Five U.S. car dealerships have reached settlement agree... Five U.S. car dealerships have reached settlement agreements with the FTC over deceptive loan practices. (Courtesy smcgee, Flickr).
The sales pitch goes something like this on the showroom floor: A car salesman makes an enticing promise. "We'll pay off your car loan, no mater how much you owe!" Or "upside down on your current loan? We'll pay off your trade."

Some unscrupulous dealers deliver on that promise by hiding the cost of the old loan in the paperwork of the new one, often by extending the length of the loan.

The Federal Trade Commission has started cracking down on that deceptive practice. The Huffington Post reported that, on Wednesday, the FTC announced settlement agreements with five U.S. dealerships, which have now agreed to stop making those loans.

Since it was the first time the FTC has stepped up enforcement on such deals, the dealers were not fined. But Malini Mithal, assistant director of the FTC division of financial practices, tells The Huffington Post, "We're starting to take it seriously."

Four dealers rolled the negative equity into the new car loans, according to the FTC. They were: Ramey Motors in Princeton, W.Va., Key Hyundai in Manchester, Conn., Hyundai of Milford LLC., also in Connecticut, and Billion Auto in Sioux Falls, S.D.

A fifth dealer, Frank Myers AutoMaxx in Winston-Salem, N.C., made buyers pay off their old loans in cash prior to releasing their new cars.


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      • 1 Year Ago
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      edbon64
      • 3 Years Ago
      It isn't illegal to roll negative equity into a new car loan. Are people really stupid enough not to know that they are rolling the negative equity over ? Or are these dealers actually trying to hide it ? As for those types of Dealers in ct, they need to check Barbarino and Bob's Dodge. They are both EXTREMELY shady..
      LL
      • 3 Years Ago
      Since I am making much less money this year I was concerned that I wouldn't be able to get the kinds of gifts I usually get for my family this year. I thought I would try one of the penny auction sites because I heard that they have the best deals anywhere. I checked out a few sites and it became clear to me that the one that was most reliable and had the lowest prices was at ( http://tinyurl.com/GreatOnlineAuctions ) . To be honest, their prices seemed too low to be true. I tested them out by bidding on an iPad, which my son wanted, but I didn't think I could afford one this year, to my surprise and delight I ended up getting one for $73. I got it about a week ago and it was brand new and in a sealed box.
      hcjake
      • 3 Years Ago
      As far as I know, ALL dealers did that. How else could they absorb the unpaid balance of the trade in, and still make a deal on the new vehicle?
      elrumba
      • 3 Years Ago
      ___Billion Auto in Sioux Falls, S.D.____This Dealership is crooked as a river running thru a mountain pass; stay away from Billion Auto in Sioux Falls, S.D._____
      • 3 Years Ago
      It is time again for "public lynchings". At least one a day until we get caught up.....
      jimjdb5591
      • 3 Years Ago
      I would guess anyone that would believe this would buy a house they couldn't afford also. Should we bail people out of their car loans?
      • 3 Years Ago
      How is this news. This is simple math. I'm not a car salesman nor was I ever one, but you totally missed the mark on this one. Here it is. The car you want is $25k. Your 3 year old car is worth $7.5k but you owe $12. The difference between what you get for your old car and what you owe is $4.5k. Add that to the new $25k car and you are at $29.5k. Who do you think is supposed to eat that $4.5k that you owe, the dealer? Certainly not. How about this. Stop trying to live above your means and buy a car you can really afford.
      • 2 Years Ago
      DO NOT buy a car from Ken Vance Motors! I bought what appeared to be a decent used car with reasonable miles. I was given a written 90 day, 3000 mile warranty. Problems surfaced immediately. I notified the dealer and explained I would go the entire 90 days before bringing it in for repairs. I made it clear to the service manager the work was under warranty. The dealer is 70 miles from where I live so I needed transportation after I dropped the car off. My friend had to cancel at the last minute. I notified the service manager and he assured that was not a problem, they' d "work with my schedule". The long and the short of it is they refused to honor the warranty and the state DOT which is charged with addressing dealer problems agreed based on my being 4 days past the 90 when I took the car in. I have since discovered additional problems which would have been discovered if the dealer had actually done the inspection they claimed. Ken Vance Motors is bad news.
      Lenny
      • 2 Years Ago
      What else is new all dealerships are scum they take trades and offer you alot less than your car is worth but make it sound like your getting a deal but in return they are making big money on the sale and more money by reselling your car They all do it and if you dont get what you want then walk off the shylocks lot by not doing it their way and making them give you the deal you want . If they dont do it then they will be out of business within 60 days as they will not be able to pay on their loans
      • 2 Years Ago
      please visit a site called "carbuyingtips.com" he is so good that several car dealers tried to get him shut down! warning: this website requires an modicum of intellegence to understand and requires you to do a liitle work when purchasing your car
      • 1 Year Ago
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