How Would You Like to Make Two Car Payments at the Same Time?

I get a variety of emails from a variety of places. One that I get that I always look forward to is the one I get from talk show host Clark Howard. Clark is one of talk radio's premiere financial gurus, and certainly unrivaled in the geek division.

I say that lovingly. Clark is one of the nicest people you'd ever want to meet or work with.

Clark is bringing to his listeners attention something that I had never thought of. The latest thing to watch for when purchasing a new car from a dealership is not the purchase itself, although that is a critical element. It's happening with the car that's being traded.

Seems that in these tough times, many auto dealers are on the brink of closing their doors on an almost daily basis. Some survive to come back another day. Others turn the lock on the door and never reopen.

So what does this have to do with anything?

When the door locks on the dealership for the final time, it's possible that the loan you may have presumed was paid off when you bought the new car and left the old one as a trade wasn't. Remember, the dealership may be.....well.....broke!

So you still assume you're off the hook? Dealer has the car so it's their problem. Think again.

The lending institution still has a lien on a car that is no longer in your possession. You can't drive it. But you'll still have to pay for it because they still expect payment. And the law is on their side.

So now you've just drove a new car off the lot with a fresh payment book and the old payment book still has coupons in it......that still need your check to accompany it to the payment address. Because you have a car locked somewhere on a lot that you are still responsible to make payment but no longer own.

Boy, doesn't that new car smell become less sweet with that news?

And how do you avoid such a situation?

Well first, stop buying new cars when your old car isn't paid for. And when selling an old car, sell it outright. You'll likely have larger net proceeds by selling to a private party. And finally, buy that new or new to you car with cash.

Remember, if you can't pay cash for it, you really can't afford it.

To learn more, click here to go there.