Car repossession question

[bagofpucks]

Coming to the CP hive mind...

Friends of ours made an absolute horrible decision and bought a very expensive SUV and also received $8K cash back as part of the loan. 4 months later the vehicle has been repossessed. They believe they are in the free and clear since Alberta is a “sue or seize” province, but I can’t imagine they are off the hook for the cash back loan, right?

Anyways, anyone have more info on this?

[CaptainCrunch]

I think you're only free and clear if the bank can sell off the car at the full value of what's left owing, you're responsible for the rest.


Of course your friends credit rating is effectively wrecked.

[bagofpucks]

I believe that Alberta is a little different due to the sue or seize rule, but I can’t imagine they forgive the cash back.

And yah, they are screwed. It is sad, but at least they looked cool in their new SUV for 4 months.

[btimbit]

If it was just a regular car loan then yes they'd be clear of the rest, but the cash back aspect I have no idea about.

Edit: by clear obv I just mean they wouldn't have to worry about another judgement, it'll still show up on credit reports and whatnot

[blankall]

You'll need to take a look at the original loan documents.

However, a lot of the time, the cash back is actually from the manufacturer, and it's not part of a loan. It's actually just cash that the manufacturer gives you. Typically most people will put it into the down payment.

If the dealership has repossessed the car, they may not be able to pursue the debt any further under the "seizure or sue" rule.

Your friends may be correct about being free and clear here. However, their credit rating is going to be f-ed.

[OMG!WTF!]

I think they are subject to the sue or seize rule. So the finance co would very likely register the debt and claim the car. They will certain send a collection agency after them if there is a short fall but they won't ever have to pay anything more. Just my hunch though.

[lazypucker]

Just thinking out loud:

SUV originally cost $80K + $8K cash back = total loan amount $88K

Let's say $3K has been paid back to the loan over the 4 months = $85K owing still to the bank

SUV is repossessed and the bank sold it for $70K = $15K gap

So the friend technically still owes the bank $15K right now. I suppose the bank will negotiate a payment plan or send it to a collection agency...

[btimbit]

Originally Posted by lazypucker

Just thinking out loud:

SUV originally cost $80K + $8K cash back = total loan amount $88K

Let's say $3K has been paid back to the loan over the 4 months = $85K owing still to the bank

SUV is repossessed and the bank sold it for $70K = $15K gap

So the friend technically still owes the bank $15K right now. I suppose the bank will negotiate a payment plan or send it to a collection agency...

Thats all correct but since the bank repossessed the car, they aren't legally owed anything anymore. They can still send it to collections but if they tried to get a legal judgement they wouldn't get it

[Mickey76]

I am a big believer in personal responsibility etc. But as I get older I have to say I have less and less sympathy for the bank in these scenarios. How do you lend to a customer whose vehicle gets seized in four months? The bank should be forced to let them keep it for being so stupid.

[btimbit]

Originally Posted by Mickey76

I am a big believer in personal responsibility etc. But as I get older I have to say I have less and less sympathy for the bank in these scenarios. How do you get a vehicle seized in four months? The bank should be forced to let them keep it for being so stupid.

I hate people but I hate banks even more. They're barely on the legal side of stealing as far as I'm concerned

[GGG]

Originally Posted by btimbit

I hate people but I hate banks even more. They're barely on the legal side of stealing as far as I'm concerned

The subprime auto industry is based around getting people cars that they can’t afford, they make a bunch of payments and inevitably fall behind, repossess and repeat.

[bagofpucks]

Yah, the dealership and bank definitely should not have approved this at all, but in the end, our friends are the ones who signed all the papers too.

There was 100% some inflation of what these people earn as well, but again, they signed off that they made that much.

[chemgear]

Originally Posted by bagofpucks

There was 100% some inflation of what these people earn as well, but again, they signed off that they made that much.

Yikes!

[OMG!WTF!]

I'm not familiar with this world but I would also assume if they have damaged the car at all the whole concept of seize or sue would be out the window. And there is probably a very small threshold for damage when it comes to a new car.



I also don't think the 8k cash back is real money either. I'm sure if they bought it for cash they would have received a better than 8k price reduction.

[bagofpucks]

Sorry, the $8K cash back was just added to the car loan and they got the $8K in cash. When I bought a car earlier in the year the dealerships were really pushing the cash back piece of financing. It makes no sense to me, but apparently it appeals to some folks.

[burn_this_city]

What kind of SUV is it?

[bagofpucks]

Kia

[llwhiteoutll]

Originally Posted by bagofpucks

Kia

So a loaded Telluride then? Plus the $8k puts them at $63k-ish loan assuming zero down?

What are the chances they are pulling a straight scam and hoping to pocket the $8k at the expense of their credit? Already repo’d at 4 months means they probably made a single payment or two and stopped

[bagofpucks]

Pretty much. They had a trade in that might have been worth $15K, but it was financed too...so I have no idea what the total damage would be.

[bagofpucks]

No chance it was a planned scam...they are no where near that clever.