dealer not paying off the trade, selling the trade, and making the trade be repossessed are things we can help you with.

Whitney, LLP’s phone number is 410 583 8000, or use our Quick Contact form. Call Us for your Legal Consultation.