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.”
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This seems dishonest by both the dealer and the borrower.
Like the sub-prime mortgage fiasco, the banks are letting the “originator” off the hook.
The fix is easy. Make the originator responsible — both jointly and severally — for the loan when and if it defaults.
Be it any kind of loan, everyone needs to have skin in the game!
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