Fine Print is VERY Important: A Quick Note on “We Will Pay Off Your Trade” Ads

A couple days ago, the Federal Trade Commission published a consumer guide covering negative equity as it relates to car trade-ins.   The information contained in that guide is pretty important to consumers, especially those who are currently in the market for a car.

It’s not uncommon to see car ads using statements like, “We’ll pay off your trade no matter what you owe.”  It’s also not uncommon to be wary of such statements, and with good reason.  Typically, when you see a claim like this, it’s a great idea to look at the fine print.  You should see a disclosure reading something like, “Negative equity will be applied to new loan” or some similar language.  This means that you’ll still have to pay the difference between what you owe versus what the vehicle is worth, and that it’ll be rolled into the monthly payments for the car you’re buying.

It’s a pretty widely used advertising method, and it seems to work—in terms of getting consumers to come to the lot.  Trouble is, many dealerships simply use these claims only to get people on the lot.  In fact, the FTC recently reached settlements with several auto dealers in various parts of the U.S. regarding “We Will Pay Off Your Trade”-centered ads.  These settlements have the dealers agreeing to no longer use similar claims in their ads, among other terms.

So, what to do?  Aside from our standard-issue “exercise caution” advice (which is still recommended, by the way), you might consider trying to sell your automobile yourself.  You’re more likely to get a price greater than the wholesale value.

Alternately, you could pay down your auto loan to a point where you’re in a positive-equity situation.  Then, there would be no application of additional money to your car loan.

Above all else, don’t sign anything you don’t understand, and fully read any contract or documentation that the dealership puts in front of you.

If you come across an ad that you find to be unfair or deceptive, send it to us; we’d love to take a look for you. Find your local BBB at

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About Jason McGlone

I've been doing Ad Review with BBB|Cincinnati since 2004.