I bought a brand new car in 2005, I financed it and now I want to trade it in. Does anyone know how it works?

Answer 1

You car is worth X amount.

You owe X + Y.

you will be given X for the car at the dealership, and Y will be rolled into the new loan, assuming that you qualify for a loan that will cover 130% or more of the value of the car.

But who am I foolin, if you could actually have followed any of the above, you probably wouldn't be asking this question.

Answer 2

Wow it seems like only rich people post on this forum. If you owe on a car you bought in 2005 you probably owe more than the car is worth. This is called negative equity. When you go to get your next car the dealer will figure out what they are selling you the new car for then add, your negative equity to that and finance it with a bank. If you have good credit from your payments on this car then you may be able too. If you paid poorly then you will have a large downpayment. If the bank can finance you then try a 60 or 72 month loan so the payments aren't crazy, but you can't just change every year after this because then your paying off money you owed for a car you don't have anymore in your new car payment. The dealer does pay off your loan to get a clear title, but the money above what your car is worth is the neg equity. Good Luck

Answer 3

When you decide on another car - the cost of the new car and how much is left on the 2005 car will be the amount a dealer has you financed for. Some lending institutions may or may not wish to pay off your 2005 and add the cost of the newer car depending on your credit rating. If your credit rating is low then you will have to pay off your 2005 before you look for something newer. You may end up paying at a higher interest rate, because of the balance still due on the 2005, than you really want.

Answer 4

You don't say where you are in the loan process, but I assume that you have not paid off the loan on the car you bought in 2005. If you trade that car in, you will roll the old loan into a new loan for the new car.

Not a great idea. Never take a car loan for longer than 36 months (3 years) for this very reason. If you took a longer loan, you probably have not paid down the balance very much since you have only been paying interest.

Taking out a new loan will put you "upside down" meaning that as soon as you drive off the lot with the new car, you will owe more than the value of the car.

I suggest getting a part time job to earn extra money to pay toward the car loan you have now. Get that all paid up before you buy another car and try to pay as much cash down as you can and borrow for a short period of time.

Answer 5

When you go to the dealer to buy a diff. car let them know you have a trade. They will drive your car and appraise it. When they give you the numbers they will show you a "differance". This number is exactly that, the number difference in your trade and the new car. So, when you see this number remember that you must add your payoff to the difference and this will give you the financed amount.

Answer 6

Chances are your lending company will finance your new car and add the balance from your existing loan to your new loan.....Good idea to finish paying off the existing, but you know your finances better than I.....