What happen if you trade in new financed car for used car at much lower price?

Question

I own $14K on my financed new car, and I want to trade it in for a used car worth $7K. How would that work? The market price of my car now is $11K.

Answer 1

Well, the problem is you owe much more then the car is worth.  You can trade it in when you purchase your 7k car and roll the payments into the new loan, but financialy, that is not a good idea.  The best bet is to sell your new car privately, and get as much as possible for it, and pay off the loan.  Your loan company will not let you sell the vehicle though without paying off the loan fully before they will give you the title. You didnt say what type of car you were trading in, what you were getting to replace it, although it doesnt matter much, and if you were trading it in to get a vehicle with better mpg.  You maybe better off holding it for a bit if it is a car that will be back in demand, but as far out as I can see, alot of makes and models will be getting cheaper with bigger manufactures rebates as the US auto industry is not selling vehicles right now.

Answer 2

If the market  vaue of your car is 11k, expect to get about 7500-8000 on trade.  Dealers have to allot for recon, detail, repair, and marketing the car, plus making a profit.

You will be trying to roll $6k in negative onto a car selling arounf $7k - making you owe $13,000 on a car worth about 6000 tops.  You will be burying yourself even further, and making no imprvements in you financial picture in any way.

forget the fact that a bank will not allow a loan for 200% of the car's value.  That is a good thing in this case.  Otherwise you would be in deep you-know-what.

Keep the car you have, pay it down, pay it off.  Then drive it til the wheels fall off.

Answer 3

You are starting you new loan with huge negative value.  You are digging a bigger and bigger hole for yourself.

You are making 3 biggest mistakes when selling and buying a used car

(1) trading in - instead of selling it privately

(2) going to a used car dealer - instead of private seller

(3) getting used car dealer financing.

You are giving the used car dealer a blank check to s***w you - with all that mixed up in one big deal.

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Separate the 3 - into 3 separate deal - so you know exactly what is going on.

(1) sell your car privately - if you own money, find out from your loan company / bank how to sell it.  You will most likely have to do a 3 way transation at the bank office AT THE TIME of sale (you , buyer, bank)

(2) go to a bank and secure a loan

(3) go find a car sold privately.

Good Luck...

Answer 4

Simple math.

You owe 14,000.

They will give you 11,000.

You are 3,000 short.

So you add that 3,000 onto the price of other car, or cough up the 3,000 cash to to pay off the difference.