Dealer Fraud: Trade In Fraud

Apr 3, 2020

As new car prices continue to rise, many consumers are looking for ways to save money and get a good deal. One way to do this may be to trade in an old car to help pay for a new one at the dealership. While many auto dealers will offer a fair price, not at all trade-ins are legitimate whether due to an underestimation or overestimation of the car’s price. If you have been the victim of a car trade-in scam, it helps to have a trustworthy attorney to rely on.

Timothy Abeel & Associates, PC is the premier consumer law firm serving clients in New Jersey and Pennsylvania. We have extensive experience handling auto deal fraud cases, including trade-in scams. If you or someone you know has not been treated fairly by an auto dealer, we can help you obtain meaningful compensation.

How Car Trade-in Scams Work

Auto dealers use a number of tactics when car buyers look to trade-in a vehicle. In one scenario, a dealer will offer a price that is lower than the actual wholesale price, or an underestimation. The goal of the dealer is to induce the customer to negotiate the trade-in price until he or she settles on an amount that is still lower than wholesale, while not focusing on the cost and terms of the new car purchase.

Another common scam occurs when a dealer gives a customer a quote for an old car that may be higher than its actual value, or an overestimation. The dealer is really trying to get the buyer to commit to a trade-in and buy a new car at the dealership. But there are usually strings attached. The buyer typically ends up paying for the higher trade-in because the dealer will raise the price of the new car. So the buyer ends up paying not only the dealer for the overestimate, but additional finance charges as well.

The trickiest scam is one in which a dealer promises to pay off an existing loan when a consumer trades in an old vehicle to buy another, no matter how much is owed. This often occurs when a the balance of the loan is higher than the value of the car.

In this scenario, dealers will include that amount in the new car loan, increasing the monthly payments by adding principal and interest. Moreover, the new loan may have a higher interest rate than the old loan, forcing the buyer to pay more at the end of the day. While such offers may be legitimate, federal law requires dealers to inform buyers that balance of the old loan will be folded into the new loan.

Regardless of the type of trade-in scheme, it is illegal under state and federal laws for dealers to manipulate trade-in and purchase figures to induce a buyer into a sale. By engaging the services of an experienced consumer law attorney, however, you can protect and enforce your rights.

Avoiding Trade-in Scams

Although consumers have powerful legal recourse under state and federal consumer protection laws, the best way to avoid being the victim of trade-in fraud is to understand the value of your car, and the difference between the retail and wholesale price. Before going to a dealer, try to have the the car appraised, or check the value of your car on the Kelly Bluebook or another online source.

Although you may be better off selling the car privately for the retail price, if you must trade-in your vehicle, the trade-in and the purchase should be handled as two separate transactions. In fact, you should negotiate the terms of the new car purchase first, before mentioning the fact that you want to trade in your current vehicle.

Experienced Trade-in Fraud Attorney

If you were the victim of auto trade-in fraud in New Jersey or Pennsylvania, contact the dealer before taking legal action and demand that the problem be corrected. If the dealer refuses to cooperate, it may also be helpful to to notify the state division of consumer affairs. Also, speak to the experienced consumer law attorneys at Timothy Abeel & Associates, P.C.

We have a well earned reputation for holding auto dealers accountable for fraudulent practices and helping our clients obtain the compensation they deserve. We will conduct a thorough evaluation of all the facts of your case and explain all of your rights as a consumer. Depending on the circumstances, you may be able to recover damages up to three times the amount of your actual losses, as well as reasonable attorneys fees and costs. It is important to note that you will not pay any attorneys fees unless your claim is successful.

At Timothy Abeel & Associates, we believe that consumers have a right to be treated fairly and auto dealers that engage in deceptive and unlawful practices must be held accountable. Call our office for a free consultation or complete the contact form on our website.

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