How owners of GM, Chrysler vehicles could be affected

In these cases, consumers are still liable for the original loan and can end up with two monthly payments -- one on the car just bought and a second on the car traded in. And if the trade-in vehicle is resold before the loan is paid off, the new owner of the used car won't be able to get a title from the state -- and, legally, won't be able to drive the vehicle.

A 2007 state law authorized a $5-million fund to reimburse victims of unpaid car liens, as well as license and registration fees paid but never forwarded to the state.

Most franchised new-car dealers that go out of business don't have this problem. But the Consumer Motor Vehicle Recovery Corp., the nonprofit agency that oversees the fund, is bracing for an influx of claims as dozens of Chrysler and GM dealerships close in California.

The fund just got off the ground this year, and Ron Reiter and his fellow board members are scrambling to hire staff and administrators. That may create delays in clearing claims, Reiter said, and may also cause payments to be held up if the fund is depleted and has to be replenished. It's funded by assessments on car dealers.

The agency doesn't have a website yet, but claims can be filed by filling out and mailing a form on the Department of Motor Vehicles' website.

Vehicle repair history: Failing to perform recommended service can invalidate a warranty -- and lacking the records to prove the services were performed can have the same result.

Maintenance records should be transferred when a dealership closes, but don't count on it. Car owners who haven't kept their own vehicle repair records should get copies while their dealer's doors are still open, said Pat Goss of Carchex, a provider of consumer automotive services.

"Paperwork can easily fall through the cracks," Goss said. "Even one item missing or one page corrupted could be serious trouble in trying to prove a warranty claim in the future."

Financing: Financing arrangements should not be affected by the dealer closings.

Sales perks: If a dealer promised a special incentive -- such as a year's worth of free car washes -- and then closed its doors before fulfilling the bargain, other dealers aren't obligated to provide the service.

Buying a new car from a dealer that's going out of business: Because Chrysler and GM have pledged to stand behind their warranties, it could be a good time to hunt for bargains as dealers try to unload inventory. The vehicle can be taken to another dealer for warranty repairs if necessary.