@Anonymous wrote:I am looking to purchase a new vehicle. I will be approved for a very low interest rate 2.2-2.4 range.
The vehicle is around $70k and I have $35k equity on my trade.I want to borrow more than the $35k difference and get a check for the rest back. Will banks do this? For example take a $45k loan on a $70k vehicle and get $10k back in cash?
@mich800 has hit the nail on the head for simplicity and best way to maximize on the vehicle you are getting rid of. You will almost always receive more for a used vehicle in a private party sale then you would as trade-in.
If you insist on going trade-in route, your options would be:
1) negotiate cash back from dealership.
2) refinance new vehicle pulling desired amount of cash from equity in doing so.
@Anonymous wrote:I am saving over $3000 in taxes by trading the vehicle in over selling privately. I have tested the waters selling it privately vs trade in and it would be very unlikely that I would be able to sell my trade in for more than $1000 more than their offer making that not a viable option.
I will ask the dealer if they are aware of how to do this.
You likely won't receive as large of a tax break asking for cash back as part of the deal.
I'm not sure of the tax implications of cashing out on a refinance, but if it can be done without a tax burden it might be your best option.
Depending on the bank you planned on financing with, might work out in your favor to accept a loan from a different bank and refinance with your preferred bank in 30-90 day's (some credit unions offer cash incentives for moving your loans to them).
Best of luck with whichever path you take.
@Anonymous It's relatively easy. If you want the tax savings, it has to be "traded" and the dealership simply cannot buy the vehicle from you in the vehicle purchase transaction since it needs to be listed on the purchase agreement.
There are 2 ways to achieve this:
Refi your current vehicle borrowing 10k against it (keep this money and finance in your 10k payoff with your new vehicle) at a local credit union, etc so you have that payoff listed on the new purchase agreement...
OR
Have the dealer "under allow" on your trade printed on the paperwork. For example, they show on paperwork that they're giving you $25,000 for your trade and they plug into their ACV (actual cash value) screen the value of $35,000. Then they give you a we-owe for $10,000 check to customer. This option, however, doesn't have quite the tax savings as the first option.
Hope this helps! Best of luck!
