The Michigan Collection Law Blog has posted an article that warns consumers about a lesser known danger to your credit score. The article discusses a couple who traded in their RV, unaware that it would cripple their credit score.
When the happy couple trade in their old RV that had a lien on it from the prior lender, for a new RV, they counted on the Walt Michals to pay off the loan balance of about $180,000. That did not happen. Walt Michals went out of business without paying off the lien on the old RV and now the couple is on the hook for the old loan and the new loan. This has been financially devastating to the couple and has completely trashed their credit score because they have not been able to keep up with the old payment as well as the new one. Worse yet, they probably have no rights under the Fair Credit Reporting Act that could be used to clean up their credit score.
The article gives several pointers on how to protect yourself and avoid this situation. First, you should turn the car title over to the bank and not the dealership. The dealership shouldn’t give you any problems if they truly intend to pay off the title. If the vehicle were to suffer any damages while in the care of the dealership, your insurance should cover it. Also, if the dealership hides or transfers your vehicle, it is officially stolen since the title is not in their name.