Colorado Car Sales Practice Test

Under what condition may a customer's trade-in on a financed deal be sold?

1. When the vehicle is paid off

2. Only when the financing has been approved

3. After the trade-in agreement is signed

4. When the buyer has made a deposit

The correct answer is: Only when the financing has been approved

The correct answer is that a customer's trade-in on a financed deal may be sold only when the financing has been approved. This is important because the dealership needs to ensure that the financing is secured before they can officially complete the transaction, which includes dealing with the trade-in vehicle. When financing is approved, it confirms that the lender has agreed to provide the necessary funds for the purchase, allowing the dealership to finalize both the sale of the new vehicle and the sale of the customer's trade-in. In the context of other options, while having the vehicle paid off or having signed a trade-in agreement may seem relevant, they do not guarantee that the financing for the new purchase has been secured. Making a deposit is also a step in the process, but it does not itself provide the necessary approval from the lender. Without financing approval, the dealership cannot reliably complete the sale, making it essential to have that step in place before proceeding with the trade-in transaction.