8. Negative Equity Scams
Never trust dealers who promise to pay off your existing car loan – no matter how much you owe on it. Motorists who’ve bought their current vehicles with low down payments and long loan terms often have “negative equity” in them, meaning they owe more than the car is worth in trade. Sure, the dealer will pay off the loan, but will simply wrap the amount of negative equity into the new-car deal, resulting in a higher balance, a costlier monthly payment and even a longer loan term. You’ll also be in the uncomfortable position of paying for two cars at the same time. It’s better to hold onto your current car until it’s paid for, or at least until the balance is whittled down sufficiently to realize actual equity.