Trade-in Finance question

[dummy86]

I know that this is my first post, I've been lurking for some time on this forum but havent posted yet.

I have a vehicle that I owe roughly 39k on. KBB tells me that it's worth 32k on trade-in.

If I was to trade this vehicle in for a car that costs around 23k that would leave me with near 9k left over.

My understanding of trade ins goes like this:

whatever your trade in is valued at, goes towards the prices of your new car, then the dealership pays off the remainder of your loan and it is rolled onto the price of your new car then you have 1 lump sum to pay off all-together. (example, car is worth 5k, I owe 10k. Traded in for a 35k car. 35-5=30k. 30k+10k=40k)

I understand this is confusing and a little long winded. But I am just trying to figure out what happens when you trade in for a car less than your trade-in value. Would I be totally screwing myself or would I end up owing less?

[UT-Engineer]

Good question, and im sure someone who has been through this will respond shortly, but what car do u have that u owe 39K on?

[PoorMansCamaro]

you basically have it, but you added a step that isn't necessary.

You have a 5k dollar car, but you owe 10k. You trade in for a 35k dollar car, you'd be paying 40k. The difference of your last car.

[PoorMansCamaro]

so in your case, you would be 7k dollars upside down. if you bought a car that was 23k, you'd actually be paying 30k.

[dummy86]

It's a Camaro, I was horribly upside down on my last trade-in. Hence the:

car worth 5, owed 10
car with 35-->35-5=30
30+10=40. That's where I stand right now, and with gas prices going up-up-UP, I am considering a trade in for a car worth substantially LESS to hopefully off-set my upside-down trade in this time around.

PoorMansCamaro, from what you're saying though at the end of the day I'd owe 30k for a car worth 23...am I correct or am I way off the reservation on this?

**BTW I know that There are a lot of people that would tell me that I'd be losing more money than saving if I did the trade-in vice keeping the Camaro and sucking up the gas difference. But this is my only DD and paying $60+ everytime I want to fill up (3-5 times a month) is getting a little much and is projected to only go UP. So I've given this plenty of thought and at this point I'm just trying to see where I'd stand if I made the choice to trade.

[Sir Nuke]

you are corect.....as you are UPSIDE DOWN now......you owe 39K, its worth 32K so for the dealer to pay off your car.....he will add the extra 7K into your new Camaro which is 23K.....thus your new Camaro would be costing you 30K.

[dummy86]

Thanks very much for your assistance y'all. It really sucks IMO that I even have to consider this. But with the recent pay scare I had (I'm military). I've had to consider what is more important to me: FUN or economic...and economic is starting to win out -_-

[UT-Engineer]

Originally Posted by dummy86

Thanks very much for your assistance y'all. It really sucks IMO that I even have to consider this. But with the recent pay scare I had (I'm military). I've had to consider what is more important to me: FUN or economic...and economic is starting to win out -_-

Good luck buddy. At the end of the day.... a car is just, well.... a car.

[brandotron]

Keep in mind that the dealer will NOT give you the KBB retail price. You'll get wholesale for it at most.

[Steve Dallas]

At first, I read this post meaning you wanted to trade in your fiance...

[2ndgenz28]

Can you trade in a fiancée?

[Stingr69]

You can't trade your way out of "upside down". You owe the money the same as if you do nothing and keep what you have now. They just tack it on top of a new car purchase.

My suggestion - Buy something reliable, cheap and fuel efficent and drive it till it drops. That will get you out of your hole and stop the "upside down" cycle. Some times you gotta do what ya gotta do. :updown:

[Russell James]

Not a chance it's worth 32. So the reality is probably at least 10K upside down.

Rolling that onto a 23K loan is going to be tough. And if a bank does do that - probably at an astronomical interest rate. What's your current rate?

I'd buy some lottery scratchers.

[Mr_Draco]

Originally Posted by Russell James

Not a chance it's worth 32. So the reality is probably at least 10K upside down.

Rolling that onto a 23K loan is going to be tough. And if a bank does do that - probably at an astronomical interest rate. What's your current rate?

I'd buy some lottery scratchers.

As a couple mentioned, dealers never give KBB. They are in it to make money and $32k is about what they will get out of it. Realistically expect $30k or less (I expect $27-$28k). Have you talked to any dealers to see what they will give?

Russell also mentioned something very important, banks hate upside down deals and most won't touch them. If you get a car MSRP of $23k the most you can expect to get is $25-$26k to cover sales tax and other fees, the rest that is owed due to the upside down trade in you will have to cover with cash or check. The banks that will do it will charge you almost a double digit interest rate for the next 5-6 years because for them, this is a very high risk loan.

Imo, if you are that far upside down, don't trade in. Save up a few thousand and buy a good reliable used car that is easier on gas since that's what your concerned about. This will save you money and you'll come out ahead in the end versus trading in your current car.