If you’ve been thinking about buying a new or used car, be very careful or you may be getting yourself into deep trouble. With the state of the auto market there are many great deals out there, whether you are looking for used or new cars, so the last thing you are expecting is to get ripped off. So beware, some buyers are ending up in a huge mess that they never bargained for.
Some car buyers when purchasing a new (or “new” to them) car, have traded in their old car which they were still making payments on. After all the paperwork is signed and the financing arranged, the buyer drives their new car home and the dealer keeps their trade in. Normally the dealership then pays off their old car, receives the title, and resells the car or sends it to auction.
Lately, some financially strapped auto dealers have not been able to payoff all of the cars they have been taking as trade ins. The trouble starts when the buyer receives a late payment notice notifying them that they are late on the car payment on the car they no longer have. By then the car may be in another state going to auction, the dealer kept the trade-in amount as profit, and the buyer is left with the car payments for both cars!
Unfortunately, the consumer is not legally protected in this transaction, and there is little that can be done afterwards besides dealing with the mess. Whether or not it is intentional, these dealerships should not be accepting trade-ins that they are not able to payoff.
Don’t Let it Happen to You
As a consumer, the best way to protect yourself is to prevent this from happening in the first place. The easiest way to do this would be to not trade in a car until you have it paid off. If that means driving your car for a few more months or years until its paid off, so be it; its probably better for your finances that you drive your current car as long as possible.
Pingback from Festival of Frugality #182 – Revenge of the Fallen Edition | StupidCents
June 16, 4:02 am
[...] presents Don’t Get Burned When Buying a New or Used Car posted at Live Money Smart. If you’ve been thinking about buying a new or used car, be very [...]