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Trading In Your Car? Here's What You'd Better Know The Next Time You're Expecting The Dealership To Pay Off Your Existing Car Loan (Or Lease)! Plus: "Spot Delivery" Is One Of The Car Salesman's Favorite Games To Play--And Get You "Off The Street"
October 30, 2003
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Dear Ben: I bet you've told your faithful readers about the evil-insider doings of car dealerships umpteen times. But please repeat whatever information you've given us in the past about the dangers of pay-offs on trade-ins. I want the public to fully understand what rights they do and don't have regarding this type of transaction. Here's my story-which could have been worse:
Last spring I walked into a local dealership with the intention of checking on the cost of a new pickup truck, curious as to whether there would be a prayer's chance I could get a decent trade-in on my late model (2000) SUV. My main goal was to lower my monthly payments; I really didn't think these guys would be able to "get me the deal" I wanted, but to my surprise they did.
When I was told they could get me into a new vehicle and use my car as the down payment without my having to fork-over a single nickel AND lower my payments more than $100 - I fell for it. Sounded great...at the time. A week later I received my regular statement from my current finance company-the same financial concern that would be financing the new car. I called to make sure the note on my former car (that I'd traded in) had been paid-off (as I expected it to be) since the dealership had my trade-in on their lot. Nope...the previous car balance was still in my name.
Yikes! What if the dealership was in financial trouble and filed for bankruptcy that day or the next? Would I be responsible for the old note (without having my trade-in in my possession) as well as the new note? According to the Consumer Protection Division in Austin-as well as my auto finance company-I sure could be. As stated in Code 348 of the Texas Transportation Code only "implies" a reasonable pay-off time for dealer's to cough-up this payoff on the trade-in; the protection for the dealer is that the consumer must adhere to the contract to purchase the new car, whether the pay-off's cleared or not. Apparently there's no real, hard-and-fast requirement for the dealer to pay off this note. It wasn't until I mentioned this to the finance manager at the dealership, as well as a voice mail to the dealership's Customer Service Manager about the call I made to the Consumer Protection Division that week that my outstanding balance (on my trade-in) miraculously became "zero." Maybe their intention was to do it anyway...maybe my messages had nothing to do with their payoff...I don't know, but here's what I DO know: I didn't sleep much the past two weeks worrying that I might have made one of the most costly mistakes of my life. Call me lucky. Someone else out there might not be.
Pamela J., via e-mail
Dear Pamela: Your words of caution have been duly noted. I think a huge (potential) landmine for car buyers has to be the "sounds too good to be true" claims made by some in the leasing business. According to one industry insider, these "no money down" and "payments 40% lower" hook lines: "These ads are come-ons! They're designed to get you in the door and once they've gotten you in, it's "let the games begin." It can be brutal. All they want to do is get you in the front door and get you so far into the new vehicle acquisition process-both emotionally and financially. Consumers have got to remember one of your favorite lines: If it's too good to be true, then it always is!"
Dose of Dover For The Week: Another favorite technique car salesmen utilize? Motivated consumers biting on print or TV ads decide to make their move for a specific vehicle, but oops! The one they wanted is already gone, "...but the next model up is loaded." Another technique? The salesmen lets you "buy" a vehicle, but then a day or two later they'll call with the bad news that "your financing was turned down...but we can get you in this other vehicle for only $20 more a month!" This sales strategy is called "spot delivery" and it's legal. For more insider insights about the car sales/leasing game, check out: www.bendover.com/cartips.asp.
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