Trading In A Financed Car.

[linx]

I financed my car a little over a year ago. I’ve probably had it for about 14-15 months now. First off, when all is said and done, I’ll be paying between 13,000 and 14,000 for the car. I forget the exact amount to be honest. I’ve had nothing but bad luck with the car since I’ve had it and I’m still completely unhappy with it. Good thing I’m a rather calm person or I probably would of drove the car off a bridge by now. The car is a very nice car, but I’ve just had numerous problems since I’ve bought it.

I want to trade it in and get another car. I’m not sure how it works since I financed the car. There’s obviously different rules in my situation because I don’t actually own the car, ya know? I’m wondering how it will work. Lets say I go to kbb.com and it tells me my car is worth 9,000 in the condition it’s in right now. Lets also say I owe 9,000 on it. That’s what I have left to pay on the car. If I go to the dealer and he just happens to offer me 9,000, what then? What happens with the place I financed the car from? How do they get involved? Also, what would happen if the dealer offers me less than what it’s worth and what I owe? What happens then? Lets also say that there’s a few problems with the car that aren’t exactly MAJOR. How does that come into play when trading it in?

So lets stick with 9,000. When trading it in, the dealer just happens to make me an offer that matches both what the car is worth and the amount I owe on it. If I want to then finance a car from that dealer for 15,000, what then? How does everything come into play with that? How would everything work? There’s more questions I could ask, but i’m hoping you all see what I’m getting at.

I’m asking a lot of questions because I don’t want to rush this. I want it to happen, but I don’t want to get fucked again. I need to start over with a new car that isn’t going to cost me thousands of dollars within the first months of having it.

If anyone can answer any of these questions, I’d appreciate it very much

Thanks.

 

[Synful*Luv]

What usually happens is the dealership finds a finance company that will pay off the total amount due on the car, including interest as well as finance you for a new car. If you do not get the amount for your car that it's worth, the extra money is added onto your new car note.

I.E.

Your car is $15K.
Your car is worth $10K.
Your new car is 20K.
The other 5K is from your original car is added onto your new car making the total amount being financed 25K, which means you're paying a lot more interest to the finance company.

9/10 you're going to get screwed and end up paying a lot more for your car than it's actually worth. Usually the dealers only give you half of the actual car value anyway, if that.

You can try to do a payment takeover thing. A lot of finance companies will let you sort of sign your car over, so to speak, to a new qualified person who is interested. Then the car is no longer your responsibility, however, you lose the money you've put into it so far. In the long run though, this is probably cheaper than trading in the car if you aren't going to get the full value of it.

 

[linx]

You can try to do a payment takeover thing. A lot of finance companies will let you sort of sign your car over, so to speak, to a new qualified person who is interested. Then the car is no longer your responsibility, however, you lose the money you've put into it so far. In the long run though, this is probably cheaper than trading in the car if you aren't going to get the full value of it.

That's not really an option though. I would never give anyone this car. I'd feel too bad.

I know i'm gonna pay more for the car than what it's worth anyway. That doesn't really matter to me. I just need to get rid of my current car and get a nice new one. And I wanna do it with having to dish out as less money as possible. The car isn't in bad shape at all. It's in good shape. There's a few things that need to be fixed, but nothing huge. I already paid off about 14 months on the car PLUS 2,500 or so for repairs and bullshit like that. But I could really care less if I lost all that money. As long as I get rid of the car.

 

[linx]

Also, do dealers tend to not do trade in's on financed cars if the person still owes a high amount on the car? By high amount, I mean.. I don't know.. like 8,000-10,000? Or does it not matter to them?

Also, is there any kind of penalty or anything if I was to trade in a financed car? With the place i'm financing it from. And if it was to happen and a finance company does pay off my car, would I avoid all the interest from then til' the time I would have ended off paying off the car myself? Know what I mean?

 

[Synful*Luv]

Also, do dealers tend to not do trade in's on financed cars if the person still owes a high amount on the car? By high amount, I mean.. I don't know.. like 8,000-10,000? Or does it not matter to them?

Also, is there any kind of penalty or anything if I was to trade in a financed car? With the place i'm financing it from. And if it was to happen and a finance company does pay off my car, would I avoid all the interest from then til' the time I would have ended off paying off the car myself? Know what I mean?

As far as I know, as long as your credit is good enough to get approved for a loan that high, they could care less. The higher the principal, means the more interest you're paying, which is god for them.

There shouldn't be a penalty, i've done this three times before with no problem. I don't know if it varies by location though. I do believe that the way it works is you would avoid the compound interest, but you would still be responsible for interest based on the principal value of the car, I think, but i'm not 100% certain on that. You would pay less interest in total than if you had paid the car off yourself though because it's not compounding still.

 

[keco52]

In my experience...If the dealer offers you less than what you owe I believe you have to pay the difference right away. It doesn't rollover onto the new car. But it might be different if you financed through the dealership...I d.k.

Like syn said...with the payment takeover. That would probably be better...I bet you owe more than what the car is worth right now.

 

[Maverick]

this is a very good topic. i like my new car and everything but i always wondered what happends in a situation lilke this..

out of curiousity, linx, whats ur year/make/model?

 

[Sirrush]

Best site to help with some of your questions.

Also what is that car make and model all that good shit. Thanks

http://www.carbuyingtips.com/

 

[ARon]

Don't trade your car in unless they cover what you owe.

 

[S. Fourteen]

linx, it's killing me - please tell me the make, model and problems of your car. I just want to know for future reference - I'm not here to hate.

If you tell me, I will print this out and make my step-dad read it - he's been working as a loan officer of car dealerships for over 15 years.

 

[linx]

If you tell me, I will print this out and make my step-dad read it - he's been working as a loan officer of car dealerships for over 15 years.

You'd be the man for that my dude.

I have a 2002 Mazda Millenia S. Like I said, it's a nice car. A VERY nice car. I've just had problems with it since i've had it. I haven't been able to do shit to it. That alone pisses me off. I found a Mazda forum with a Millenia sub-forum. The people there are real helpful. There's a shit load of them and there's a LOT of posts there too. I'm still amazed at how many people have problems with the Mazda Millenia. Alot of them are problems other Millenia owners have too.

Here's what it looks like..

 

[S. Fourteen]

Ah... Millenia. I have a friend who went through a similar situation. Thanks. I'll probably watch the game with him on Sunday, so hold on tight.

 

[DeeezNuuuts83]

I used to work at a car dealership. I didn't completely read through your original post since most of it seemed to be about how you don't like your car, but here is an example of what will happen, all with arbitrary numbers.

$25000 - selling price of new car you want at dealership
$15000 - dealership's offer for your trade-in
$10000 - amount you still owe on your trade-in

What a dealership does with a trade-in is typically to pay it off then put it on their used lot (if they have one, especially consisting of cars of different manufacturers) but at your cost. Based on these numbers, the total out-of-pocket amount is going to be $20k, since your car is worth $15k but you owe $10k, which they will have to pay off to possess the title, so basically you will have a $5k credit toward the purchase of your vehicle. However, this could be your situation as well:

$25000 - selling price of new car you want at dealership
$5000 - dealership's offer for your trade-in
$10000 - amount you still owe on your trade-in

In this scenario, the vehicle you are trading in at the time of transaction has a value lower than what is owed. This is what the auto sales industry calls being UPSIDE-DOWN. This is typically due to any combination of a car being older, in poorer condition, having a lot of miles, or just a low value because the car is in low demand for whatever reason. It happens more so to people who drive their cars a lot or had payment plans where they had too small of a down payment or they stretched out their monthly payments to a longer period of time with smaller payments or if they had a lower credit score that yielded a higher APR. In this case, you'd be paying $30k, since they're offering $5k but to pay the car off, they need to pay $10k to possess the title, once again out of your pocket. So you can either bite the bullet this way or just hold onto the car, though you'll pretty much be upside-down no matter what you do.

 

[Jeremy]

Never finance a car unless you just want to waste money.

 

[DeeezNuuuts83]

Never finance a car unless you just want to waste money.

Well, not everyone has $30k or so just sitting around, which provides the option of not having to finance a car.

Obviously paying cash is the best option financially, but the next best thing would be to finance as small of an amount as possible through as large of a down payment as possible.

 

[Jeremy]

Well, not everyone has $30k or so just sitting around, which provides the option of not having to finance a car.

Obviously paying cash is the best option financially, but the next best thing would be to finance as small of an amount as possible through as large of a down payment as possible.

Oh fuck, I'm sorry. I thought it was a lease. I wasn't thinking.

 

[linx]

wtf @ moving my post. goddd.

 

[linx]

In this scenario, the vehicle you are trading in at the time of transaction has a value lower than what is owed. This is what the auto sales industry calls being UPSIDE-DOWN. This is typically due to any combination of a car being older, in poorer condition, having a lot of miles, or just a low value because the car is in low demand for whatever reason. It happens more so to people who drive their cars a lot or had payment plans where they had too small of a down payment or they stretched out their monthly payments to a longer period of time with smaller payments or if they had a lower credit score that yielded a higher APR. In this case, you'd be paying $30k, since they're offering $5k but to pay the car off, they need to pay $10k to possess the title, once again out of your pocket. So you can either bite the bullet this way or just hold onto the car, though you'll pretty much be upside-down no matter what you do.

Honestly.. I wouldn't really give 2 shits whether or not they gave me enough to pay off the car. If they somehow can pay the car off for me and give me a new car I want, that's fine. If I gotta pay them an extra couple thousand on top of what i'd owe them for a new car, fine. As long as I get rid of this one. I could care less.

 

[linx]

$25000 - selling price of new car you want at dealership
$5000 - dealership's offer for your trade-in
$10000 - amount you still owe on your trade-in

Wait, so lets say this right here is the situation. If they offer me 5,000 less than what I owe on it, are you saying that i'd have to pay the other 5k (or what ever the actual number would be) out of my pocket?

 

[DeeezNuuuts83]

Wait, so lets say this right here is the situation. If they offer me 5,000 less than what I owe on it, are you saying that i'd have to pay the other 5k (or what ever the actual number would be) out of my pocket?

Assuming that you agree to their offer, yes, somewhat. So based on that scenario...

$25000 sale price for new car
$5000 offer for trade-in
$10000 remaining principle on trade-in

= $30000 for everything, said and done. If you choose to finance, they will divide the total ($30k) plus interest into however many months.