topic Re: Trade in after refinance? in Auto Loans

Trade in after refinance?

vampireszombies — Fri, 09 May 2014 01:18:57 GMT

This is possibly a stupid question but I was wondering if its a good idea or even possible to trade in a vehicle after a refinance?

I purchased a new car in Feb 2014 with a rate of 11%. I will either try to again refinance by myself in about 4 months or my brother may possibly co-sign a refinance for me soon. I tried refinancing a couple times since getting the car and was denied both times mainly because of my income (which my brother can help me there). I have been paying more than the amount due each month.

So my question is: once the car is refinanced and the total amount wont be upside down anymore, can I trade in the car if I wanted for possibly something cheaper? When getting said car, would the refinance carry over or would I have to (if needed) refinance all over again?

Thanks for the help. If any additional info is needed please ask I will reply asap.

Re: Trade in after refinance?

StartingOver10 — Fri, 09 May 2014 03:23:16 GMT

@vampireszombies wrote:
This is possibly a stupid question but I was wondering if its a good idea or even possible to trade in a vehicle after a refinance?

I purchased a new car in Feb 2014 with a rate of 11%. I will either try to again refinance by myself in about 4 months or my brother may possibly co-sign a refinance for me soon. I tried refinancing a couple times since getting the car and was denied both times mainly because of my income (which my brother can help me there). I have been paying more than the amount due each month.

So my question is: once the car is refinanced and the total amount wont be upside down anymore, can I trade in the car if I wanted for possibly something cheaper? When getting said car, would the refinance carry over or would I have to (if needed) refinance all over again?

Thanks for the help. If any additional info is needed please ask I will reply asap.

^^^I am a little confused on your question. When you trade in the vehicle you have for another one, the equity (if any) is applied to the new vehicle. You have to either get new financing for the rest of the purchase price of the new vehicle or pay cash for the difference between the equity from the trade applied and the purchase price.

If your current vehicle does not have equity, then you are transferring "negative equity" to the new vehicle purchase which is the same as adding to the purchase price.

You don't transfer your financing in either event. The refinance you are planning to do with your brother for the current car is specific to the car you finance.

Re: Trade in after refinance?

vampireszombies — Fri, 09 May 2014 03:50:08 GMT

I guess a better way to put it is. Is it better to refinance for better equity for trading in? Or is it better to trade in and try to get a better rate with the new car?

Re: Trade in after refinance?

StartingOver10 — Fri, 09 May 2014 04:08:35 GMT

If you are planning to trade right away, then don't bother to refinance. Are you on title for the current vehicle or just your brother?

Re: Trade in after refinance?

vampireszombies — Fri, 09 May 2014 05:10:09 GMT

I am on the title. If i trade in and the amount they add on to the new vehicle (because currently owe more than what its worth) can that still be refinanced or is it now part of the new vehicle price?

Re: Trade in after refinance?

StartingOver10 — Fri, 09 May 2014 11:05:15 GMT

It becomes part of the new vehicle price.

The problem though is this - there is a limit as to how much negative equity will be allowed to carry over to the new vehicle. The lower the price of the new vehicle, the less you will be able to tack on from the upside down vehicle.

That's why it is a bad idea to trade frequently unless you are bringing cash to the deal. The car dealer makes money by paying you wholesale (or less) for the trade and charging you retail (or more!) for the new one.

Re: Trade in after refinance?

Creditaddict — Fri, 09 May 2014 17:14:56 GMT

Lets say:

current loan is $10k

you trade car in and they give you $8k (That means you still owe $2k

you buy new car and it's $8k (now they add the $2k you still owed above what they offered you on old car and try to finance you for the full $10k)

or else they may ask that you put down at least $2k so that you are not financing any of the old car loan into the new car loan....

that make sense?