Do I have to pay my car note if the car does not run? By S. Craig Panter

Car will not run

I still owe on this thing!

Here is the situation. You recently bought a used car at a dealership. To finance the car, you signed papers taking out a loan with a lender.

Two weeks later, the car breaks down. After having it towed to a repair shop, you learn that the car has many defects and was previously involved in a serious accident. Now, the car is only worth a fraction of what you paid for it.

Do you have to keep paying on the car loan?

The FTC Holder Rule.

The Federal Trade Commission (“FTC”) adopted the Holder Rule in 1975. The purpose of the Rule is to protect a consumer in the type of situation described above.

The FTC Holder Rule applies when a seller of consumer goods (i.e., goods for personal, family or household use) is paid, in whole or part, by having the buyer sign a finance agreement. In that circumstance, the finance agreement must contain this statement:

ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

What this means is that if the seller cheated you or otherwise sold you defective goods, you can use that as a defense to avoid paying the lender.

You may also be able to recover the money you have already paid on the loan.

The Rule applies to many types of goods.

In our example above, we used a defective car. The FTC Holder Rule, however, applies to a wide range of consumer goods, such as furniture, household appliances, and many others.

In addition, it applies to persons leasing out consumers goods as well as selling them.

Consult an attorney.

If you find yourself in a situation like the one described above, do not simply stop paying the lender. Instead, consult with a lawyer to be sure the FTC Holder Rule applies to your circumstances.

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110.

601-607-3156.

www.craigpanterlaw.com

Craig Painter