Financing hell
February 16, 2011 4:17 AM   Subscribe

My friends bought a new car in Canada, moved to the States, and just discovered that they violated their financing agreement by taking the car abroad for over 30 days. Nissan Canada's financing people say they have a month to pay the whole car off--$18,000--or it gets repossessed and their credit is ruined. They don't have that kind of money. What would you do?

When my friends bought the car, they told the dealership they were moving to Chicago and asked whether that mattered. Nissan said: "Not at all!" But I guess the dealership isn't the same as the financing people.

After they got the threatening call from Nissan, they checked the fine print of the financing agreement, and it does indeed say that they can't take the car out of the country for over 30 days. Now Nissan is saying it's an illegal import and pressuring them to pay it all off immediately. They said they couldn't, and Nissan told them to declare bankruptcy.

What are their options? Is it worth seeing a lawyer, or are they just screwed by that fine print?

(You are not my, their, or probably anyone's lawyer.)
posted by Beardman to Law & Government (18 answers total) 1 user marked this as a favorite
Have they considered getting an auto loan from a US bank and using that money to pay it off?
posted by jon1270 at 4:24 AM on February 16, 2011 [1 favorite]

I would look into refinancing the loan with a US-based bank.
posted by ferociouskitty at 4:26 AM on February 16, 2011 [3 favorites]

If your friend has no history of missed payments etc, nor any history that would suggest there is a risk they might default on the loan, they might try approaching Nissan saying "This wasn't brought to our attention at the point of sale, and were it so, we would not have proceeded with the sale", then suggest that as a low credit risk, the finance company doesn't really stand to lose the car/money and could they allow you to continue on your current repayment scheme. In short, turn it back on the company for not adequately drawing attention to a rather restrictive condition of the finance agreement.
posted by dougrayrankin at 4:30 AM on February 16, 2011

Also, keep in mind that this unsettling problem is not likely to be a predatory sort of thing. With an auto loan, the car is the collateral for the loan. Moving out of the country makes it much harder for Nissan Canada to keep track of the car or to repossess it if the payments stop arriving, so they've effectively unbalanced the relationship by taking the collateral out of the lien holder's easy reach. It's not at all surprising to me that Nissan Canada would not be okay with that.

The bankruptcy suggestion, however, was stupid and irresponsible.
posted by jon1270 at 4:32 AM on February 16, 2011

I would start immediately looking into re-financing at a US bank. Assume Nissan will not make any effort to resolve this.

But, at the same time, I would press hard against Nissan. Call higher ups in Canada and the US. I mean, a Nissan sales person told them they could take the car to the US, and now Nissan is going to crush there credit for taking the car to the US.

File a Better Business compalint against the Dealership, write a letter to a car magazine blasting Nissan, and copy Nissan on everything. Take some time to fight Nissan - this is disgustingly bad customer service by Nissan. Your friends were basically set up by the company. There has to be someone at Nissan that has the sense to deal with this.

Nissan does finance cars in the US. It might be unconventional and difficult for Nissan to do - but they should be the ones taking care of it.

But, like I said, I would assume Nissan will make no effort.
posted by Flood at 4:33 AM on February 16, 2011 [1 favorite]

Response by poster: I should have mentioned that they probably can't get a loan from a U.S.-based bank; they are there because one of them is doing a degree at the U of Chicago, but they're both Canadians and not permanent residents. They couldn't even get a U.S. credit card. (Or, is there any upright place where they could get a loan?)
posted by Beardman at 4:40 AM on February 16, 2011

They could apply at a Canadian bank for a personal loan (not auto loan), so that the loan does not have the car as collateral. If they would not qualify for that, is there a family member who can co-sign?

Alternatively, they can sell the car in Canada, and then use the money they received from the sale to pay off the auto loan. Then, buy a car in the US.
posted by Houstonian at 4:47 AM on February 16, 2011

Is the $18,000 the purchase price or the total of all the payments? If it's just the purchase price I would expect that they could still get another Canadian loan - maybe they could find one letting them own the car while in the U.S.?
posted by XMLicious at 4:54 AM on February 16, 2011

How did they register the car in the US ? I am in the US, I dont know how it works in Canada, but when I had a car loan, the bank/finance company held the title. AFAIK If they didn't have the title, the car cant be registered in a the US. How will they/did they get insurance?
posted by sandra_s at 5:02 AM on February 16, 2011

Is it worth seeing a lawyer

Absolutely, yes, immediately, don't wait. I'd contact a lawyer right away (many of them will do a first consult about the situation for free). And tell your friends to be sure to document date/time/person of all phone communication (particularly the "declare bankruptcy" ass).
posted by mediareport at 5:07 AM on February 16, 2011 [1 favorite]

Yeah, this really was a boneheaded move. A completely understandable one, but boneheaded nonetheless. Nissan is more or less correct here: leasing a car in Canada and relocating it to the US does count, more or less, as an illegal import.

However, I think they can probably make a decent argument that because they aren't permanent residents, they haven't actually imported the car, particularly if the plates are still Canadian. I'd see if they can get any leverage on that angle. The argument would be something like "Look, if you try to enforce this provision here, all you're going to get is the car, and to even get that, you're going to have to repossess it across an international border which is 1) a pain in the ass, and 2) expensive. So it'd be better for everyone if you just let us keep paying and move back to Canada in a year or two."

But Nissan doesn't really have any incentive to cooperate, as the contract does say that they can't take the car out of the country for that long. And the fact that they allege that the dealer told them they could do this isn't going to work. There's a written contract which says they can't, so they won't be allowed to introduce oral evidence to the contrary.

They may, in fact, be hosed.
posted by valkyryn at 5:07 AM on February 16, 2011 [3 favorites]

they checked the fine print of the financing agreement, and it does indeed say that they can't take the car out of the country for over 30 days

Does the fine print say over 30 days cumulative over the life of the loan, or does it say over 30 days in a row? Because you could drive back into Canada in less than five hours and reset the count.
posted by mikepop at 6:24 AM on February 16, 2011

oops, just saw that they already went beyond the 30 days so disregard my comment.
posted by mikepop at 6:27 AM on February 16, 2011

Yes lawyer. In at least some parts of Canada, the fine print on a contract of adhesion will not hold up against the verbal assurances of a seller. Even a serious letter from a lawyer might be enough to get the dealership on board with negotiating instead of bullying.
posted by Salamandrous at 6:57 AM on February 16, 2011

Mod note: OP is not anonymous, off-topic responses can go to MeMail, thanks.
posted by jessamyn (staff) at 7:10 AM on February 16, 2011

They couldn't even get a U.S. credit card.Credit cards are unsecured debt, car loans are secured debt. As a result, car loans are typically easier to get, assuming the purchase price isn't more than the value of the car.

Not being able to get a credit card actually makes a lot of sense, but I'd still suspect they'd be able to refinance the car in the U.S.
posted by toomuchpete at 7:43 AM on February 16, 2011

Join a credit union and and ask them about getting a loan for the car.

If all else fails, this might be the time to call a family member and try to get a personal loan.
posted by jeffamaphone at 10:24 AM on February 16, 2011

2nd getting a personal loan from a canadian bank and just paying off the car loan.
posted by WeekendJen at 10:28 AM on February 16, 2011

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