If I trade in my 2004 Ford Explorer and I have been only paying one year on it?

Question

Can I buy something with a cheaper payment?

Answer 1

Yes, you can trade it in for a cheaper car, but I'm guessing if you've only been paying on it for a year that you have negative equity in the car (your remaining loan balance is more than the value of the car), which means you'd have to roll this negative amount into any other car loan you get.

For example, say you intially borrowed $20k and the loan balance is now at $18k, but the current trade-in value is only $15k. That's negative $3k in equity. So even if you traded it for a $15k car, the net effect would be the same ($15k + $3k from last loan = $18k new loan...plus sales tax and titling, so you'd actually lose a little bit). In this scenario, you'd REALLY need to trade down in value to get a lower payment (like to say, a $10-12k used car). So you may find it's more worthwhile to tough it out and pay off your loan than lose another few thousand by trading it in.

Answer 2

Sure, get an older car with a lot of mileage and I guarantee your payment will be cheaper.