Possible to trade in a financed car for a new one? (1 Viewer)

[JasonDNJ]

Hello. I have a 2001 Plymouth Neon which has seen better days due to my daily commute. I owe $5000.00 on the current car loan. I'm thinking of trading it in and whatever the remainder of the $5000.00 is owed, add that on to a new car. Is this possible? Right now I am eyeing the Honda Element. Has anyone done this where they owe on a financed car and were able to carry it over to the new car? I may be able to get $2000.00 for my current car if the dealer wouldn't mind the trade in.

 

[Malcolm R]

People do this all the time...I did it myself two cars ago. It just increases the amount of your new loan (or cuts into your trade-in allowance) by whatever amount necessary for your new leinholder to pay off the existing loan.

Of course, unless your current car is completely falling apart or suffering a major mechanical malfunction (in which case you wouldn't get much in way of a trade anyway), your best bet would be to keep running it. But the Elements are pretty nice (I just got a new CR-V myself about 3 weeks ago).

 

[Shawn C]

A car with a good rebate can help offset any negative equity you might have in your car.

 

[Shawn Solar]

I tried doing this about 2 months ago. Trading in my 2000 maxima for a 2004 nissan quest. I had the car about a year. It came down to the dealer just not being able to offer enough to off set what I owed. Meaning that my monthly payment went way to high even with $3500 down(which cover what I owed after trade in). Just be careful and make sure your not paying more than its worth. Paying money and interest on a lost investement(basically every vehicle) and not getting anthing for it is a waste. Unless its low enough that it only raises monthly payments $10-$20/month its easily covered up by not buying one DVD a month

 

[Andrew W]

Consumer advocates strongly discourage this. It is a way for the car loan dept. to screw you out of megabucks in trade in value and interest.

 

[Zen Butler]

Jason, you're only $5,000 in the hole. If they give you Blue trade in, and apply rebate to the down. You're in there. Now it's the bottom line price you need haggle. You're in good shape. It's people who are completely upside down in their current loan who tend to get confused and burned. $5000 can be buried, easy. Not to mention the warranties are better now. A few reasons I'm rolling out of my truck to a coupe; cheaper payments, better warranty, and better gas milage. The one downside, I'm adding another 2 years of car payments.

 

[Eric Samonte]

I read somewhere that doing this is OK unless ur present vehicle if less than 2 years old. With depreciation, the car would be worth a whole lot less that trading it in would be a huge loss for u.

 

[Shane Martin]

Being upside down in your car is OK??

FWIW, that is the term that describes what you are wanting to do.

If you end up doing it, don't tell them you have a trade in at all until the very last second and after you negotiate the price of the car you want. That way they will more often that not give you as much as they can for the trade in to seal the deal.
I doubt he will find a rebate on the Element. Then again I could be wrong.

 

[Malcolm R]

Honda doesn't really offer rebates. But I don't think Element sales have been that hot, so a good discount price should be achievable.

 

[Zen Butler]

 

[Shane Martin]

I was replying to Eric's post below you.

 

[Zen Butler]

Oops, I apologize.

 

[Anthony_J]

Based strictly on principle, I'm against trading in a car partway through the loan term. You usually end up rolling a bad decision (the original car) into a future one because you end up stretching the remaining loan balance over the total term of the new one. It's a very bad habit to get into.

If you truly want to do it, your best bet is to buy the loan down to what the dealer will give you on the Neon. Yes, it requires a couple of thousand in cash (on top of the Honda down payment), but you take the loss upfront as opposed to taking the loss plus interest in the future.

On the other hand, if you can afford to lose a couple of thousand on the old car and still manage a reasonable deal on the new one, there's absolutely no reason not to go for the new car.

Based on your first statement, I'm assuming that your commute is pretty nasty. It might be better to suck it up and stick with the Neon or you might drive the value right out of the Honda and put yourself back underwater within a year.

 

[SethH]

Personally, I wouldn't do this unless they gave me within $500 of the remaining loan in trade-in value (ie >= $4500 in this case). Looking at the bluebook value I seriously doubt you could get even $3000 for it, but I am just guessing the condition based one what you've said.

Also, if you are going to continue having a commute that is rough on your car and plan to do this frequently, it seems to me that you'd be a great candidate for leasing. If you decide to lease, don't let them know it when you go in. Go in and negotiate a price and then tell them you want to lease it based on that price.

 

[CRyan]

Leasing is probably not an option for a large commute. I think they only allow 15000 unless you are willing to really add to the monthly fee.


C. Ryan