Q: What are the legal repercussions of “paying” off a loan to get into another loan?
Right now we have a loan with our current vehicle and its transmission went out. We still owe on this vehicle. We are going to eventually just give it back to the bank. When I tried to get another loan for a vehicle, no place would let me because of the loan I have. I used my routing number to make pay off the loan, when I know it’s going to eventually bounce. Now I can be approved for a new loan. I am an otherwise law abiding citizen. I’m a desperate mother of three. What would the legal repercussions be if I went through with the new loan if any.
A:
You have the cart in front of the horse. You need to be asking “what are the legal repercussions of knowingly writing a bad check.” The answer is it is a crime, and you can be pursued criminally by the prosecuting attorney or civilly by the lender to whom you wrote the check knowing it would bounce. In Missouri you can be required to pay twice the check amount if pursued civilly, subject to some limits.
You also need to understand that returning the vehicle doesn’t eliminate your obligation to pay off the loan. The lender will simply sell the vehicle at auction where it will receive a lower amount than it might otherwise be worth. The lender will then apply the proceeds of the sale first to any expenses incurred in getting the vehicle ready for sale and sold. Then whatever is left will be applied to your outstanding loan balance, with you being obligated to pay the remaining amount of the loan balance.
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