To avoid leaving customers on the hook for thousands of dollars and potentially having their credit score damaged, dealerships would be required to resolve a customer’s trade-in loan within 15 days of accepting the trade-in under a measure sponsored by Assembly members Paul Moriarty (D- Camden, Gloucester) and Annette Quijano (D-Hudson).
The bill passed the full Assembly, 72-0, on Thursday.
The impetus for the bill came from an ABC’s “7 On Your Side” story featuring two consumers who were saddled with a combined $32,093.77 in debt after their dealers defaulted on their trade-in loans instead of making the payouts.
“Consumers deserve better protection from dealers who refuse to pay off their car loan as promised,” said Moriarty. “A customer goes into a dealership, conducts a proper transaction and rides out with a brand new car believing the dealer will hold up their end of the bargain. A few months down the line, the buyer finds out the loan has not been paid and now they are responsible for two car payments. It’s unfair and, quite frankly, bad business.”
“Closing the window of time for dealers to pay off trade-in loans helps both car customers and the industry,” said Quijano. “Customers won’t have to wait for an extended period of time for their loan to be paid off and dealers can resell these vehicles more quickly since the loan is settled. It’s a win-win.”
The bill (A-1483), which has the support of both consumers and the industry, would also require the dealer to provide proof of the payment to the customer upon request. A dealer who violates these provisions is subject to a penalty of up to $1,000 for the first offense and up to $2,000 for each subsequent offense.
The measure will now go to the Senate for further consideration.