Summary: Negative equity is the surplus debt we acquire when buying back the lemon car. Consumers must understand this part of the law and know the appropriate solution to it. Here Allen Stewart has highlighted some crucial information on the effects of negative equity on buyback under lemon law for new car in California.
The term negative equity is defined as owing more in the finance for purchase or lease than the actual worth of the vehicle. It is also otherwise known as a surplus debt. Negative equity happens when you trade the car, which is upside down for a new one. This additional debt is rolled into the finance of a new car. Allen Stewart states that negative equity is controversial as cars depreciate the assets by themselves.
When repurchasing a car as per lemon law for new car in California, the refund amount is equal to the actual price paid or to be paid by a buyer that includes the monthly payment and the down payment. It also refers to the charges of registration and other costs that are mentioned on lease or purchase agreement. The more ethical way of buyback explained by Allen Stewart is if a deduction is taken for negative equity, the reimbursement amount for payments made by consumers is reduced or eliminated. In some extreme cases, it is also reversed by which the consumer owes money to the manufacturer after the car is ‘bought back’ in lemon law repurchase. Now a great solution to negative equity is to do trade by collateral swap. Here, the current balance, scheduled loan, and the payment amount stays the same. The only thing that changes is the lemon car which is eliminated as collateral to secure the loan as it is replaced by another vehicle that is replacement car. With this, the consumer gets back the actual position that is bargained for, a new car and the original loan terms.
According to a spokesperson of Allen Stewart, “negative equity is confusing and is a prime issue to cases under California lemon law new car. Be sure that a consumer understands this issue before you decide to approach lemon law claim experience the lemon law counsel who better understands it.”
About the company
Allen Stewart Corporation is a legal corporation of attorneys dealing with various types of law cases. They specialize in the affairs of lemon law across the nation. If you are ever stuck with a lemon case or want to know more about the lemon law, do not hesitate to call Allen Stewart on the below-given details.
Address: 1700 Pacific Avenue
Dallas, Texas 75201