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 Second Ago
      • 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.
      • 1 Year Ago
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      • 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..
      • 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
      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
      Dealerships have done this for years and why are people so stupid to sign a paper if they don't understand they are agreeing to a loan for more than they are paying for the new car. Even the government can't fix stupid.
      • 3 Years Ago
      please visit a site called "" 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
      • 3 Years Ago
      Disco Harvey
      • 3 Years Ago
      How is this news? It would be more shocking if it read "Most US car dealers are honest and trustworthy." Car dealers are like pimps, without the cool clothes.
      • 1 Year Ago
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      • 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 ( ) . 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.
      • 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?
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