What is there to know about trading in a car for another one.?

Question

I have a 2006/dodge neon and it is not paid for. I want to trade it in to get another car a little larger. Do I have to give money on a down payment or just the car is enough?

Answer 1

You can do anything, it all depends on a few different factors, most commonly:

a. how good is your credit?
b. how much money are you putting down?
c. how much do you owe on your old car?

Here's how it works out:

The better your credit is, the more money a bank is willing to loan you.

Here's an example: Lets say you have excellent credit and you want to buy a Dodge Ram that costs $18000. The bank will approve you for around $30000 worth of financing. That means you can not only buy the truck, but a heck of a lot of accessories as well, and, if necessary ... roll in some negative equity from a previous loan. (Negative equity occurs when you trade in a vehicle and you receive less for the trade than what you actually owe)

Here's the same scenario for someone with decent credit:
The banks may loan 21K on that 18K truck, i.e. this person can finance the full amount, but not much more.

And finally, the same scenario for someone with poor credit:
The banks might loan this person 15K on a truck that costs 18K, therefore automatically causing a necessary 3K-4K down-payment, not counting TT&L.

Now, lets find out if you're "upside-down": Do you owe more money on your Neon that what it is worth?

Some things to consider are: The Neon depreciated 30% the moment you drove it off the lot.

So, unless you put down at least 1/3rd when you bought the car, most likely you are whats called "upside-down", meaning that you owe more on the car than what it is worth.

This might still be ok because here's what the dealership can do.

I'm gonna illustrate a scenario where you're buying a Chrysler 300 C and trading in that Neon for it (with some negative equity)

We're gonna assume you owe 13K on the Neon and its worth 8K.

Chrysler 300C going for 25K. First they subtract the trade value, so 25K - 8K = 17K. Next they take that number and add tax, title, and licensing fees to it, so that'll bring us to roughly 19K, and then, they throw what you OWE on your old car, ON TOP of that amount, so 19K + 13K = 32K, which would be the grand total of your new car loan on the Chrysler 300C.

Next, here's a scenario where you're NOT upside down, we will assume your Neon is worth 8K and you owe 7K.

Chrysler 300C for 25K - 8K trade value = 17K, take that and add some tax title and license on it and we've got 19K, once again, add back in your old loan, so 19K + 7K = 26K. Not too shabby of a deal, right?

Anyhow, thats the two ways for things to work out, at the end of the day you realize that at some point or another, you're going to have to put some serious money down in order to not be upside down.

So what can you do to avoid all this crap?

Here's a few solutions:

1. Buy a new car that has a huge rebate on it so that it will off-set or even pay for your negative equity

2. Wait another year or so to let your payments off-set the depreciation on your car

3. Wash your Neon and fall in love with it all over again.

BTW: 3 is the best option for you right now I think.

Answer 2

with it being a 2006 you probably Own more then what the car is worth at this point. So if you do trade it in you will need to find a dealer who would be willing to pay the car off first. Normally when this is done they do expect something down (normally it's $1000.00) Find out what the Blue book is on the car (Look at both the high and low) then look at what you owe on the car. If you owe less then what the blue book is then you have value in the car. dealer most often takes the low value. other wise you may just want to sell the car yourself. You normally get more for it and then you can pay the car off and use whats left for the down. If the car is completely paid off then you have the full trade in as a down and you do not need anything.

Answer 3

Unless your ready to take a huge financial loss on the neon I would wait. The car is not worth anywhere near what you more then likely what you owe on it and may never be until the last year of the loan. The only way possible that it might be is if you put 1/2 down and took a three year loan. Save your money and rent a larger car for those special times you might need a little more room.

Answer 4

If you trade in your car the trader will give you about 2K less than what its really worth. And he will charge you at least 1K more on your new car that what that is really worth.. do you really want to give up 3K for nuthing??.. car traders are not charities. Sell your car privately !!.. you will need to pay the finance off 1st though which is where it becomes complicated becuase you cant do that if you havnt sold it. Lol.

So.. Be brave and buy your new car 1st.. (I have no money u r thinking?).. Get a personal loan.. AA are the cheapest at about 6% which is probably cheaper than your hire purchase agreement. You will easiliy pass there credit tests if you already qualified for your hire purchase loan. AA wnt ask you for your fist payment for a couple of months.. When you et the money ring finance company and ask for a 'settlement figure' then pay the balance using your new loan.

Now the neon belongs to you.. you can sell it !! If you end up with out a car while looking for a new one.. who cares.?? the cost of hire car for a coupel of weeks wont amount to 3K will it ?.. no more than a couple of hundred.

hope thats helpful.. it about time we stopped giving charity to dealers. There cars are rubbish and mostly come from auction.

Answer 5

I would believe that the car should be enough although you would get more money for the car if you sell it outright.A dealer will never give you what it is really worth.Sell the car first.You can check with Kelly Blue Book as to value.You may not get what the book declares due to being a private seller.Only Dealers can get the Full Book Value because by law they have to warranty the vehicle.

Answer 6

hi, first thing is, you need to know what the diff in cost is between the two cars so if the car you wanna trade yours for is more expensive, you need to calculate how much more it is expnsive than the car you have. That is how much you need to pay on top. Most places you can get great deals but you must ask for it.