Car dealers are lying to your face

It?s not easy to buy a car when you?re upside down in your car loan. That is, you owe more on the vehicle you?re driving than it?s worth. It?s called negative equity.

So it?s mighty appealing when a dealer offers to ?pay off your trade -- no matter how much you owe.?

Warning: some of these ads are deceptive. The dealer never intends to pay off the negative equity of that trade-in. ?Fall for the pitch and you?ll get taken for a ride.

?How can a dealer pay you more for the car than they can sell it for?? asks Jack Gillis, author of The Car Book 2012. ?It makes no business sense. That?s why these deals are too good to be true.??

Last week, five dealers around the country agreed to settle complaints brought by the Federal Trade Commission that they did not ?pay off? trade-in vehicles with negative equity as promised in their advertisements.?

?The dealers actually rolled the amount of the negative equity into the loan package for the new vehicle,? says FTC attorney Malini Mithal. ?So you were ultimately responsible for paying off your trade, not the dealer.?

The dealers named in the government?s complaints are: 1) Billion Auto of Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx of Winston-Salem, North Carolina; 3) Key Hyundai of Manchester in Vernon, Connecticut; 4) Hyundai of Milford,? Connecticut, and? 5) and Ramey Motors of Princeton, West Virginia.

In settling with the government, the dealers do not admit doing anything wrong. But they promise not to make this sort of deceptive representation in the future.?

Protect yourself
You need to be very careful when you trade in a vehicle that has negative equity. Otherwise, you could get burned.?

Know if you are upside down on your car loan
Check Edmunds or Kelley Blue Book for the approximate value of your car and compare that to what you still owe on your loan.? If you owe more than the car is worth, you?re upside down.?

?Now is not the time to try and sell or trade in your car,? Gillis advises. ?Keep it until you are 'right side up' and then think about selling or trading in.??

Understand all the paperwork you will sign at the dealership?
Buying a car with a trade-in is really three different deals. Keep those transactions separate.?

• Know exactly what you?re getting for your trade-in. Gillis says most people can do better by selling it themselves.
• Know exactly what you?re paying for the new car.
• Negotiate the financing. What matters here is the APR or annual percentage rate.?

In many cases, the salesperson will try to wrap all three deals together by asking how much you can afford for a monthly payment. Don?t go down that path.?

?Unless you negotiate each of these three transactions separately, you have no idea what the value of each element is or if you?re actually paying too much,? Gillis warns.?

These cases are the first of their kind brought by the Federal Trade Commission. The FTC?s Malini Mithal says her agency is ?very focused? right now on auto financing and leasing issues.? The commission would like to hear from anyone who believes they were the victim of an unfair or deceptive practice by a motor vehicle dealer. You can file a complaint online.?

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Source: http://bottomline.msnbc.msn.com/_news/2012/03/23/10815449-car-dealers-latest-deceptive-sales-tactic