Avoid possible pitfall when trading in your old vehicle on clarkhoward.com

Clark has a special warning for you if you're looking to trade in your old car for a newer one. It's no secret that some dealers are closing their doors because of sluggish sales. If you're wondering what that has to do with you, read on.

The problem is that many people trade in their existing car for another one before they finish paying off their loan. If the dealership is in financial trouble, they may not pay off the loan on your behalf. Then you're responsible for the payment on a new vehicle plus the balance of the loan on the first vehicle you traded in.

The Wall Street Journal reports Bill Heard Enterprises is among the dealers facing financial troubles that could lead to a scenario like this.

So, how do you protect yourself?

Well, for starters, let's take a step back. Why are you trading in a car you haven't finished paying for yet? That's a bad financial move. You should consider holding onto it. If you simply must get rid of it, sell the vehicle on your own to a legit private buyer to help pay off the loan balance.

What others are saying

Bill Heard Closes
I am in the car business in Phoenix,AZ and Friday afternoon several people called saying that Bill Heard has closed their doos and laid off over 140 people. However, months ago the dealership started doing away with its internet sales team and several sales managers.
By Melanie @ 09/17/08 12:50:06 PMreport abuse
Income Classifications
What is the determining factor as to what class of income fits the following?
1. Poor.......2. Working Poor....3. Middle Class.....4. Rich. So much is being said to help the Middle Class, shouldn't the Working Poor be given more consideration?
Thank you, Clark
By Pauline Barnhart @ 09/08/08 11:28:49 AMreport abuse
Small town dealers not exempt.
The small town GM dealer "back home" in Nebraska got closed down by GM because they can't sell enough new cars. 2000 people in town, everyone knows everybody, so no danger of them not paying for the trade ins, as everyone knows where they live, but in a slightly bigger town where you don't know the owners personally, could see the dealer keeping the trades to cut his losses.
By Doug K @ 09/01/08 10:23:43 PMreport abuse
Vacaville Ford/Mercury, Vacaville, CA
This dealership was seized and closed down by the California DMV and Ford Motor Company because of this very practice. Many people got taken by this dealership. The employees had no idea until the Sheriff's Dept. showed up with car carriers and taking cars right off the lot to a holding facility in Benicia, CA. It's been about a year that this dealership has been closed down.
By Kirk @ 08/31/08 12:54:08 AMreport abuse
Lost on Trade In
Thanks, I lost Really big on my trade-in with Tom Jumper. We traded on Wednesday with a signed contract for x percentage for financing, drove off and kept the new car for five days. Got a call from the dealership stating contract not good and I had to sign a new contract with a much higher interest rate. I guess they couldn't pay off the old one so the bank is making me pay the balance with the increase in interest. Bummer
By PConrad @ 08/29/08 09:14:10 PMreport abuse

Bill Heard Closes

I am in the car business in Phoenix,AZ and Friday afternoon several people called saying that Bill Heard has closed their doos and laid off over 140 people. However, months ago the dealership started doing away with its internet sales team and several sales managers.

By Melanie @ 09/17/08 12:50:06 PMreport abuse

Income Classifications

What is the determining factor as to what class of income fits the following?
1. Poor.......2. Working Poor....3. Middle Class.....4. Rich. So much is being said to help the Middle Class, shouldn't the Working Poor be given more consideration?
Thank you, Clark

By Pauline Barnhart @ 09/08/08 11:28:49 AMreport abuse

Small town dealers not exempt.

The small town GM dealer "back home" in Nebraska got closed down by GM because they can't sell enough new cars. 2000 people in town, everyone knows everybody, so no danger of them not paying for the trade ins, as everyone knows where they live, but in a slightly bigger town where you don't know the owners personally, could see the dealer keeping the trades to cut his losses.

By Doug K @ 09/01/08 10:23:43 PMreport abuse

Vacaville Ford/Mercury, Vacaville, CA

This dealership was seized and closed down by the California DMV and Ford Motor Company because of this very practice. Many people got taken by this dealership. The employees had no idea until the Sheriff's Dept. showed up with car carriers and taking cars right off the lot to a holding facility in Benicia, CA. It's been about a year that this dealership has been closed down.

By Kirk @ 08/31/08 12:54:08 AMreport abuse

Lost on Trade In

Thanks, I lost Really big on my trade-in with Tom Jumper. We traded on Wednesday with a signed contract for x percentage for financing, drove off and kept the new car for five days. Got a call from the dealership stating contract not good and I had to sign a new contract with a much higher interest rate. I guess they couldn't pay off the old one so the bank is making me pay the balance with the increase in interest. Bummer

By PConrad @ 08/29/08 09:14:10 PMreport abuse

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Aug 28, 2008 -- Avoid possible pitfall when trading in your old vehicle

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