Dealer Trick? Subtracts trade in but adds it back to the loan.

[Anonymous]

Thanks for the explanation.  The smartest thing I can do is to get rid of the negative equity.  I am checking with Carmax and my credit union has passed my info along to Enterprise in my area.  Enterprise seems to have pretty good pricing ("no haggle") for fairly new cars.  They also claim to add $250 to blue book value for a limited time. 

[Anonymous]

Gotcha.  I am sending a bill of sale to credit union.  Serves as a double check on the numbers and competitive offer on interest rate.  The credit union says they will match the interest.

[StartingOver10]

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@Anonymous wrote:

Thanks for the explanation.  The smartest thing I can do is to get rid of the negative equity.  I am checking with Carmax and my credit union has passed my info along to Enterprise in my area.  Enterprise seems to have pretty good pricing ("no haggle") for fairly new cars.  They also claim to add $250 to blue book value for a limited time. 

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Yes, this is true ^^^.  Split up the transaction so you aren't rolling the negative equity into the new purchase. It makes the entire purchase more transparent IMO - that way you are only negotiating the purchase (out the door) price and not messing with the neg equity.

I am glad you are checking with Carmax - best way to sell a used car if you don't want to get involved with the retail sale of it to someone on Craigslist.  Here there are other dealers too that do the same thing as Carmax so get your estimate and shop it with a reputable dealer that follows the same format to buy used,  Even if you have to bring a few dollars to get the deal done due to neg equity it is better than throwing that balance into the new purchase IMO. 

[Anonymous]

Kuma,

I employed your technique.  They asked me what did I want?  They kept trying to pull the monthly payment tactic and I told them what my out of the door price was. 

We reached an agreement.  My new note is only $43 more than the old note for an 8 year old car that was upside down and needed lots of repairs!

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Kuma wrote:
Unfortunately unless I'm missing something that's exactly how it works. Let's say your car Is worth 1k, you owe 5k on it, but the car you want to Buy is 15k.
You MUST pay atleast 15k for the new car. Your original car you owe 4k on still even after the trade in. You can't have a auto loan without the car itself, so the 4k you owe is rolled into the new loan. 5-1+15=19k.
Your new loan ends up at 19k. I just traded in my dart that I owed 11.8 on. Negotiated the trade to 8.8. My new frs was 17.2. The 3 I owe is rolled into the new loan to make it 20.2, before taxes and fees.

I negotiate out the door prices, because their all inclusive and to me it keeps the dealer from trying to pull one over on you. In your case unfortunately it doesn't look like they are. You can try telling them you want x price out the door and let them deal with the numbers of making the new car lower or trade in higher. I'm sure they may have told you a final price after taxes. That would be the out the door price

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[Anonymous]

Perfect. Yeah they play the monthly payment game because generally unless your interest is very high,(and even if it is) thousands of dollars only shift it between 18-28 dollars. Which for them, is a great way to mask hundreds/thousands of dollars. If your OK with 300 your probably OK with 310. Yet those 10 dollars a month are around a thousand overall usually.
Anyhoo, good job, as long as you feel good about the purchase that's all that matters. Make payments and avoid trading it in for the new flashy thing. Refinance when your scores show your capable of you didn't get a great rate. Good luck with everything