Dear Consumer Ed:

Are auto dealerships in Georgia required to pay off trade-in vehicles within a certain time frame?

Consumer Ed says:

No, there is not a time frame set by law, although the dealer should not delay once your new loan has been funded.  Remember – until the dealer pays off your old loan, you will remain responsible for maintaining insurance and making all payments on your old vehicle.  As a result, if your new car purchase includes trading in a car with an unpaid lien balance, be sure to get a promise, in writing, from the dealer regarding the trade-in payoff date.  Make sure that it requires the payoff to be made before your next scheduled car payment is due.  Then, follow up with the lender to be sure that the payoff was actually made.

Trading in a vehicle is a convenient option for some consumers.  When done correctly, it allows consumers to leave their trade-ins at the dealership and be responsible for only one payment to one lender.  When done improperly, however, consumers are stuck with two car payments and a trade-in vehicle that may be in the possession of the dealership.  In worst case scenarios, some dealerships have sold the trade-ins before the loans are paid off.

If you find yourself in a situation in which the trade-in loan is not paid, contact a private attorney immediately.  You can also contact the Georgia Department of Law’s Consumer Protection Unit at 404-651-8600 or 1-800-869-1123 (toll-free in Georgia, outside of the metro Atlanta calling area).  Failing to deal with the issue could lead to damage to your credit score and a potential lawsuit against you from the company that financed the trade-in.

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