We'll Payoff Your Car No Matter How Much You Owe Scam
How the Scam Works
These are common ads on the radio and newspaper all the time. They rely on your brain to trick you, as if the obligations of your current lease or loan just magically vanish. You can't just dump a lease, it's a contract. By breaking the contract, penalties are stiff, in the thousands.
They do get you out of your current lease, but these payoff penalties must be paid to your leasing company to end the contract. The dealership is not doing you any favors here. They just want your used car for less than market value and sell you a new car at a high profit margin. They will resell your trade in at a much high price and you are stuck paying off both the new and used cars.
You may ask, "how am I paying off 2 cars?" If you still owe money on the car you are trading in (lets say $10,000), the dealer pays off your loan and you now "owe" that money to the dealer. This amount gets financed in with the money you are borrowing for your new car (new car amount financed is $15,000). Now your new loan amount is $10,000 + $15,000 for a new total of $25,000. The dealer can hide this fact by extending your payment over 60 or 72 months so you won't realize what happened.
Remember, the longer the loan, the lower the payments. It's entirely possible the payments could be lower than the current payment. So you are tricked into thinking you're saving money when you just got the shaft! Their ad made you think that trading in a car relieves you of your obligation to that car. It does not! This gets many, many, many people deeper into financial trouble. You are actually taking on double your current debt, when you thought you were dropping one debt for another and buying a new car.
Their ad worked as designed and was able to mislead you. Sure they did get you out of the lease or loan, but you are not really out of it. They dipped you out of it and then dipped you right back into it under their umbrella of debt. Very clever trick, but now you're onto them. Next time you hear those ads, you'll know what they're up to. Here's how ads would be worded if they were truthful:
"We'll Get You Out Of Your Current Lease, then we'll roll what you still owe plus penalties into your new purchase, so you can payoff 2 cars!"
How to Avoid the "We'll Payoff Your Car" Scam
If you are in a lease now, it's best to stay in it until the end. Ride it out baby, you slaughtered the cow, now you have to eat it. If you are upside down on a loan, now is not the time to trade in the car. You will have to wait until the car is worth more than the amount you still owe on the loan. To get a higher value you might want to try selling it privately.
By combining a trade-in with a new car purchase transaction, you are opening yourself up to lose money. Don't ever think you walked away ahead on a trade in. No one ever has done this successfully and no one ever will. If you really need to get out of your lease, you'll have to try to change your strategy. Instead of terminating the lease early, consider the option of transferring your lease to somebody else via an auto lease trade. Use sites like Swapalease.com and LeaseTrader.com to transfer your car lease.