I'm trading my car in for a newer car. What happens to the loan?

Question:
I already did the research and my trade in from KBB is about $9200. I want the new 2007 Corolla which is around 15-17,000 roughly. My loan is more than the Corolla itself right now. How does that work when I trade it in to the dealership? Help!

Answers:

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Well basically you end up paying the loan off no matter what. So, if you still owe roughly the price of the Corolla, then they will take your trade in value, pay that to the loan you have now and you will still owe whatever is still left over. So basically, the $9200 you would get for the trade in goes to pay off your old loan. The place you buy your car from will generally pay off the entire value of your current loan to the current lender, and then just roll in whatever extra they had to pay on top of your trade in into your new loan for the vehicle. I dont know what your financial situation is, and how much you still owe on your current car, but it sounds like for right now you would be wise to hold on to the car you have until you get that loan payed off a little bit more. For the sake of the discussion lets say you still owe 20,000 on your current vehicle. Basically if you got the new car for 15,000 you would have to somehow come up with 35,000 dollars. So the car company would put the 9000 from your trade in towards that, and you would still come out the other end with a loan of roughly 24,000 for a car that cost you 15,000. Your car is negative equity right now, which means you owe more on the car than what it is worth. You are going to have to make some more payments on it and get the loan under control before you start to consider buying a new car.

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How do you spot hidden problems on a used car?

you bite it or pay it off don't trade your car in, sell it privately you will get more money for it!

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Would anyone buy this 2006 car?

The term is being "upside down" on the loan. You'd have to have a loan to cover the balance you owe after trade plus a loan for the entire amount of Corolla. Your best bet is to check out the retail value of the car your trading and attempt to sell it, but you still might owe on the loan, or find someone who will take over the loan payments for you.

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