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Has a dealer offered to pay off your old car loan?

On Behalf of | Jan 25, 2021 | Dealer Fraud

A Pennsylvania car owner often knows when it is time to buy a new or newer vehicle. However, it is not always an easy decision, especially if the consumer still owes a considerable balance on the current car loan. This is where a consumer may be especially vulnerable to a dealer scam offering to pay off the current car loan.

No matter how much a car buyer owes, a dealer may promise to pay off the balance on the trade-in so the buyer can purchase a new vehicle. This may actually happen. However, it is usually the buyer who ends up paying in the end.

The victim pays in the end

For this scam, the dealer may pay off the lender, but the dealer will then roll the amount into the car buyer’s loan for the new vehicle. The buyer may not realize this has happened because the dealer has ways of spreading the payments out, such as extending the loan for an extra year or two. In fact, in many cases, the buyer may make a lower monthly payment on the newer vehicle than he or she was paying on the old one.

In the end, this scam may leave a Pennsylvania car buyer paying the higher interest rate of the dealer lender and carrying much more debt than they had before. The purchaser may also pay considerably more in total than either vehicle is worth. This dealer scam not only costs consumers money, but it may also place their credit scores and their future goals at risk.

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