Auto trade-in How does it work???

Question

Okay so I'm 21 and a year ago I made a not so smart decision and I financed a car which I never should have due to finances (but hey I'll learn, I'm young lol)....I want to trade in my car for a cheaper car so that my payments aren't $466.67 anymore (YES I KNOW). I am upside down on my payments..Its a 2007 Toyota Camry, I owe about $20,000 and its worth about roughly $16000. How would a trade in work if I wanted to trade it in for a car that was like $8000. Would I just be paying the remainder of the toyota loan, and the $8000 would cancel out because I'll get about $16000 for trade in value..or how does that work?? Please help me.

Answer 1

depends on how much they give you but if its not more or enough to pay off the loan your not getting it

Answer 2

Depends how much they give you for your trade. If they give you what its worth(16000 but i doubt they will) then you are $4000 upside down and they add it to the price of the car you are buying. So it would go from 8k to 12k.

Answer 3

In your case they would take the amount you owe -  trade-in value. So you still would be negative $4000.

Then (if you get approved) add that to the $8000 of the car you want, for a total of $12,000.

Good Luck...

Answer 4

If your car is worth 16,000, a dealer might give you 14,000 on a trade.  That means you will still owe 6000 on the old loan plus 8000 for the new car.  On average your payments will be about 300 a month if they allow you to stretch out the new loan but that's not likely since it's an older car.  So in reality your payment's might not come down  a whole lot.  I would see if you can refinance the current loan for a better rate and bring the payments down that way.

Answer 5

Start with the assumption that the dealership is in business. So, whatever deal they make you, it will be done in a way that makes them money.

Suppose you have a car worth $16,000 (it would really sell for that value) -- that means they will only want to give you $13,000 for it.  That would let them sell the car for $16,000 and make $3,000.  (Most car dealerships make much more from used cars & trade ins than they do from new cars.)

So, you have $13,000 in your pocket & owe $20,000.  Thus, you need an additional $7,000 of your own money just to not be in debt--and all you have are your shoes. No car.

If you want to sell it, you should try to sell it outright....and try to get $16,000.  At least then, you will only owe $4,000 of your own money.  If it is an SUV, then you're really going to have problems because few people want them now.

You're in a genuinely tough situation and it will cost you money to get out.  If you could, you could pay more each month and buy down the value of the car until what you owe is in line with its value. Or, you could sell it, take a loss, and just pay off the $4,000-$6,000 while you ride the bus or ride with friends.

Since cars depreciate, and new ones do so Very Quickly, you can save a lot by buying one that's just a few years old (e.g., it's just coming off a lease). That way, other people have paid the most for the depreciation.

Good luck.