“I was wondering if this was just another one of those car scams? The car dealer says they will pay off my car loan if I trade in my car. I do want to trade in my car at a dealership instead of selling, but the problem is that the car I want to trade in isn’t paid off yet. The car dealer says they will pay off my loan for me after I trade it in. Is it safe to trade in a car for another car?  Is this a car scam?”

The above questions ( Car Scams – Dealer Says They Will Pay Off Trade-in ) were submitted by a reader and here are my answers…

First of all, I would never trade in a car because you won’ t get anywhere near as much money for it as you will if you sold it yourself. Seriously, we are talking about hundreds or possibly even thousands of dollar more if you sell it yourself. See, the thing is that you are going to have to clean up your car anyway if you are going to trade it in, so why not spend just a little more time and sell your car yourself?

Okay, I realize that wasn’t your question, so let me get to that…

To have the car dealer pay off your car loan may not be a car scam…but it might be for some. The reason I say that is because in the present economic situation where things are sucking, there are many car dealers across the country (and maybe even some with the best of intentions) that are going out of business. Okay, big deal. Well, it is a big deal because the problem is that they aren’t paying off the loans on cars that they took in on trade. And guess who is responsible for paying off your car loan? YOU! Yes, no matter how much they promise to do what they say they are going to do – the bottom line is that YOU will be the one that gets stuck for paying off your car loan because you are the individual on the loan. Trading in your car is enough of a scam as it is because of all the money you will be throwing away, but letting someone else tell you that they will pay off your car loan can and often is another one of those car scams to be aware of.