Trading in financed car...?

Question

I have a Mercedes I still owe about 18K, but Im looking to trade it in for a different car, I know I'm upside down but would trading the car in for a cheaper one be a better or worse idea? Im not really in a hole, just looking for a smaller car.

Answer 1

By the time you factor the negative equity into the new loan, even buying a cheaper car may result in the same or more monthly payment.  

Answer 2

It's really depends how much they will give you for the Mercedes! If you owe much more than what they will offer if you trade it in, than it won't be a great idea. If you owe more than $3000 than what they give you, then just keep it for a little longer, at least, until they give you as much as your payoff amount would be. Let's say you get something cheaper, like a new Civic, for $18.000, plus the negative equity that's on the Mercedes, plus tax, and all fees, (which is an other $2000), so the new Civic is now going  to be like $23.000 than. Unless you really don't like the Mercedes and would be able to afford to trade and the new balance..

Answer 3

Like the first answer said if your looking to get a lower monthly payment the car will have to be alot cheaper to get a lower payment. If you gave specifics on your car I could tell you how much its worth and if you tell me what your payment is I could tell you how much you can spend on a new one to get a lower payment.