Credit Nightmares: Car Trade-In Scams

Posted by: Desiree B. | Mar 24,2008

Credit nightmares related to cars continue to infiltrate news headlines. In a shocking development, the Pennsylvania Attorney General has received a spate of complaints recently involving car trade-in scams. A trade-in happens when someone buys a new car but still has an old car they don’t want anymore. The car dealership takes over ownership of the buyer’s old vehicle, paying off the loan and passing along some trade-in savings to the buyer, often in the form of a discount on the new car purchase.

 

But in Pennsylvania, and in other areas of the country, a very unfortunate scam is unfolding, which makes the simple, time-honored tradition of a trade-in become a credit nightmare for car buyers. In this scenario, instead of paying off the trade-in vehicle as promised, the car dealership simply lets the car sit on the property until it is repossessed by the lender. And unfortunately, it looks like the car buyers didn’t get anything in writing about their trade-in deals, so they have some lengthy legal battles in front of them to try to fix their credit nightmares.

 

If you are releasing a vehicle to a car dealership for a trade-in, make sure that the paperwork to buy the new car clearly states that a trade-in is part of the deal. The value of the vehicle being traded and the lender information should be clearly outlined in your contract. And if you think you’ve been the victim of a trade-in scam, contact your state’s attorney general.

 

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