Adding Upside-Down Deficiency to Sales Price

Did you know that if you trade a car in on the purchase of another and you are upside-down on the loan to value of the old car—meaning that you owe more on the trade-in than the trade-in is worth—and the car dealer says he will fix this problem by adding the deficiency on to the sales price of the new purchase, you end up paying more in state sales tax on the deal. This “fix” is not a fix at all and could possible violate your rights as a consumer under state and Federal laws. The additional sales tax you have to pay on the amount of the sales price may be considered a “finance charge” for which certain truth-in-lending disclosures should be made to you during the transaction.

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