when trading a car to a dealer, who pays the remainder of the loan, if any?

Question

car loans have a "buy out" amt, does the dealer pay this or is the driver responsible?

Answer 1

usually the amount of the loan left on the car will be put into the deal the car dealership gives you on the new car that you are purchasing.. if that is what you are wondering about.. so if you have lets say $500 left on the loan, that amount will be added to the final price the dealer gives you on the new car.. and then all of that will be the amount on the new loan you are taking out

* and in addition, this can be a good deal if the dealership has a good financing deal going on and the terms of your old loan is not as good.. but just make sure you ask a lot of questions when they bring you back to talk to the finance officer.. this is where a lot of people can get into trouble if they dont

good luck

i hope that helps

Answer 2

When you purchase with a trade involved, most of the time you will find that the dealer will not reduce the selling price of the new vehicle so that they can show you more money for your trade. This is called "over allowance" of the Actual Cash Value (ACV). The ACV is the correct wholesale price of the trade vehicle at which the dealer needs to own it in order to still make a profit on it later.

The way this figures into the equation you need is that, the more they can show for your trade on paper, the closer you are to the payoff amount. As others have already mentioned, the difference is rolled into your new finance contract, meaning you are paying it off through your new payment.

My suggestion is that, if you don't absolutely *need* this new car, don't trade it yet. Get it paid off first. That way you're not refinancing the balance all over again. I know the temptation is to have what everyone else is getting, but you'll thank yourself later when you have money left each month to indulge yourself in other, more important things.

Answer 3

the payoff must be met in order for the dealer to take possession of the old car if it is being traded in

the old lending company has the old car as collateral for the loan and you cannot give the collateral (the car) to the dealer without paying off the loan.

How the old loan is paid off is figured into the deal on the new car. If the dealer won't give as much on the old car as the old loan is worth, then the rest that is owed is added to the new loan on the new car.

Ultimately, it is the person whose name is on the loan who is responsible for seeing that the loan in their name is taken care-of. However, the dealer is the one who arranges to make the final pay-off payment to the old loan company. Papers are usually signed to this effect during the deal.

It's a finely orchestrated event. But dealerships handle this stuff all the time, and they are good at it. USUALLY anyway.

Good Luck!

Answer 4

the remainder of the loan on the trade-in is usually paid by the dealer and becomes part of your payment/cost of the new car.

Answer 5

The dealer pays off the loan...... but depending on whether you're upside down or not, the negative equity will be applied to your next car. For example, you owe $7k on the car but the dealer only offered you $4k for the car. Tthe dealer will then pay the full $7k to pay it off. Then add the $3k negative equity to your next car. But if your payoff amount is $7k but the car is worth $10k, the $3k "positive equity" will be used as downpayment.

Got it? Good.

Answer 6

Most of the time, you do. It's what they term ' a roll over'. They roll the remaining balance over on to the new loan.

Answer 7

yea the first answer is right unless the dealier is having a sale and they say spacifically that they will pay off your old vehical no matter how much you owe