Scam of the day – March 20, 2012 – Car trade-in scam

Recently the Federal Trade Commission settled complaints against five automobile dealers for a misleading and deceptive advertising practice pertaining to paying off a car loan on a consumer’s trade-in when buying a new vehicle.    Some car dealers promise in their ads to pay off any outstanding car loan on the car that is being traded when purchasing  a new car, however, rather than paying off the loan with their own money as implied by their advertising, some dealers are merely adding the cost of the payoff into the cost of the new car, building the cost into the new car loan.  Other times the consumers have even been forced to pay off the old loan in cash before they can take their new car.

TIP

When buying a new car make sure you negotiate the total price of the car and not the monthly payments on a car loan.  The loan payments can be extended to make it appear that you are paying less when you are paying more over the time of the loan.  Also read the fine print to make sure that you know exactly what you are paying.