You decide to get a new car although you still have payments on the old one. In this case, what normally could happen is the dealer will promise to get a pay-off figure and pay the loan off for you – and then add that payoff towards the new car.

Unfortunately, there are times when the bank will call you after 2 months because the dealership never paid the old loan. This is a horrible scam, since the loan at the bank is in your name, not in the dealer’s.

How to avoid: these scams happen because the victims focus on what car they get for the trade-in (along with all the new features) and they never request an additional contract, in which the dealer signs to payoff the loan in a certain amount of time. Get a signed contract – you may still have to take him to court but at least you won’t feel such a fool.