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Attn. Auto Paper Investors: Dealerships Telling Car Buyers To Stop Paying Your Loan

Joyce Parks was struggling to afford her Kia Soul when, she says, the dealership where she had bought it pitched her an unconventional idea: Stop making the payments.

Ms. Parks, 63, says employees told her that she couldn’t trade in the Soul, but that she could buy another car. To get rid of the Soul, the dealership told her, she should have the lender repossess it, Ms. Parks said.

The trade-in, where a buyer hands a car back to a dealership and uses it as credit toward another one, is often a crucial step in car buying. But some dealerships are instead telling buyers to give their old cars back to their lenders — and selling them new ones — in a practice known as “kicking the trade.”

It is difficult to estimate how often this happens. Auto-sales veterans say the practice is an open secret in some showrooms. Broadly, vehicles are getting more expensive and Americans are struggling to afford them. Dealerships now make more money arranging financing than selling vehicles. If a car loan goes bad, it typically isn’t the dealership on the hook — it is the borrower or lender.

READ MORE:  https://www.marketscreener.com/KIA-MOTORS-CORPORATION-6492386/news/Dealerships-Give-Car-Buyers-Some-Advice-Just-Stop-Paying-Your-Loan-30003627/

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