If I have a car loan and let's say I want to trade it in and get a Cheaper car how does it work

My car is worth ooo 8K my loan cuz of finance charges iis around 13K, now let's say huypothetically I found a car let's say a mustang for 7k and I want that one now how do I transfer my loan or get a new one for the mustang or can I trade in my car for the mustang? How does it work when you are financing a car and you want to buy another onE?

If I have a car loan and let's say I want to trade it in and get a Cheaper car how does it work?

You have what everyone calls a %26quot;negative equity%26quot; situation. Your loan balance on the car is much higher than the car's blue book value.

As such, you are %26quot;upside down%26quot; in the loan because of the steep finance charges that you agreed to when you first purchased the vehicle. You could find a dealer to put you in a Mustang, but please understand that he will transfer the %26quot;negative equity%26quot; in your current vehicle to the new Mustang. Therefore, you will have paid $12,000 for the Mustang.

Please believe, the dealer is not gonna absorb your negative equity situation. As a shrewd businessman, he will probably offer you the same interest rate on the Mustang, and make up the difference with a longer term for the auto loan -- maybe 72 or 84 months. But honestly, will the used Mustang even last that long?

If you are looking for a cheaper car, you should have found one at the point of sale of the original vehicle.

If you are looking for a cheaper loan, then you might see if a credit union or some similar institution will refinance the loan.

You can rest assured that buying a different car with about the same blue book value as your current vehicle will not solve your current financial situation. You might want to cut your losses, hold onto your current vehicle for longer than you originally expected, and pay off the loan over time.

Time heals all wounds, even ones caused by %26quot;negative equity%26quot;.

Watch the video below and enjoy.

If I have a car loan and let's say I want to trade it in and get a Cheaper car how does it work?

from your figures, it looks like if you can find a car dealer willing to finance, you could end up with a used mustang for about $14k. one way or another, you will pay the finance charges on the original car.

If I have a car loan and let's say I want to trade it in and get a Cheaper car how does it work?

If your current car will appraise for what you owe on it you are lucky, they will only give you for your car what the blue book value is. So, if you owe more on your current car, they will add that negative to your new loan , if it has a value great enough to carry it or you can pay that off and in turn they show that on paper as your down payment, You dont actually have anything down on new car, just dont have the negative added to it but, the banks consider that a plus it still counts as your down. Or find a vehicle that has enough rebate on it that will cover the negative. There again, you arent getting any discount on new purchase, but you arent creating a negative, or upside purshase that always has a domino effect, that follows you on every purchase until you eventually haft to put up a huge down to get rid of upsideness.