Did They Really Pay Off My Car?
Car dealers run ads stating, “We’ll Pay Off Your Current Lease or Loan No Matter How Much You Still Owe!” This statement is just a play on words to make you believe something that is not necessarily true. A dealer is not going to pay more money for your car than it’s worth.
All Car Dealer Scams
This dealer advertising scam is used to get you to come to a dealership and buy a new or used car. The dealer wants you to believe they will pay off what you still owe on your current vehicle. The dealer will then appraise your car and tack on any negative equity and penalties onto your new car loan or lease. This is a very tricky play on words and can put you in a worse position than you’re currently in.
This is one of the more common ads you will see car dealers run in their TV, radio, Internet, and print advertising. They promise to pay off your current lease or loan and put you in a new car.
It’s best to not trade in a vehicle if you still owe more than it’s worth.
Your current lease or loan payoff amount just doesn’t vanish though. The dealer actually takes the difference between your current vehicle’s actual cash value (ACV) and what you really owe, called negative equity, and rolls it into your new car loan or lease.
If you’re trying to get out of a lease you may also have some pretty stiff penalties to pay also. These penalties can be anywhere from a few hundred dollars to a couple of thousand dollars depending on the lease contract you’ve signed.
There are several different variations of this statement when car dealers use it in their advertising. I bet you’ve seen or heard some of these statements in the past:
Dealers are very creative with the above statement. The fact is, no matter how this statement is written, they all mean the same thing, SCAM!
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“Then we’ll take your negative equity and roll it into your new lease or loan. You’ll still be paying the balance of your old loan and put yourself in even a worse debt situation than you were before. It doesn’t matter to us as long as we get to sell another car!”
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You hear the dealer’s ad on the radio and decide to go visit them. You have your vehicle appraised and they offer you $10,000 for your car. You still owe $17,000 so you’re looking at $7,000 negative equity. Why would the dealer give you an additional $7,000 for a vehicle that’s only worth $10,000?
The dealer will take your $7,000 negative equity and add it to the $21,000 you are financing for your new car. You’re now paying $28,000 plus interest and fees on a vehicle that’s far from worth it. The dealer may also extend the term of your contract out 60-72 months or more so you don’t notice the increase in the amount financed.
By extending the term out far enough the dealer may actually lower your payments. You may think you’re getting a great deal, but you’re really getting bent over. You should also be aware of extended-term leases up to 60 months. These kinds of leases will greatly reduce your monthly payment amount but at the end of the lease term you will have a large residual payment and you will still NOT OWN THE CAR!
This type of dealer advertising scam leads you to believe you’re getting out of your current car loan or lease and the dealer is absorbing your negative equity. This cannot be further from the truth. By continually rolling the negative equity into your car loans, you’re putting yourself in a deeper financial dilemma.
