By John Campbell

Never trade-in an automobile you still owe money on if an auto dealership agrees to pay off what you owe but won’t put the agreement in writing. Otherwise, the dealership won’t be under any legal obligation to pay off your trade-in.

That’s right. You’ll still be held fully responsible for making all remaining payments on the vehicle you just traded in unless you have a signed agreement stating that the dealership will pay off what you owe. Even a signed agreement is no guarantee that the dealership will pay off your old loan in a timely manner. You may also be responsible for any late payment penalties if the dealership takes its sweet time in paying off your loan. To avoid this you should also get the dealership to agree, in writing, that your loan will be paid off in no more than 7 - 10 days.

Without a signed trade-in payoff agreement, you’ll have no recourse in a court of law if an auto dealership fails to uphold their part of the bargain. You’ll end up with late payments on your old auto loan, your credit score will be reduced and you could end up being responsible for two car payments.

Don’t allow yourself to be scammed by an unscrupulous auto dealership. Get every agreement in writing and don’t do business with any dealership that won’t put their agreements in writing. A wink and a handshake just won’t do.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.