Vehicular question (sort of BR)

melrob613 · March 2014

We are going to have to get a new vehicle, because neither of ours can seat 5 persons. My car is a used 2009, just recently purchased (not even 2 years of payments made), and DH has a 4 seater suv, paid off and in pretty good condition.

We have never attempted to trade in a car with it not being paid off, and I told DH it would make more sense to try to trade in my car and only still have 1 car payment due, as opposed to selling his car at BBV and adding another car payment to our wallets.

Does anyone have experience in car sales, that can explain to me how they go about doing a trade in on a car that is still new in payments? Am I better off going to a big name dealer, or a little "no credit/no problem/low payments" place?

TIA

beckynsean11 · March 2014

With your car, they will give you a trade-in value just like they would do with any other car. The difference is, you'd need them to offer more for trade-in than you still owe for it to make sense. If they don't the difference between what you owe & what they offer you gets added(for lack of a simpler way to explain) to the loan on your new vehicle. I'd think you'd probably be best off getting them to give you a value for each vehicle before you make a decision. Also, go into it knowing what you're willing to realistically accept as trade-in on either. Trade-in value, just like everything else, is negotiable.

That's where my experience ends

Good luck!

beckynsean11 · March 2014

MrsSparklebottom said:

It would depend on how much you owe on the car. Part of the problem trading in a car that's just been purchased is if you owe more than they'll give you for the car. Then you're just adding on to your debt, paying for the interest. Figure out what a dealer will give you for your car, then determine the difference between that and what you owe.

Selling your car privately may be the way to go. You tend to get more money that way, I think.

Agreed, private sales are usually more profitable. Sure you'll end up with 2 notes in the end, but you should be ahead overall.

punnybunny · March 2014

Personal preference- I would go to a dealership, it feels less like I'm going to be taken advantage of. When we bought my Corolla (used) from a Kia dealership, we got free car washes and reminders about maintenance checks. Obviously, not necessary, but it was nice and the dealership was conveniently located enough to make those things worthwhile.

Payments and finances depend on things like buying vs leasing. But based on how I read your post, you bought your car and still have payments/owe money. In that case, if you trade it in, essentially the amount owed gets added onto a new car payment (depending on how much the trade in is worth).

For example: my corolla was $15k used, I think it's worth about $11k now according to Kelly Blue Book. If I have been making extra payments and more than minimum amount payments, I could potentially owe less than it's worth. For this example, let's say I owe $8k. If I traded it in, I could get $3k back and put that toward a new car purchase.

If I had been making minimum payments and, for this example say, I still owed $13k, that extra $2k debt over what the car is worth would be added to the purchase price of a new car. (This was really long to type on my phone, so I'm really sorry if it doesn't make sense.)

melrob613 · March 2014

@beccalou That made perfect sense. The examples were what I needed. I hoped it was something like that.

So I have to figure out what we've paid, what the car is worth, then see who will give me the best offer for it.

And then find a detailer that likes me and will hook me up with a thorough cleaning. TBH I wasn't planning on needing a bigger car, so having a 5 and 2 y.o. making the backseat their second home is gonna hurt me in the long run.

Katsouza1 · March 2014

STAY AS FAR AWAY FROM NO CREDIT NO PROBLEM AS POSSIBLE. Best thing to do is look up your vehicle on Kelly Blue Book and the NADA and get a rough estimate of what it is worth. Next step would be to call your bank and get an exact vehicle pay off so you know how much you owe on your current vehicle. this will give you an idea of how much money in trade you have or don't have at your disposal. Then begin research on what you want to purchase, look around online and educate yourself on a fair price for the new/used vehicle you want. Go into the dealership armed with everything you have learned, be specific in what you want and see what they can negotiate for you. In the mean time I would put aside as much as you can for a down payment. The more cash you have in hand the more power you have at a dealership. Also check out dealership reviews on Yelp and the like.

Oh and what @beccalou said.

beckynsean11 · March 2014

Ohh one more thing I learned with my last purchase, be absolutely ready to walk if you don't like the deal. I flat out refused to even test drive anything until I had a value for my car that I was willing to accept.

blue+skies · March 2014

I also agree with private sales usually get you more than trade ins, but one other thing to consider is sales tax. In many states, you only pay sales tax on the different between the new car and the trade. So when you take that into account, it may make more sense to trade. It did for us.

For example, if they give you $15k for trade, and you pay $20k for your new car, then you would only pay taxes on $5k of your purchase instead of the full $20k. If taxes in your area are 5% then you are paying $250, instead of what would've been $1000 on the full purchase. Like I said though, it's state to state, so I'd check!

sprocketsngadgets · March 2014

We just went through this a few weeks ago. Went to a dealership to see what we could get in trade in value, ended up more than we owed. Boom, new car with no mystery noise and a passenger door you could open from the outside. I also second the tax thing. Keep in mind that a private sale becomes taxable income as well

SaraPEwell · March 2014

We just did this on Saturday (the Mini Cooper was not family friendly). Know the payoff value of your car, and what the trade in value is before you go. We negotiated the trade in value to cover the outstanding loan on the mini and from there it was business as usual for buying the new car. Good luck!

nilvero · March 2014

Sometimes if the difference in the pay-off and the trade in value is not that big, you can negotiate to have it included. I did that when I traded in my Saturn Ion for my VUE. (Before Saturn bit the dust!) Then you're just basically buying the new car without a down payment or trade in. Some dealers are more willing than others to do this, especially if it's a car that they know people will want to buy.

ve304856 · March 2014

beccalou12 said:

Personal preference- I would go to a dealership, it feels less like I'm going to be taken advantage of. When we bought my Corolla (used) from a Kia dealership, we got free car washes and reminders about maintenance checks. Obviously, not necessary, but it was nice and the dealership was conveniently located enough to make those things worthwhile. Payments and finances depend on things like buying vs leasing. But based on how I read your post, you bought your car and still have payments/owe money. In that case, if you trade it in, essentially the amount owed gets added onto a new car payment (depending on how much the trade in is worth). For example: my corolla was $15k used, I think it's worth about $11k now according to Kelly Blue Book. If I have been making extra payments and more than minimum amount payments, I could potentially owe less than it's worth. For this example, let's say I owe $8k. If I traded it in, I could get $3k back and put that toward a new car purchase. If I had been making minimum payments and, for this example say, I still owed $13k, that extra $2k debt over what the car is worth would be added to the purchase price of a new car. (This was really long to type on my phone, so I'm really sorry if it doesn't make sense.)

We traded in DH's car a few months ago bc his car died and we still owed $3k on the car. He just needed a cheap car to get to and from work but he had to get a nicer car with more features than he needed (sunroof, remote start etc.) to make the value of the car more to cover up the $3k that we world add on to the new loan. Since the basic car he was looking at was not valued much more than it was listed as there was no equity to cover the extra $3k. I hope that made sense.

melrob613 · March 2014

Thank you all once again. You have definitely helped this make sense in my head. DH already knows what he wants, so we just have to do the back research into my car.

melrob613 · March 2014

From what I understand with leasing: you have to ensure the car is basically immaculate when you return it . No baby spills, messes or anything else that showed you used the vehicle. And you have to watch your mileage.

That is why I won't lease, I am a messy person.

MMason12 · March 2014

In 2012 we traded-in an 08' Ford Fushion that had almost a year (or two) worth of payments left. We traded it in for a 2012 Ford Mustang for my husband's 30th birthday. Basically after the trade-in offer we had around $2,500 left on the loan for the Fushion. We just rolled that balance over into the new loan we took out on the Mustang.

That just means that our balance on the new loan was automatically more than the Mustang would ever be worth. We didn't mind since we plan to own the Mustang forever.

rlyttle · March 2014

https://www.kbb.com/car-reviews-and-news/top-10/best-midsize-suvs-2014/2000010380/#zipo=ff8d79c84db624e03b8e7e9822df2d56

Go to this site & see how much your car is worth. Then subtract what you owe. You may have to roll over the difference into a new debt, or if you are left with money you can use that as a down payment.

melrob613 · March 2014

I would love tit that 1bazillion times if I could.

Thanks for the insiders secrets!!

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