Clark wants to issue a special warning about the unintended consequences of trading in a car.

Picture this scenario: You have a car and you're still paying off the note. You decide to trade it in and get a newer vehicle, taking out a new loan in the process. Several months later, you are contacted by the lender on your last car about missed payments.

What happened? The dealership never paid off your loan when you traded your car in…and you don't have the vehicle anymore.

Yet you are still responsible for payments on the car that you no longer own. Your credit is dinged because of the missed payments and your new car may be repossessed if you can't meet both loans!

A recent Associated Press article that Clark saw reports this is happening all over America. The car dealership that took your trade-in is not trying to cheat you. But dealerships are going insolvent left and right and they may not be able to pay off your note.

The AP report also had the following angle: The person who buys the car you traded in could have it repossessed from them because your original loan is outstanding. And they would still have the obligation on the loan they took out! Talk about a train wreck…

The real problem here is that state legislatures have not passed bonding laws that would protect consumers in the event a dealer goes insolvent. That's the real solution, but the dealerships have a powerful lobby.

So the takeaway is this: Do not trade in a car you still owe money on ever -- period. Pay it off before dumping it.