Can a car dealership cash a check for a car payment from the past after they took the car as a trade-in?

I made my car payment on the 27th of last month and traded the car in on the 28th. The dealership was paid off for the old note. It’s the 19th of the next month and now the check for

the old note has gone through my checking account, a month later. Can the dealership do

that? Isn’t that payment null and void?

Asked on May 19, 2016 under Business Law, Georgia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

They would not be allowed to cash the check IF:
1) The note had been paid in full, such as by the trade-in or by some other party or entity, prior to cashing the check; or
2) They had otherwise agreed to not charge the last payment (e.g. in order to make it "worth your while" to do the new deal).
Otherwise, the fact that you traded in the car does not, by itself, necessarily prevent them from taking payment. If you paid on the 27th but did not trade in until the 28th, then they could usually cash the check, since payment was tendered (made) by you prior to the trade-in. That said, if under the specific facts of this case (e.g. the terms of the trade-in and new car sale) they agreed to waive the payment (i.e. they said that they were not going to take that payment), either they need to return it to you, or you could sue them for the money.

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