SoundSpeed

If you have a car that is not paid off, say you owe $7000 on it, I heard that if you attempt to trade in the car the $7000 gets added on to the price of the car you are trying to bye. So basically, you are paying for your new car and your old car. Is this true?

tgif

No, it is not true. It really depends on the value of your car. For example, you owe $7000 on your car loan, and the Kelly Blue Book said $6000. There is a difference of $1000, this is so called "negative value" or "up side down". The $1000 just roll it over to your new car loan. If it is the other way around, you owe $7000, and the KBB value is $8000. You have $1000 "equity". So, when you trade it in, that "equity" will treat as a down payment.


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2002 Acura TL Type S
Nighthawk Black Pearl
Parchment Leather

SoundSpeed

Do you negotiate what the car is worth, just like you would normally negotiate a trade-in?

So, if I get them to say my car is worth $14,000, but I owe $7000, then I should get $7000 that will count as a down payment, correct?

1000bpm

Given that I’ve traded in 2 cars in the last 45 days I should be able to answer this one :-).

It’s very simple really. Let’s say you decide to trade in your 2000 3.2TL for a TLS. Your dealer gives you $ 22,000 on your ’00 on which you still owe $12,000 in payments. The purchase price on your TLS is $32,000. The cash price on the deal is $32k - $22k = $10k. Add the amount you owe on your ’00, i..e $12k to the $10k to arrive at a total of $22k. Assuming you make no downpayment, this is the amount to be financed.

Never never reveal to the dealer that you’re going to be trading in your car until AFTER you’ve negotiated the price of the car that you’re going to buy. Dealers sometimes will give you an excellent deal on the new car but will screw you on your trade-in. Remember that trade-in’s are a major cash-cow for most dealers. If the dealer is lowballing you on the trade in, try selling in the pvt. market. Keep in mind though that you will lose the tax benefit of trading in (paying sales tax on only the difference). Its been my experience that if you have the time and patience to sell to a private buyer 9 out of 10 times you are better off and stand to make a net gain.