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Toyota Motor Credit Corporation is facing a class action lawsuit alleging it breaches its contracts with consumers regarding “gap” protection for vehicle financing.
Toyota Motor Credit Corporation (TMCC) is a company that provides financing to consumers so they can purchase vehicles from an auto dealer.
When the consumer purchases the vehicle, the consumer enters into a retail installment contract with the dealer, and the dealer assigns that contract to TMCC.
Retail installment contracts typically state that the borrower will make periodic payments to the lender for a specified period of time. The RIC also indicates the principal, interest rate, total amount financed and other various charges that are part of the financing plan.
According to the class action lawsuit, TMCC also provides purchasers with the option to purchase “gap” protection, which is a contract that covers the difference between what the insurance carrier will pay and what the consumer actually owes on the car if the car is totaled in an accident.
Plaintiff Marian J. Mensie says she purchased a new Toyota RAV4 in June 2014 that was financed through TMCC for a total of about $41,900. According to the TMCC class action lawsuit, she also paid a separate charge of $695 for gap protection.
In April 2015, Mensie’s RAV4 was reportedly involved in an accident. Her auto insurance company declared the vehicle a total loss and paid TMCC $24,431.45, the value of the vehicle at the time of the accident. Mensie reportedly still owed TMCC approximately $38,100 for the vehicle under the RIC.
“TMCC refunded Ms. Mensie approximately $4,000 for the unused portion of a Mechanical Repair Agreement and a Prepaid Maintenance Agreement,” the TMCC class action lawsuit states. “Thus, there existed an approximate $10,000 ‘gap’ between the $34,100 Ms. Mensie owed TMCC under her RIC and her ‘the actual cash settlement’ from American Family in the amount of $24,431.45.”
However, TMCC did not waive Mensie’s liability for the $10,000 “gap,” the TMCC class action lawsuit says. Instead, the lender waived $7,997.48 and informed Mensie that she was liable for the remaining $2,328.42 owed under the RIC.
Mensie has filed the TMCC class action lawsuit on behalf of herself and a Class of other persons who purchased a TMCC gap contract on or after July 1, 2009. She also seeks to represent an Arkansas subclass. She asserts TMCC breached its gap contract by refusing to fully waive borrower liability in situations involving total loss.
The TMCC class action lawsuit asserts claims for breach of contract and violation of the Arkansas Deceptive Trade Practices Act. Mensie has demanded a jury trial for the case.
Mensie is represented by Michael B. Phillips and Brandon K. Moffitt of Moffitt & Phillips PLLC, Robert A. Horn and Joseph A. Kronawitter of Horn Aylward & Bandy LLC, and Brian Timothy Meyers and Brian C. McCart of the Law Offices of Brian Timothy Meyers.
The Toyota Motor Credit Corporation Class Action Lawsuit is Marian J. Mensie v. Toyota Motor Credit Corporation, Case No. 4:17-cv-00085-DPM, in the U.S. District Court for the Eastern District of Arkansas, Western Division.
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29 thoughts onToyota Motor Credit Class Action Takes Issue with ‘Gap’ Protection
I have gap on my current car and my old car… currently have the same problem as this case… whats the point of gap insurance being pushed on you if they are not going to honor it!
I was forced to get gap insurance on both my Toyotas
I have gap insurance and was “forced to get it” on both of my Toyotas.
I have a Toyota and have had many and always get gap and unfortunately have had to use it twice because the cars were a total loss after the accident. So in the end I had to pay nothing out of pocket. I always get gap because you never know when some idiot will run a red light and total your car it’s better to be safe than sorry
Purchased used 2012 Toyota Camry with Gap as well
I had GAP insurance on all of my Toyota leases. I was pressured into getting it and for this new lease I have I refused it.
oops – I didn’t think it worked the first time :(
I had Gap on all three of my leases with Toyota – I was pressured into getting it each and every time I turned in one Venza and got another. My lease that I have now I finally refused it.
I had GAP on all 4 of my vehicles
I have Gap on my Toyota Corolla
I purchased a 2011 Corolla and have gap, I was told by the dealer if the car was totaled the gap would pay off the note.
i have and heard the same thing from toyota
We have GAP Insurance on our Toyota Prius Lease.
I also have Gap insurance on my 2015 Camry, I am starting to wonder if they will honor it if my car is totaled. Unfortunately I have already been hit by another driver who claims I hit him even though he got the ticket, but car wasn’t totaled. But a am wondering if they will pay if I ever need it.