trade in my car?

Question

i have a car loan of 20000, i want to know if i can trade it in for a cheaper car..........how does this work????

Answer 1

You are missing an important piece of information in your question. What is the current value of the vehicle that you are thinking of trading? Do you have equity in that car, or do you owe more than the current value.?

If you owe less than the balance owed, you can trade the car in and purchase a less expensive vehicle, using the equity as a down payment. If you owe more than the car is worth, you would have to pay the difference, either in cash, or by rolling it into the loan on the new vehicle.

For example, using your $20,000 loan balance:

1) Your vehicle has a current value of $35,000. You owe $20,000. You have $15,000 in equity to but down on another vehicle.

2) Your vehicle has a current value of $20,000. You owe $20,000.
You have no equity. You could buy another car, but may need to put money down on the new vehicle.

3) Your vehicle is worth $10,000. You owe $20,000. You owe $10,000 more that the value of your car. You would need to either pay the difference, or finance it as part of a new vehicle loan.

You say you want to buy something cheaper, so I assume that you are trying to lower your payments. If you are in a negative equity (3) situation, it will not be an easy thing to do. If you have equity you can use that to buy something more affordable!!

Answer 2

My guess is that you are "upside down" on your loan, meaning that you owe more on the loan than the car is actually worth in a trade or a sale.

Unfortunately, car dealers mislead people like you when they say they will take your old car and pay off your loan. That is true, but the negative equity on your old loan is simply rolled into your loan. All of a sudden your low car payment on your new car becomes a large payment again, because you're paying off two loans now with a single payment.

The best strategy is to stick with the old car until you have some equity - until you are not upside down any longer.

Answer 3

Sounds fishy... yet once you hand somebody a *signed* identify of possession, you're in result giving them your motor vehicle. happy which you probably did no longer sign, yet this continues to be no longer secure... aside from them no longer providing you with the money for the commerce, they might nevertheless paintings w/DMV to circulate possession and so on... possibly by a lien. Please be direct with them, you like you cash... the dealership owes you, and who's to assert what the tale is going to be in 25 days?