Negative Equity - Know what you're getting into before it's too late!

 Negative equity can leave you upside down and under water in a car loan, especially if your car ends up being defective.  Negative equity can be financially devastating, so make sure that you know what you are getting into before you trade in a vehicle with a loan on it.

What exactly is negative equity?  It is created when you owe more on a vehicle than it is worth, trade the vehicle in, and then roll the balance of the loan into another vehicle purchase.  Here is an example: You decide to trade your vehicle in on a newer model.  The loan payoff is $20,000.  However, your value is only worth $15,000.  You have negative equity of $5,000.  And, in most instances, even if the dealer tells you that they are paying off your loan, the dealer will add that $5,000 to the purchase price of your new vehicle.  As a result, your loan and your monthly payments for the new car will increase.  And, the longer the loan, the longer it will take to reach positive equity in the vehicle.

Understanding how negative equity works in a vehicle trade-in can help you make a better informed choice about purchasing and financing a car, and help you know when a car dealer's ads or statements regarding your trade-in are misleading.

Here are some tips to help you avoid negative equity:

1. Find out what your vehicle is worth before starting negotiations with the dealership.  You can go to websites by Kelly Blue Book, Edmunds, or NADA, or take your vehicle to your local CarMax for a written appraisal.

2. Consider holding off on the purchase of the new car until you have paid down the loan on your current vehicle to an amount close to its projected trade-in value.  You may even want to pay a bit more monthly on the principal to speed up the process.

3. Read the purchase contract very carefully and ask the dealer how the negative equity is being treated in your purchase.  If the dealer tells you that it is paying off the loan on your vehicle, but they are really making you pay the negative equity, then it will be included on your sales contract.  The negative equity might appear in a "negative equity disclosure" box which states that it was added to the purchase price, it may be an itemized addition before the final "out the door" price, or it may be calculated by addition of the loan payoff to the purchase, less the trade-in allowance that the dealer is really giving you for the car.

Beth Wells

www.BurdgeLaw.com

www.OhioLemonLaw.com

www.KentuckyLemonLaw.com

Helping Consumers Get Rid of Lemons, 12 Years Running

Transmission Problems with your Ford Truck or Sedan?

Do you have a Ford truck or sedan?  Does your Ford truck or sedan hesitate or shudder on acceleration?  According to the National Highway Traffic Safety Administration reports, and my own experience litigating lemon law cases, you are not alone!

Is your repairing dealership telling you that they cannot find a problem, or that the problem you are having is normal operation?  If your answer is yes, don't lose hope!  Continue to take your Ford truck or sedan in for repairs.  Keep a diary in the car of when the problem occurs and what happens.  If you have any near miss accidents, make sure to include those. Obviously, wait until your car is parked and you are in a safe location to make the diary entry.  These diary entries may help you get some traction at the dealer.

Still having problems after 4 repair attempts?  You may want to call Ford direct and ask Ford to take your vehicle back and give you your money back or to make it right in some other way.  Make sure to tell the Ford representative about your diary, near accidents, and repeated repair attempts.  If the vehicle makes you feel unsafe to drive, then tell the Ford representative so!

Ford still won't do anything?  If the vehicle was purchased or repaired in Ohio or Kentucky, then you can call Burdge Law Office on our Toll Free Hotline, 1.888.331.6422, to see if we can help you out of your "lemon" vehicle.

Beth Wells

www.BurdgeLaw.com

www.OhioLemonLaw.com

www.KentuckyLemonLaw.com

Helping Consumers Get Rid of Lemons, 12 Years Running

KNOW YOUR RIGHTS: You Have the Right to a Written Auto Repair Invoice in Ohio

I recently had a car dealer tell me that their service department is so busy that they just don't have time to write out service invoices for vehicles that they repair.  In fact, the dealer went on to tell me that it was actually their practice NOT to document any repairs that they perform.

I was blown away.

In Ohio, when you take your car in for repairs or services of any kind, the Motor Vehicle Repairs and Services Rule, OAC 109:4-3-13, requires that the repair shop to document any repairs or services in writing.  Specifically, OAC 109:4-3-13(A)(12) makes it a deceptive act and a violation of the Ohio Consumer Sales Practices Act, RC 1345.01 et seq for a repair shop to fail to provide a consumer with a written itemized list of repairs performed or services rendered in any consumer transaction involving the performance of any repair or service upon a motor vehicle.

So, if you have your car repaired or service, and the repair shop refuses to give you a written

list of repairs that they performed or services that they rendered, the repair shop is violating Ohio law.

What can you do?  One option is to report the violation to the Ohio Attorney General, or to the Better Business Bureau.  Click here to access the Ohio Attorney General's Online Complaint.  Click here to access the Dayton Better Business Bureau website.  If you are somewhere else in Ohio, click on change your location, and you can get to your local Better Business Bureau website.

Why is it important?  Documented repairs are extremely important.  If you end up in a dispute with the dealership or the auto manufacturer about your car, the written repair invoice will be your evidence that the repairs or services occurred.  If you end up having a dispute with the manufacturer and they demand oil change receipts from you as a prerequisite to warranty coverage for the repair, written invoices of all oil change services will also be essential.  Documented repairs are important for a host of other reasons, too.

So, know your rights.  And, if a repair shop refuses to give you a written invoice documenting repairs or services performed to your car, tell them that they are required to do so under Ohio law!

Beth Wells

www.BurdgeLaw.com

www.OhioLemonLaw.com

www.KentuckyLemonLaw.com

Helping Consumers Get Rid of Lemons, 12 Years Running

Purchasing A Vehicle Online?

Found a vehicle at an amazing price online?  Wonder if it is too good to be true?  It might be, so make sure to do these four important things before purchasing it.
  

1. Print and save the online advertisement.  Many care dealers quickly delete their advertisements after the vehicle is sold, so you want to save your evidence in case something goes wrong.  This way, if you get involved in a legal battle with the dealership, you will have proof of the representations that the dealer made about the vehicle in writing.


2. Pay to have the vehicle inspected by a local dealership.  Many people want to save the money and trust what the dealer tells them about the vehicle.  However, if you are purchasing the vehicle online out of state, it is much easier for the dealer to unload a "lemon" vehicle on you, and much harder for you to get the dealer to take it back after the fact.  The logistics of an online purchase can be a nightmare if the vehicle has problems at delivery, so spend the extra money to make sure that the vehicle is reliable and as advertised.  How do you choose an auto shop to inspect?  The best bet is an authorized dealer.  They will know the vehicle better and have access to information from the manufacturer that a local shop will not.  Spend the extra money.  It is worth it in the long run on such an expensive purchase as a motor vehicle.

3. Get a CarFax Vehicle History Report. A CarFax Vehicle History Report will  list all reported repairs and accidents, and will show the title history string.  While the report will not have unreported repairs or unreported accidents listed, getting a CarFax Vehicle History Report is still much better than going into a motor vehicle purchase blind.  To get a CarFax Vehicle History Report at www.carfax.com. 


4. Get all promises in writing. Car dealers love to make promises to buyers to get them to purchase a car, but aren't very willing to put those promises in writing.  If the car dealer won't put the promises in writing on what is called a "we owe" form, then there's probably a reason.  In other words, good car shopping.

Unfortunately, none of these things are completely foolproof-- there is always a risk that the salesman is lying and you won't catch him until its too late.  However, if you are going to make an online purchase anyways, make sure to do your homework so you aren't fooled!

Beth Wells

www.BurdgeLaw.com

www.OhioLemonLaw.com

www.KentuckyLemonLaw.com

Helping Consumers Get Rid of Lemons, 12 Years Running