Trading in a car

[Anonymous]

Okay, this may be a stupid question to some but im completly lost.  I bought a car about 5months ago.  My balance on my loan right now is 12000.  I was thinking about trading it in and getting a more expensive car. Right now the KBB value is 10000, so is that considered up side down? and does trading in a car help your chances of getting approved for a more expensive car? Thanks!

[StartingOver10]

Yes, you are upside down.

No, trading in an upside down car doesn't help you get approved.

Which KBB value did you look at, retail? Look at the NADA trade in value to get a better idea of the value you will receive when trading (at best).

The dealership is going to offer waaaayyyy less. You actually can work a better deal if you sell your car separately first. You  will have to pay the difference in order to get it sold. Check auto trader to see what your car is actually selling for or get a carmax estimate (they are good for 7 days).

It is not a good idea to move the amount you are upside down onto the new car for two reasons: 1) it is a quick way to spiral out of control on your payment and 2) most dealers will see you coming and use the trade in to offer you much less or charge you a huge amount on the new vehicle. Its one of the standard tricks. If you break up the sale of your current vehicle and the purchase of another vehicle into separate transactions you stand a better chance of getting a higher price on the old one and a lower price on the new purchase.

[LIGHTNIN]

Hi bab3211,

Just to let you know, there are no stupid questions here at myFICO.

If you have a question or questions, Please feel free, to ask away.

Also I agree 100% with StartingOver 10.

And in case you didnt know, CU's have the best rates on auto loans.

[Anonymous]

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@StartingOver10 wrote:

Yes, you are upside down.

No, trading in an upside down car doesn't help you get approved.

Which KBB value did you look at, retail? Look at the NADA trade in value to get a better idea of the value you will receive when trading (at best).

The dealership is going to offer waaaayyyy less. You actually can work a better deal if you sell your car separately first. You  will have to pay the difference in order to get it sold. Check auto trader to see what your car is actually selling for or get a carmax estimate (they are good for 7 days).

It is not a good idea to move the amount you are upside down onto the new car for two reasons: 1) it is a quick way to spiral out of control on your payment and 2) most dealers will see you coming and use the trade in to offer you much less or charge you a huge amount on the new vehicle. Its one of the standard tricks. If you break up the sale of your current vehicle and the purchase of another vehicle into separate transactions you stand a better chance of getting a higher price on the old one and a lower price on the new purchase.

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+1

[webhopper]

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@StartingOver10 wrote:

Yes, you are upside down.

No, trading in an upside down car doesn't help you get approved.

Which KBB value did you look at, retail? Look at the NADA trade in value to get a better idea of the value you will receive when trading (at best).

The dealership is going to offer waaaayyyy less. You actually can work a better deal if you sell your car separately first. You  will have to pay the difference in order to get it sold. Check auto trader to see what your car is actually selling for or get a carmax estimate (they are good for 7 days).

It is not a good idea to move the amount you are upside down onto the new car for two reasons: 1) it is a quick way to spiral out of control on your payment and 2) most dealers will see you coming and use the trade in to offer you much less or charge you a huge amount on the new vehicle. Its one of the standard tricks. If you break up the sale of your current vehicle and the purchase of another vehicle into separate transactions you stand a better chance of getting a higher price on the old one and a lower price on the new purchase.

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+1   Agreed with the above post...  Vehicle changing is a great way to spiral out of control on auto loan debt.  Dont get caught in a trading frenzy on your vehicles.

[Anonymous]

Bab- at least you are smart enough to come on here and ask. Speaking from experience during my early college years, I didn't understand the concept of negative equity, and the impact it has on your loan. It's a situation that can put you into some heavy debt quickly, and you should avoid it at all costs. Sure getting the better car will feel great for a few months, but the higher payments get old quickly. In addition, you essentially paying for two cars, one that you are no longer even driving..how does that sound?

Until you can pay down your note to a level that you aren't upside down, just let this idea go. trust me!!!