The Federal Trade Commission (FTC) is cracking down on automobile dealerships around the country who have been running ads that mislead consumers into thinking the dealership will pay off the remaining loan balance on their existing car when they trade it in. These dealerships then add the cost of the old car loan into the price of the new loan. The buyer ends up with a loan that they must pay off for a longer period of time because they are paying off their old car and new car at the same time. This is known as negative equity auto trade ins. In some cases, dealers force customers to pay off the old loan in cash before they could get their new car.
The dealers named in the FTC’s complaints include:
- Billion Auto, Inc., in Sioux Falls, South Dakota
- Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina
- Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut
- Ramey Motors, Inc., in Princeton, West Virginia
Three of the cases allege violations of the Truth in Lending Act (TILA) and its implementing Regulation Z for failing to disclose certain credit-related terms, and the complaints in two of the cases allege violations of the Consumer Leasing Act (CLA) and its implementing Regulation M for failing to disclose certain lease related terms.
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