Bamboozled May 2, 2016: When a car dealer doesn’t pay off a trade-in’s loan

When buying a vehicle, it’s common for the dealership where you’re making a purchase to pay off any remaining loans or leases on your current vehicle, or your trade-in. That’s because the dealership wants the sale, and consumers are usually happy to have someone else take care of the payoff.

That was the agreement offered to Miguel Claussell when he bought a vehicle at Cars on Route 21 in Newark.

But the payoff on his trade-off hasn’t happened yet, Claussell said, and he asked Bamboozled for help to end the runaround.

The dealership said it hasn’t done anything wrong, and the dispute is more a matter of bad timing on the finance company’s side.

Here’s what happened.

Claussell purchased a 2009 Toyota Camry for his wife, but she wasn’t comfortable with the manual transmission.

He said he didn’t want to return the car to the dealership, so he went shopping four days later to a different dealer — Cars on Route 21.

Claussell said he was greeted by a sales associate, and they were soon joined by Tino Rodrigues, the sales manager. They proceeded to work out a deal for Claussell to trade in the Camry for a used Honda Accord.

“I mentioned that I would take their Honda if and only if my car is paid off before the 11th of April,” Claussell said.

That’s the day his payment to the financing company, Gateway One, was due.

The sales associate and Rodrigues said that would be fine, Claussell said.

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When they sat down to do the paperwork for the sale, Claussell said, the employees were not giving clear answers about the loan payoff on the Camry.

“Worried and concerned, I decided to push the issue, ‘At what point will we call Gateway for a payoff quote?'” Claussell said. “I was told that as  soon as we finish the paperwork we would call, but never happened.”

Rather than have the correct payoff amount, the contract shows the purchase price on Claussell’s receipt for the Camry as the number they used.

Later that evening, Claussell said, he brought the dealer the loan account number with Gateway, and he again asked them to call for a payoff amount.

They said they would take care of it, he said.

Claussell returned the next day because he felt the dealership wasn’t concerned about paying off his old loan.

“[Rodrigues] said I need not to worry about the car because it belonged to them and that I no longer am responsible for it,” he said.

boozle_UnpaidCar_miller_11.JPGMiguel Claussell says Cars on Route 21 hasn’t paid off the loan on his trade-in.

Claussell said he called again on March 21, and again he was told not to worry.
After a week, he called Gateway for an update, and he learned the loan still hadn’t been paid off.

So on March 31, Claussell asked a police officer to escort him to the dealership “just to be on the safe side and hopefully push for reconciliation.”

The manager said he was wasting his time and the police officer’s time, Claussell said. But at least he learned Cars on Route 21 did finally call Gateway to get the payoff amount, so things seemed to be moving in the right direction.

But by April 7, three days before the car payment was due on the Gateway loan, the loan was still open.

So Claussell returned to the dealership, again with a police escort, and spoke to Rodrigues, he said.

“He said not to make the payment because my car was paid off,” Claussell said. “He proceeded to walk to his office and bring back a copy of check No. 5427, signed and illustrating the payoff amount.”

Claussell wasn’t confident because Gateway had just told him that it still hadn’t received the payoff.

April 11 came and went, and Claussell didn’t make the his loan payment, hoping Cars on Route 21 would come through as promised.

On April 18, he called Gateway again.

This time, it reported it had received a check. It was check No. 5450, not check No. 5427, and the check was unsigned. Gateway said it had to return it to Cars on Route 21.

So Claussell called the dealership again, but he couldn’t get through to the financing office or owner David Pereira. He tried to reach Rodrigues also, but Claussell said Rodrigues wouldn’t take his calls.

“I have never been late with any payment and this situation really has me concerned and frustrated,” he said.

FOLLOW THE MONEY

We left messages and sent emails to owner David Pereira and manager Rodrigues.

While we waited for a response, we took a closer look at the company.
Public records showed 19 lawsuits against Cars on Route 21. Twelve resulted in judgments, three were settled, two were dismissed, one went to trial in favor of the company and one is still active. The active one happens to have been filed by NJ.com surrounding an advertising dispute.

Cars on Route 21 also had nearly $550,000 of tax judgments against it between 2012 and  2015. Public records show the tax judgments have been paid.

The Division of Consumer Affairs has “approximately nine” complaints against the dealer.

“The basic allegations include defective merchandise, pricing, contract dispute, billing/billing scheme, failure to provide title, and unsatisfactory service/poor customer service,” a spokeswoman said. She wouldn’t elaborate on what “approximately nine” meant.

The company also has an F rating with the Better Business Bureau. The business didn’t respond to eight of 14 complaints received in three years, BBB said.

After we left another message for the company, Rodrigues gave us a call.

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He said that because Claussell’s trade-in was purchased recently, the financing company didn’t yet have the title and it couldn’t process the payoff check.

That could be the reason for the delay, he suggested.

“We sent a check in before the due date for the payoff but unfortunately my secretary forgot to sign the check,” Rodriguez said. “The check came back and we sent another back.”

He said it was mailed between April 15 and April 18.

We said Gateway reported to the consumer that it hadn’t received a check yet.

Rodrigues said couldn’t speak for Gateway, but said again the delay could be because the financing company didn’t have the title yet.

“We have issues sometimes,” Rodriguez said. “A lot of times we are doing the right thing but other times something else causes things to go down, and that’s what happened here.”

Claussell checked with Gateway again, and still, no payoff was received.

He asked Gateway about the title and how that could impact the processing of the loan payoff.

“I asked Gateway even if they didn’t have the title, can the dealer still make the payoff? And they said yeah, even if they don’t have title, the loan can still be paid off,” he said.

Claussell said he didn’t understand why Rodrigues was making an issue of the title, especially because the Sentry dealer told him Gateway had the title within three days of the purchase.

Gateway didn’t respond to our requests for clarification.

We went back to Cars on Route 21 to report the check still hadn’t arrived. We also asked for the check number or a tracking number for the payment, but Rodrigues didn’t return our detailed messages.

So Claussell continues to wait. With two car payments.

Staff researcher Vinessa Erminio contributed to this report.

Have you been Bamboozled? Reach Karin Price Mueller atBamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. FindBamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com. Stay informed and sign up for NJMoneyHelp.com’s weekly e-newsletter.

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