How do the “we pay off your loan” deals work when you’re trying to buy a new car, yet still have an old loan?
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I’m trying to get rid of my 2000 Dodge Durango. Yet I still have roughly ,000 on the loan. If I go to a car dealer that offers to buy out my loan, so I can purchase a new car with them, will they just tack on the extra ,000, even though my car is worth ,000, leaving me with a debt of ,000? Or will I now have to pay it all? Example: I buy a car from a dealer for ,000. I still have a loan for ,000. They buy my loan, I trade in my car. Is my loan completely wiped out? Or do I now owe ,000 for a ,000 car?
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spacemonkey1958 said:
Heres how it works:
Your Durango is worth $4k, you owe $7k and the price of the new car is $12k
$12000 price
– $4000 trade value
= $8000
+ tax on $8000 (say $560 for 7% sales tax)
+ dmv and title fees (roughly $250)
+ $7000 for your old loan
= $15810 – that is your total amount financed on the new caryou old loan is gone, but you have a new loan that includes what you owed on the old one. Usually when you do this they require a fair amount of cash down because the bank is loaning you almost 16k for a car thats probably worth no more than 10k wholesale
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0December 26th, 2009 at 12:04 am -
garrisonbight said:
You had it right the first time. You, like so many people, are upside down on the loan… you owe more on the car than it’s worth. You will see that $3000 added to the new loan and you will be PAYING INTEREST on it… and it will add that much to the loan… so… YES… you would owe $15,000 for a $12,000 car… and if you trade again and are still upside down on the loan, you will be retired by the time you get out of debt.
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0 0December 26th, 2009 at 12:04 am -
Constance B said:
You got it, you will pay the balance of your old loan minus the trade value ( you are what is called upside down , meaning you owe more on your trade than what is its worth), and you will pay $15,000 for your $12,000 car, but the loan is paid off and you have to worry about it no longer. They are not going to give you $7000 for a car worth $4000. Nothing is that good.
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0 0December 26th, 2009 at 12:04 am -
steve.c_50 said:
Yes, you owe 15k for a 12k car. It’s stupid, don’t even think about it. Were you to total the car , the insurance co would pay the depreciated value of the car and you would be out several thousand bucks and have no car.Plus if you trade again later, the problem just compounds.
That is a very,very dumb move. It took me 35 years to figure that one out.
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0 0December 26th, 2009 at 12:04 am -
artgrantz said:
Gotta go with Steve C on this one, it would be a bad move.
Do whatever you have to do to pay off the Dodge before buying another car. Work overtime, get a second job, but get out of that loan.
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0 0December 26th, 2009 at 12:04 am -
xx_satanic_mechanic_xx said:
everyone here is right, but for one thing.
It sounds like you want to trade this car in, with zero down, and get a new car. You will not owe $15k on a $12k car. You will owe more like $17K on a 12K car.
If you do not put down en ough cash to cover tax, title and license, you are financing those too. A question I pose to everyone who wants to do this: Don’t you think taxes are high enough, without paying interest on them as well?
Before the ink dries, you will be a minimum of $6k flipped, if not more like $8k. This car you are looking at had better be the one you want to drive for the next 6 yrs. Because you will NOT get out of it without some serious cash down next time.
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0 0December 26th, 2009 at 12:04 am
