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      11-19-2009, 12:15 AM   #1
JerzeySux
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How do trading cars work if you still owe?

I see many people sell there cars and trade there cars.

Im wanting to trade my car right now and kelly books tells me its about $28k worth. Say i wanted to trade for something that is similar in value but i still owe the bank $14k.

How would this work out? Do i need to pay off my car first in order to trade or can i still trade and make payments like normally?

Or do i get another loan and pay off the BMW first and than trade with nop payments?

Any advice?


What i want to do is trade my car for a stage 3 AA E46 M3 from a friend and his asking 28k and im around there as well. He is willing to do the trade but im trying to get an idea how it works.

Thganks
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      11-19-2009, 01:17 AM   #2
kyleb350
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I wondered that myself. If your bank hold the title, you need to pay the bank off first to get the title, so I think you might need to get another loan right away to pay off the previous?
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      11-19-2009, 04:30 AM   #3
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if it' worth 28k, you owe 14k, you will only get 14k towards your new purchase/cash back

the other 14k will go to the bank since you owe them
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      11-19-2009, 08:57 AM   #4
ACZakka325i
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Quote:
Originally Posted by persian54 View Post
if it' worth 28k, you owe 14k, you will only get 14k towards your new purchase/cash back

the other 14k will go to the bank since you owe them
He's not getting cash for his car because he is trading.
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      11-19-2009, 10:00 AM   #5
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Quote:
Originally Posted by ACZakka325i View Post
He's not getting cash for his car because he is trading.
The car is cash. When you trade in all you are doing is selling the car to the dealership. In the above scenario you could do the following:
The value is $28,000, you owe $14,000, you can have them write a check to you for $10,000 and put $4,000 toward your new purchase. Or any combination you would like.
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      11-19-2009, 10:38 AM   #6
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Quote:
Originally Posted by MisterSkiMask View Post
The car is cash. When you trade in all you are doing is selling the car to the dealership. In the above scenario you could do the following:
The value is $28,000, you owe $14,000, you can have them write a check to you for $10,000 and put $4,000 toward your new purchase. Or any combination you would like.
Yah pretty much right, oweing more for your car than you owe is considered inequity. You can pay it off or like most people, just roll it into your next loan. In the above example you would add 14000 to whatever the purchase price was on the next vehicle and loan this total figure. (30,000 purchase price + 14,000 inequity= 44,000 total financed)

Since most people are most concerned with getting the lowest payment, the payment is stretched out to as long as they can get. (sometimes up to 8 years!) This factored in with interest means that the car will most likely always depreciate faster than you pay it off, hence the inequity. The sad thing is many people will do this multiple times because "they got to have it" and will become "buried" in each and every car. I have seen this multiple times, if someone is going to buy cars this way, I would recommend that they at least buy used cars because then at least they can avoid the initial and substantial "hit" on buying a new one....

Hope this helps clear any questions up you have.
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      11-19-2009, 10:41 AM   #7
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Rereading the OPs original question, since he clearly owes much less than what the car is actually worth, it should be no problem to get a bank to payoff the old loan and refinance him a new loan for the 14k he still owes, as this is what he will have to do.
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