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This sounds like fraud by the dealership. I would contact the Attorney General in CA as well as the CA DMV to lodge a complaint about the dealership and see if they know anything else that might be able to help you. By not paying off your existing car they have at this point stolen that money from you as far as I can tell. They are also not going to be able to sell that car since it has a lien on it. You might also check the CA DMV website to see the registration status of that vehicle. Have monthly payment been made on your old loan or is it in default for nonpayment?