Vehicle Trade-In Scam. How To Avoid It?
Car dealers use a number of tricks to scam you when you trade your car in at the dealership. The first way is to simply tell you they are giving you a great price on your trade-in and then on the contract it is much lower. This happens a lot when you owe money on your trade-in and have equity in it. They will put in the contract the payoff which is added to your loan amount but somehow forget to credit you with the additional equity you are using for a down payment. To avoid this dealer trick carefully check your contract and make sure they give you the equity you were promised.
Another common auto fraud is to not pay off your trade-in right away. You are still responsible for the payments until the car is paid off. If the dealer takes months to pay it off, the lender will come after you for the back payments. This could hurt your credit. Make sure you have it in writing that they will pay off your trade-in no more than 10 days. Call your lender the following week to verify it was paid.