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What
is " Negative Equity"?
Simply
put, negative equity is the difference between the dollar
amount the dealer allowed for your trade-in, vs. the actual
amount owed (figured in terms of a
negative number).
So,
let’s assume you trade-in a vehicle, and the dealer
“allows” you $5,000.00 for it. Then the dealer checks your
loan payoff, and it’s $9,000.00. The difference, or
“negative equity” is ($-4,000.00)
What
happens to the negative equity when you trade-in your present
car, and take delivery on the new one?
In
this scenario, you are “upside down” (you
owe more on the car that it’s worth). The dealer will
“bury” (carry over) the
negative equity into the new vehicle transaction, and hence the
loan if paying by monthly installment contract.
So,
if you purchased a $21,000.00 vehicle, you add $4,000.00 of
“negative equity” to the sales price equation, and you end
up with a much higher car payment.
What
does this have to do with the California Lemon Law?
Plenty. When a consumer initiates and completes a lemon law
claim, the “negative equity” (negative
loan balance carry-over) is a deduction to their lemon
law refund. In the case of a replacement vehicle in lieu of
repurchase, then negative equity is not of issue.
You
can quickly see how not doing a lemon law claim, and simply trading
off your vehicle can cause massive negative equity
carry-over (a very bad thing). By
pursuing a lemon law claim, even though the negative equity is
deducted, the vehicle is repurchased, any loan is paid off, and
typically the consumer has a considerable cash refund due
to he/she by the automobile manufacturer. In almost all cases,
using the lemon law far outweighs the economic downfall of
trading in the vehicle.
An experienced
lemon law attorney in California can best assist you in doing an
“actual damages” worksheet on what your specific lemon law
situation may afford to you if successful with the automobile
manufacturer.
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The California Automobile Lemon Law Insider
1960 Deermont Road
Glendale, California. 91207
Ph: (818) 548-6070
California, law, lemon, warranty, state, statute, consumer, Los Angeles, San Francisco,
San Diego, Riverside, San Bernardino, Santa Barbara, Sacramento, Ventura, Santa Clarita, Orange County, Newport Beach, Bay area, automobile, truck, SUV, van,
rights.
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