How can I protect myself from a failing dealership?

If a dealership suddenly closes its doors, it can create problems for its customers. Some car buyers, for example, never received a factory rebate to which they were entitled. Or service or modifications that had been agreed to as part of the negotiations were never completed. Or a dealer didn’t pay off the loan on the trade-in as promised. This leaves the customer having to pay two car payments: one for the new car and one for the trade-in that he or she no longer owns.

To avoid these kinds of problems, we recommend you take these precautions:

• Use a credit card to make a down payment, order parts or accessories, or pay for service. That way, you can challenge the payment with your card issuer if a failing dealer doesn't come through.
• Try to pay off your loan before you trade in your car. Allowing a dealer to roll it over into a new loan is a bad financial move.
• If a dealer has agreed to fix something or provide a service or accessory for your new car, make sure that it's done before you take the car home. If you get caught short, contact the automaker's customer-service department to see what recourse you have.