How does trading in a car work at a dealer?

Question

this is my first time and i have a car i want to trade in but i owe money on it. what can a dealer do to help me? do i need to have money to put down on top of it? hows does the process work?

Answer 1

Depends on how much money you still owe, and how much your car is worth as a trade-in.

If you still owe more than the car is worth, you have no trade value. In fact, you have negative ownership value. Dealers, however, will tell you that they will "pay off your old loan" but what they might not tell you is that your negative equity is ADDED to the price of your new car, and you will essentially be paying off two loans at once, making your new car more expensive.

If, however, you owe less than the trade-in value of your car, you have some positive ownership value that can be applied as a down payment to reduce the price of you new car, after the dealer pays off your old loan.

Good luck.

Answer 2

You are what is known as "upside down" on your current car.  Let me just plug in some numbers:

Say your current car is worth $5000 but you owe $8000 on it, and want to buy a $24000 car.  Basically you'd need a loan for $27000 (the cost of the new car, plus the $3000 that you're short on your old loan).  Of course, if you wanted to, you could put $1000 down and get a $26000 loan.

Where you're at is generally not considered a good place to be.  Think about whether you *really* need the new car.  Maybe you do, but maybe you don't.  Also think about the odds of losing your job in the near future - are you in a stable industry?

Answer 3

They way the numbers work is like this.

      $15,000 - price of new car

    - $5,000  - value of trade

    = $10,000 - selling price of new car

    + sales tax on $10,000 say $700 for 7% sales tax

    + fees, say $225

    + amount left on your old loan, say $8000

    = $18,925 - total financed of new car.

This makes it difficult because your trying to get a loan for $19,000 from the bank on a car thats probably worth less than $14,000 wholesale. Having very good credit and/or putting a fair amount of cash down will help this. If your car happens to be worth more than you owe (which is highly unlikely unless you owe very little on the car or its a rare model or something) then the amount of money the dealer gives you over the amount you owe will drop the price of the new car.

As for tips, Im sure people will tell you to sell it on your own because you will get more money instead of trading it to the dealer, just remember when you trade it in you will save money on the sales tax of the new car and selling on your own is not a sure thing, you may need to spend money adverstising the car.

To get the best price from a dealer just shop around with different dealers and get price quotes. Dealers will always beat another dealers price qoute for your car, but what they will do is just charge you more for the car your getting. The number that is important is what your trading for. For example a dealer offers you $5000 for your car and sells you an 06' Fusion for $14,000, so your trading for $9000, another dealer may offer you $6000 for your car but try to sell you a similar Fusion for $15,500 so your trading for $9,500. Just decide what you want then compair similar cars at different dealerships.

Answer 4

both of the above are good answers but you may not be upside down it will depend if you owe more for your trade than what it is worth in trade.just go to a dealer and pick out the car you like and can afford thats what the salespeople are there for to help you pick and let them look over your trade and they will show you the sale price of the car the value of your trade and what you owe and then the out the door price.its not very hard .