Trading-in or buying used? Avoid trouble – make sure old loan is paid off.
Around the country, more dealerships are going broke and closing. This has created a big problem for some consumers who traded in a vehicle or who bought a used traded-in vehicle. The now closed dealership where they traded in or bought the used car closed and never paid off the lien (loan) on the car as they were legally supposed to do. What does that mean for the poor consumer?
- Those who traded in the car for a new car may find that if the dealer defaulted on paying the old loan, they must now pay it. They still owe their loan for the new vehicle, too.
- If the consumer has bought a used car on which the dealership didn’t pay off the old loan, this consumer may find that the lender of the previous loan repossess the vehicle or demands payment from them, the new owner.
How can you prevent this from happening to you if you're thinking of buying a used car or trading in your old car on a new one? Here are some tips:
- If you still owe money on your trade, pay it off yourself before trading. Having a clear title to the car prevents the above situation. By financing your used car purchase through your credit union, you’ll find that they can also help you pay off your existing loan. Instead of trading, why not sell your trade yourself? This StreetWise article shows you how.
- Ask to see the title of the car you plan to purchase. Make sure that the title is in the dealer's name and not the previous owner's name. Also, there should be no liens on the title (or clear evidence such as official receipts that previous liens are paid off). If the title isn’t clear, look for another vehicle that has a clear title in the dealer’s name. If the dealer won’t show you the title or you have any doubts, go to another dealership.
| A note about third-party links – By selecting links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites. |
|
