I have an existing loan on a car that I have been paying on for 2 1/2 years and was wondering if I trade that in for a new car (which I will need a loan for) how does my present loan affect a new loan?
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{ 3 comments… read them below or add one }
whatever is left after the trade in is removed will be added to your new loan. Kinda like buying a car and paying for 1.5 or more cars. Pay off the first one and then change cars.
Dealer will payoff your current loan…. but apply any negative equity to your new loan. For example, you owe the bank $10,000 but the dealer will only give you $7000 for your trade-in. The $3000 negative equity will be added to your new loan.
This is a quick way to financial ruin….. if there’s nothing wrong with your current car, keep driving it and keep making payments on it.
If you can’t fight the urge to trade in vehicles every 2-3 years, then you should seriously think about leasing.
By a "new" car, trust that you are thinking abou a "different" car.
If you have cars on a loan, I assume you are not daft enough to loose 10% as soon as you drive it out of the showroom.
The procedure is fairly straightforwards.
You can offer your current car to a dealer in part-exchange, bit will not get the best deal.
Best to advertise it locally, pay off the existing loan, then take out another one.
Bob