Motorcycle Financing: A Trap for the Unwary

Did you recently purchase a motorcycle?  Were you then surprised to receive a credit card in the mail?  Have your monthly payments now shot up after the initial “teaser” rate vanished into thin air?

If so, your dream motorcycle may have just turned into a financial nightmare.

This reality is now all too common.  Over about the past five years, many motorcycle dealers and finance companies have been looking for new ways to make higher and higher profits.  Unfortunately, this search for profits has come at the expense of unsuspecting consumers – and, frequently, it violates California’s Rees-Levering Act, the law that regulates the sale and finance of motor vehicles.

One of the most important provisions of the Rees-Levering Act requires that the dealer disclose in a single document the cost of the vehicle, including the cost of any financing.  This is to make it as simple as possible for the consumer to make an informed decision regarding how much they are going to be paying over a certain period of time for the vehicle.  Any person who has bought a car has likely seen the standard contract – it prominently places the terms of the financing and purchase right at the top, easily visible to the purchaser.

With this new type of credit card financing, the dealer does its best to obscure the true cost of the motorcycle and the corresponding financing terms.  In fact, the terms of the financing frequently don’t appear anywhere at all on the face of the purchase contract.  Rather, the dealer will merely tell the purchaser about the low introductory rate, have the purchaser sign all the documents thinking they are getting a great deal, and push the purchaser out the door. 

One might ask, “Why would the dealer obscure the financial terms of the transaction?”  The answer – it helps line theirs and the financial institutions’ pockets at the consumer’s expense.  By way of example, one client who thought he had purchased a $14,000 motorcycle would have had to pay nearly $30,000 in interest over the life in the financing had he made monthly payments in the amount the salesperson told him he would be making.

Victims in transactions like this frequently don’t even realize it at the time.  Frequently, they won’t even realize they don’t own their motorcycle until it is repossessed because they missed a payment.  By that time, they may think it is too late to do anything about it.  Often, this is not true.

Our firm has now brought class action cases against multiple different motorcycle dealerships alleging violations of the Rees-Levering Act in the sale of motorcycles financed by credit card transactions.  In fact, we recently obtained certification of a class of motorcycle purchasers in two cases: Wallace v. East Bay Motorsports, Inc., Alameda County Superior Court, Case No. RG11579995, and Bohannon v. Professional Cycle Parts, Sacramento County Superior Court, Case No. 34-2011-00108983.  Links to information on these two cases are as follows: https://www.wallaceeastbaysettlement.com/; http://classaction.kccllc.net/CaseInfo.aspx?pas=PCB.

If you think you have been a victim of this financing scheme, please reach out to us, and we can investigate your potential claims.

Written By: © Nancy Barron