Title Fraud With Your Trade-In
This is a typical car deal to show how a car dealer commits title fraud with your trade-in. Let’s assume that one is doing business with the crooks from Escondido and he just traded-in a 2004 Volkswagen Passat. He bought the car 3+ years ago and he has 10 months of payments left at $375 per month. As part of the deal, they give him $14,000 for the car. Now he still owes $3,750 on the Passat so the dealer is putting $10,250 towards the purchase of a new car and they will pay off the remaining $3,750 he owes to the bank for the Passat, a very typical car transaction. In most states by law, the dealer has between 3 to 5 business days to complete the deal by paying off his old Passat’s bank.
This is standard car dealer business but some dealers use a scam so they can hold your trade-in’s title and use that money for themselves. They might wait a month, two months or maybe plan on never paying the $3,750 to the Passat’s bank. A dealer does this so they can use that money without permission, interest-free. And while they commit title fraud their customer’s credit gets damaged. Who do you think is responsible for the $3,750 still owed on the Passat in our example, you guessed it. ME! A car dealer pulling this scam will do a great job of lying to the lender and customer to put off having to pay off the trade-in for as long as possible.