The advertisements seem too good to be true: the car dealership will give you $3,500 for your trade-in, regardless of condition. Many consumers who have trade-ins with serious problems find these offers impossible to resist. But, be careful, because these advertisements are deceptive and are a type of auto dealer fraud.
Car dealerships are happy to take your car in trade, and most honest dealerships will give you close to the amount they would expect to receive for your car at auction, minus a reasonable amount for their time and effort. If your trade-in is the type of car that the dealership can re-sell, then they may even give you a little more.
But, no dealership is going to lose money on your trade-in. They are in business to make money, and although they may tell consumers that they are getting the promised price for their trade-in, the truth is that dealerships make up the loss by charging consumers more money on some other part of the deal.
Most of the time, the dealership will make up for a loss on a trade-in by overcharging for the car that the consumer is buying. Sometimes, consumers discover that they even paid more for a new car than the MSRP
Dealerships can also make up the loss on a trade-in by packing the contract with expensive extras that offer little or no value.
How to Protect Yourself: Consumers should always prepare to buy a car before they go to a dealership. That preparation should include researching the value of your trade-in. Make sure that you understand all aspects of your deal. If you think you have been scammed, you should contact an experienced lawyer.