And that's with a good economy. If there's a crash, then there will be a lot of cars theoretically eligible for repossession. At that point, though, who the fuck would the banks even sell 100,000 lightly used F-150's to?

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656044)

Car sellers are telling hard-up borrowers to have their old cars voluntarily repossessed. Lenders and borrowers are losing out.

Joyce Parks with the used Nissan Murano her family bought her after a financing disaster with two previous cars. JEREMY M. LANGE FOR THE WALL STREET JOURNAL

By AnnaMaria Andriotis and Ben Eisen

Feb. 15, 2020 5:30 am ET

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Joyce Parks was struggling to afford her Kia Soul when, she says, the dealership where she had bought it pitched her an unconventional idea: Stop making the payments.

Ms. Parks, 63 years old, says employees told her that she couldn’t trade in the Soul, but that she could buy another car. To get rid of the Soul, the dealership told her, she should have the lender repossess it, Ms. Parks said.

The trade-in, where a buyer hands a car back to a dealership and uses it as credit toward another one, is often a crucial step in car buying. But some dealerships are instead telling buyers to give their old cars back to their lenders—and selling them new ones—in a practice known as “kicking the trade.”

It is difficult to estimate how often this happens. Auto-sales veterans say the practice is an open secret in some showrooms. Broadly, vehicles are getting more expensive and Americans are struggling to afford them. Dealerships now make more money arranging financing than selling vehicles. If a car loan goes bad, it typically isn’t the dealership on the hook—it is the borrower or lender.

Kicking the Trade

A consumer already has a car loan when she visits a dealership.

Scenario 1

Scenario 2

I would like a cheaper loan.

I would like to trade in my car.

Can't do that. I will sell you another car instead.

After I sell you this new car, call the lender that you're paying for your existing car and tell them to take it back.

Loan

approval

Loan

application

Dealership gets a new lender to approve a loan for the new car. That lender doesn’t know the borrower is about to stop paying their other car loan.

Original lender

The consumer leaves the dealership with two cars, each with a loan.

Old car is

repossessed

At home, the consumer calls the lender on her original car and tells the lender to take it away.

Source: WSJ interviews and review of documents

The National Automobile Dealers Association said there is no evidence to suggest “kicking the trade” is prevalent. Dealerships “could not sustain carefully cultivated relationships” with lenders “if they were to engage in the type of behavior alleged,” a spokesman said.

Consumer lawyers say they have seen more such cases. Five years ago, “it happened two or three times per year,” said Daniel Blinn, a Connecticut-based attorney who has sued dealerships and auto lenders. “Now, we hear it at least once per month.”

Credit-reporting firm TransUnion calculates that nearly 24 million U.S. vehicle loans were originated in 2018. About 300,000 of those vehicles were repossessed within 12 months, up 17% from 2014. Such a quick souring of the loan can be a signal of some sort of auto fraud.

Why Some Car Dealers Tell Borrowers to Stop Making Payments

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Roughly a fifth of people who have had a car repossessed over the last several years take out another auto loan within a year of the repossession, TransUnion says.

Dealerships typically don’t make loans. When consumers need financing, a dealership electronically sends their loan applications to banks, credit unions and other lenders. They, in turn, decide whether to fund the loan.

Problems often begin with consumers who buy cars they can’t afford or sign loans they don’t understand. But dealerships can compound the trouble. Some dealerships are inflating borrowers’ incomes on loan applications so they can sell them bigger or more expensive cars, according to lawsuits and interviews.

When dealerships kick the trade, they typically get a lender to approve a loan for the buyer’s new vehicle. Next, the buyer generally goes home with two vehicles and two loans. It is only then the buyer asks the original lender to repossess the original car.

Connex Credit Union sued Connecticut dealership Barberino Nissan in 2016, alleging the dealership “repeatedly told customers to just deliver the keys to Connex.” Barberino denied the accusations but agreed to a settlement roughly a year ago, according to the dealership’s lawyer.

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Lenders generally say they will cut ties with dealerships that do this. Often, though, the lenders aren’t aware it is happening.

Ms. Parks, a former dietary aide in Gastonia, N.C., said she told dealership employees she couldn’t afford the used Nissan Rogue they wanted her to buy. She said she signed a bank loan for it because she felt out of options.

Ms. Parks then told Kia Motors Finance, the lender on her Soul, she wanted to return it. The dealership told her not to mention she had just bought another car, she said.

After a few months, Ms. Parks couldn’t make the payments on the Rogue either. It was repossessed too.

Ms. Parks now drives a used Nissan Murano her family bought her. Her credit score has plunged. She owes at least $15,000 on the Soul and Rogue, according to her credit report.

She is suing the dealership, Kia of Gastonia. It shut down last year. A lawyer for the dealership didn’t return requests for comment.

Joyce Parks still owes at least $15,000 on two cars that she no longer has.

PHOTO: JEREMY M. LANGE FOR THE WALL STREET JOURNAL

When a lender takes back a vehicle, it typically tries to sell it, but that is often not enough to cover the outstanding loan. Sometimes borrowers don’t realize they are responsible for their remaining debt even after they get rid of the vehicle tied to it.

Perla Amante of Hawthorne, Calif., struggled to pay for her Kia Sorento after her husband died in 2018. At her dealership’s instructions, she said, she signed a loan for a Kia Forte and then called the Sorento’s lender, Ally Financial Inc., to say she no longer wanted it.

Ally told her she would be billed for the amount left over after Ally resold the car. Ms. Amante, 70, a retiree who worked in customer service, said the dealership hadn’t mentioned this risk. She contacted a lawyer, who got the dealership to take back the Forte.

When Whitney Davis’s Hyundai Sonata was having mechanical problems in 2016, she returned to the Connecticut dealership where she bought it used.

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The dealership told her it would take the car and sell her another one, she said. But after she signed a loan for a used Nissan Altima, she was told she couldn’t trade in the Sonata, she said. When she explained she couldn’t afford two car loans, an employee told her to have the Sonata’s lender take it back, she said.

“He made it seem like it was something they deal with a lot,” said Ms. Davis, who is 29 and an office manager.

The Sonata’s lender took back the vehicle and soon informed Ms. Davis she still owed nearly $9,000. Her credit score plummeted.

An owner of the dealership, Car Nation in Middletown, Conn., pleaded guilty in federal court in December to a charge related to giving false information about loan applicants to auto lenders. Trent LaLima, an attorney for the owner, said his client didn’t cheat any car buyers and “would never have tolerated any such activity.”

The dealership has shut down. An attorney for the dealership disputed Ms. Davis’s account but wouldn’t give details.

Ms. Davis recently got a loan for a used Jeep Grand Cherokee.

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656105)

Have fun at resale

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39655989)

look at this cadillac get barely touched and get puts on its back

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656148)

I have no idea how you got stuck in grass, perhaps you dont know how to drive or you were overloaded, or had bald tires.

there are millions of salt of the earth people--not everyone is living in y'alls concrete dindu thunderdomes ("Metros")

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656895)

Stripper 2wd luxury work trucks to RAPTOR OFFROAD BEAST

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656216)

Dumb thread. XO prole fan-fiction is always interesting to read though

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39656276)

Something like an extended cab XLT 4x4 is still a pretty basic truck, but the sticker on that is $42k

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39658060)

republican denial is a hell of a thing

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39657664)

Worth noting that our credit is excellent.

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39658126)

Who is paying $1,000/month to drive a jeep wrangler?

(http://www.autoadmit.com/thread.php?thread_id=4453938&forum_id=2#39658481)