What if my trade in value is more than the car I'm buying?

If your trade-in is financed and you have equity, the dealer will pay the remainder of the loan and subtract the equity from the price of the less expensive car. If the equity of your trade-in exceeds the price of the car your trading for, the dealer will cut you a check for the difference.
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What happens when a car being traded in has more value than the new car?

At the time of the actual trade transaction, your car dealer will pay you the difference between what your trade-in is worth and the price of the car you are purchasing. For example, suppose your trade-in is valued at $10,000 by the dealer, and you own it free and clear.
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Can you trade a higher value car for a lower?

Yes, it's possible to trade in a financed car for a cheaper one, but it really all depends on your situation. Consumers trade in cars that they still owe money on all the time. In fact, very few people actually wait until their vehicles are paid off before purchasing their next one.
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What if I owe more than my trade in is worth?

If the loan balance is more than your car's appraised value, you have negative equity – which also means you're underwater, or upside down. At some point, most car owners are underwater on their auto loan. It's not necessarily a bad thing, but it can get in the way if you want to trade in your vehicle.
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Can I trade in a more expensive car for a cheaper one?

A: If you still owe money on the car, you can trade it in for a cheaper one. If, for example, you owe $15,000 and the car is worth $20,000, the dealer can purchase the car as a trade-in, pay off the loan, and put the $5,000 toward your new auto loan as equity.
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My Sneaky Trade In Tactic - Ex Car Salesman Tells All!-How To Trade In Your Car



How long should you keep a car before trading it in?

If the vehicle is new, you should ideally wait until at least year three of ownership to trade it in to a dealership, as this is when depreciation normally slows down. If it's used, it already went through the big drop in depreciation and you can usually trade it in after a year or so.
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Can you part exchange a car of higher value?

The part-exchange process is fairly simple. Once you and your dealer have agreed a value for your vehicle, that figure is subtracted from the price of your new car and you pay the difference. If you're doing a simple trade-in of an owned used vehicle for a new purchase, that's all there is to it.
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What if my car loan is more than my car is worth?

Some car dealers advertise that, when you trade in your car to buy another one, they'll pay off the balance of your loan. No matter how much you owe. But what if you owe more than the car is worth? That's called “negative equity,” and the dealer's promises to pay off your loan may be misleading.
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How can I get rid of negative equity on my car?

If paying off the car's negative equity in one fell swoop isn't on the table, pay a little more each month toward the principal. For example, if your monthly car payment is $351, round up to $400 each month, with $49 going toward the principal. The more you can pay, the faster you'll get rid of the negative equity.
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How much negative equity can I roll over?

There is no set amount of negative equity that can be rolled into your next car loan. If you need another vehicle but your current one is worth less than you currently owe your lender, you may be able to roll the negative equity onto your next auto loan.
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What is the best thing to do if you are upside down on your car?

How to Get Out of an Upside-Down Car Loan
  • Calculate Negative Equity. The first step is to know just how underwater your car loan is. ...
  • Contact Your Lender. ...
  • Continue Making Payments. ...
  • Make as Many Payments as Possible. ...
  • Refinancing an Upside-Down Loan. ...
  • Selling Your Upside-Down Vehicle.
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Should I trade in a car with negative equity?

If you're upside down on your car loan, it's a good idea to delay your trade-in if you can — unless you are comfortable paying off your negative equity upfront. But if you need a new car soon and a negative equity rollover is your only option, consider buying a used car and borrowing as little as possible.
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Can a car dealership take a car back after you signed a contract?

A customer may take delivery of a car on a Friday, drive around for the weekend and suddenly see something that is much more appealing. But once you've signed the deal, this is binding. And a dealer will only allow you to take delivery once the payment has registered after the money has in fact changed hands.”
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How much do you lose trading in a new car?

It is best not to trade in your vehicle when you purchased it very recently. As soon as you drive a new vehicle off the lot, it loses around 10% of its value and up to 20% of its value within the first year.
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How do you trade in a car with positive equity?

Contact your lender to find out your payoff amount. If you have positive equity, you can use what the dealer offers you for your trade-in to pay off your existing loan and use any leftover money as a credit toward the new car purchase.
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Will a dealership buy my car if I still owe?

What happens if I still owe money on my trade in car? It's important that you know the pay-off amount – how much you still owe – and the trade value of the car – how much the dealer is willing to offer you. A dealer will then pay off your old loan and give you a credit for the value of your trade vehicle.
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Is 600 too much for a car payment?

How much should you spend on a car? If you're taking out a personal loan to pay for your car, it's a good idea to limit your car payments to between 10% and 15% of your take-home pay. If you take home $4,000 per month, you'd want your car payment to be no more than $400 to $600.
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How does trading in a car affect your credit score?

Your car loan doesn't disappear if you trade in your car. However, the trade-in value of your car becomes credit towards your loan. This credit might cover the whole balance. If it doesn't, your dealer will roll over your loan, combining the deficit with the amount owing on your new car.
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Can you trade in a car that's worth more than the car you're buying?

You have negative equity. If your car is worth less than what you still owe, you have a negative equity car also known as being “upside-down” or “underwater” on your car loan. When trading in a car with negative equity, you'll have to pay the difference between the loan balance and the trade-in value.
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What do dealers use to determine trade value?

Factors that determine the value of your trade-in include the condition of the car, the demand for that particular make and model, and your skill at negotiating a price. The moment a new car leaves the lot, it begins to lose its value, known as depreciation.
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Should I clean my car before part-exchange?

Clean the car thoroughly

To help get the best price possible, keep your car in good condition. Before taking it to the dealer, give it a clean inside and out to give the impression your car's been well looked-after.
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What is the best mileage to trade in a car?

30,000 To 40,000 miles

The depreciation of your vehicle will generally begin to accelerate faster after this milestone, so the closer your car is to this mileage, the better your trade-in will likely be.
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How soon can you trade in a financed car?

WesBank's data shows the majority of vehicle finance contracts are in place for six years (72 months). In these cases, a breakeven point would normally arrive at between 24 and 36 months, depending on the size of the deposit at time of sale.
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Can I change my mind after signing for a car?

Most dealerships don't allow returns or exchanges unless something is wrong with the car. Contrary to what you may have heard, there is no "cooling off" period for vehicle sales. Dealers are not legally required to give you three days to cancel the contract, explains the Federal Trade Commission.
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Can you change your mind after financing a vehicle?

There are very few instances in which you can back out of buying a car after signing the paperwork, whether it's new, used or leased. While the Federal Trade Commission does allow a 72-hour “cooling off period” for some types of purchases, it doesn't apply to vehicles in most cases.
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