TTMA Trading in a car that you still have a loan on

[redheadbaker]

I have a 2017 Nissan Rogue -- bought it used in 2020. I still owe on the loan (through my credit union), but the car is worth more (per KBB) than the amount left to pay on the loan. 

Using the lowest end of the KBB range, plus the difference on the remainder of the loan, I could theoretically buy a newer (but still used) car and (depending on the particular vehicle) either eliminate or more than halve my monthly loan payment. 

Will a dealership actually do this? (This car was the first I ever bought on my own, I bought my previous two cars from my parents) 

[VillainV]

So you’d trade in the old car and apply the extra to a newer car (after paying off the loan)? People do this all the time.

[redheadbaker]

Jan 13, 2024 16:32:14 GMT -5 VillainV said:

So you’d trade in the old car and apply the extra to a newer car (after paying off the loan)? People do this all the time.

Yeah, now I realize what a dumb question it is! I don't know why, but when I first thought of it, it seemed like the dealership would be losing money .... I don't know why I thought that. 

[puppylove64]

When you trade the car, negotiate the new car price and don’t tell them how much you owe on your trade until you are satisfied with the amount they offer for your trade. If they know you have positive equity, they try to offer only the payoff amount and keep the difference for themself.

[VillainV]

Jan 13, 2024 20:06:27 GMT -5 puppylove64 said:

When you trade the car, negotiate the new car price and don’t tell them how much you owe on your trade until you are satisfied with the amount they offer for your trade. If they know you have positive equity, they try to offer only the payoff amount and keep the difference for themself.

Great advice! I try to negotiate the trade completely separate from the new car. Know what your car is worth (you’ve already looked up values). You might even clean it up as much as possible, then go someplace like CarMax to get an offer (those are typically good for 7 days). Be ready to walk away from whatever the dealer offers you for the trade.

Then negotiate the new car price. Be prepared with your own financing/pre-approval. They may offer you a better deal with dealer financing, but having your own pre-approval gives you leverage to walk away.

[mrsukyankee]

We usually sell our cars privately versus trading them in, unless the car is not worth that much. There are so many ways to sell privately (to actual dealers as well as private buyers) that it can be very much worth doing.