Car garage closed down - owed money

[JH20000]

This is on behalf of my partner and are his words.

he bought a car through part exchange at a local garage that came highly recommended from various people. He was told he’d get the money for his old car two weeks after buying the new car (and the owner called it a cooling off period?)

new car was paid for through finance.

He is currently owed 4k.

The garage has put out an announcement today (a week after buying the car) saying they’ve closed down immediately due to rising costs. No other information. Obviously they’re not answering the phone now and the garage looks officially shut down when I drove past earlier.

What can he do in this instance? He’s had no communication they’ve shut down and now obviously he’s worrying about the money.

Thanks all

Did he trade it in or sell it?

Who has the V5?

This might be a strange coincidence but a car garage youtube channel I follow (sad I know) has announced on Sunday they are closing.
They are called Berrow Motors in Somerset and the channel is called shifting metal. If its them they are all over social media so should be able to reach out to someone. The owner does respond to comments on YouTube and Instagram.
If its not them I hope you get it sorted.

Are you saying that he took out finance for the full asking price of the new car, paid for it, then the garage took possession of his old car and told him they would pay him the value of it two weeks later?

This is quite unusual - normally the dealer would simply deduct the value of the old car from the new one, and the buyer would pay the balance. That's the point of part-ex, you're still essentially buying one car and selling another, but it's all done in one transaction and you're applying for less credit.

There is usually a 14 day cooling off period when buying a car on finance. However this relates to your right to cancel finance agreement. You would still need to pay for, or return the new car, and pay any penalties/damage/excess milage etc.

My guess would be that they were holding the value of the old car as collateral until the cooling off period on the credit agreement has passed, and that they would have given you the option of returning the old car to you had this happened. This should have been made clear during the sale though. Was it?

Regardless - if the company has gone into liquidation, you're in a bad spot here.

Presumably you have some paperwork with the details of the company's trading name - you can search online to see if it's gone into liquidation. If it has, you'll need to register as a creditor.

Unfortunately you would be classed as an unsecured creditor and are extremely unlikely to receive anything once any assets are sold.

Is he still the owner of the car or is the garage? If not it sounds like they were trying to bring in money and not pay any out intentionally.

I'm presuming he's signed it over, otherwise what would be the point of them taking on the responsibility of storing it, insuring it etc. They could have just left it with him until they were ready to pay. Assuming they were on the up and up of course.

OP says the place came highly recommended, presumably by people she or her partner know and trust, so you'd like to think that they were an honest business that have had to make a difficult decision.

But I agree, it does very much sound like a deliberate attempt to take ownership of the car and delay payment, knowing that they were going bump.

Must be a strange coincidence but not them 😅

I wasn’t with him when this all happened but yes it’s all signed over. I’ve never heard of it being done this way to be honest as usually it’s all done and dusted on the day the new car is purchased. Thanks for your comment anyway, he is going to try and reach out to the owner.

Normally, when you trade in a car and buy another, the garage simply knocks the trade-in price off the price of the car you are buying. The idea that you take away the new car and the garage pays you the agreed price for your old car some time later is, to say the least, unusual and suggests to me that the owner knew the garage was in financial difficulties.

If the garage is a limited company which is now insolvent and your partner signed ownership of his old car to the garage, I'm afraid he is now an unsecured creditor. He is unlikely to get the full amount agreed, and he may not see any of it. The owner is not normally personally responsible for the company's debts. If the director(s) do have any liability, that is a matter for the insolvency practitioner to deal with.

Good luck with reaching out to the owner. If that doesn't achieve anything, you need to watch for any announcements from the insolvency practitioner and make sure you register your claim with them.

Presumably, if he hasn’t been paid for the car then he’s still the owner?

Possibly. It will depend on the small print of the agreement that was signed.

Normally in business the T&C's will state that the title of the goods being sold does not transfer until the invoice is paid in full. If that is the case and the garage is in liquidation then you can go and get the old car back. But it will depend on the wording in the agreement.

They didn't pay him because they didn't have the money. And it's not a part ex if the new car is financed and they're just buying the old car off him. Unless the deposit for the financed new car was paid for with the old car and the leftover sum was 4k?

He'll need to get the old car back, and because the new car is financed he'll need to make sure that the finance company takes on all responsibility for it. I don't know how consumer rights work in this situation, as if he'd bought it from a dealer, he has 6 months protection if the car is faulty or dodgy, but as they've closed down and I assume it's financed through a 3rd party company, it will change things.

https://www.gov.uk/government/publications/claim-money-back-from-a-bankrupt-person-or-company-in-compulsory-liquidation-guidance-for-creditors/if-an-insolvent-company-or-bankrupt-person-owes-you-money see if this applies (assuming you're in UK)

I guess the question for the OP then, is what does the paperwork actually say? Was it put in writing that the title transferred to the garage and what the T&Cs were around that?

It’s worth contacting the dvla, they may be able to help.

No, they won't. They register the keeper of the vehicle. They do not record ownership, nor do they have any role to play in resolving issues around payment.

Trading Standards.

I assume its not a franchised dealer

The registered keeper is not necessarily the legal owner, so if you can prove that you were supposed to be paid, and have not been, then you are still the owner of the car and can get the V5 reissued to you.

@JH20000 do you know where the car is physically?