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We'll Pay Off Your Car No Matter How Much You Owe

Last Modified: April 10, 2018 by Jeff Ostroff

How the Scam Works

It is very common to see or hear ads from car dealerships that tell you they'll "pay off your current car no matter how much you owe." Unfortunately, the obligations of your current lease or loan don't just magically vanish.

They Don't Pay Off Your Current Car, You Do!

As the old saying goes, "Nothing in Life is Free." This is especially true when dealing with a car dealership. Technically, they will pay off your current loan or lease. However, the money used to pay it off is coming out of your pocket.

payoff scam

While fooling you into thinking that they are doing you a favor, what they are actually doing is rolling the payoff amount into your new lease or loan. It might not be obvious in the paperwork but, trust me, it's in there!

You Are Now Paying Off Two 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. For example, if the amount financed is $15,000, your new loan amount is $10,000 + $15,000 for a total of $25,000. The dealer can hide this fact by extending your payments over 60 or 72 months so you won't realize what has happened.

Remember, the longer the loan, the lower the monthly payments, but the more you will end up paying in total. It's entirely possible the payments could be lower than your current payment. 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 on your current car. It does not! This gets many, many people deeper into financial trouble. You are actually taking on much more than your current debt. You thought you were dropping one debt for another and buying a new car.

You Are In Worse Shape With a Lease

When the dealer terminates a lease early it will cost even more. There will be all kinds of early termination penalties that must be paid to your leasing company to end the contract. You get all of the negatives of terminating a lease early and the dealer hides the costs from you.

The End Result for You

The dealership is not doing you any favors here. Their entire goal is to sell you a new car at a very high profit margin. In many cases, you don't even know what you are getting for your current car in trade-in value.

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 pulled 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 pay off both cars!"

How to Avoid the "We'll Payoff Your Car" Scam

Do not believe these ads. The only way to avoid this scam is to be skeptical of dealership advertising. They are never going to give you more than your car is worth or just "help" you get a newer or nicer car without costing you some serious money.

If you are in a lease now, it's best to stay in it until the end. Ride it out baby. 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.

By combining a trade-in that you still owe money on with a new car purchase transaction, you are opening yourself up to get ripped off. Don't ever think you walked away ahead in a situation like this. No one ever has done it 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.

CarBuyingTips.com has affiliate referral relationships with multiple web sites. This means that for many of the links you see on this site, we are paid referral fees for leads generated from visitors that click on links or fill out forms on this site. In some cases we are paid a commission for a purchase made on a site that is linked to from CarBuyingTips.com. Please view our advertising policy page for more information.