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Can we trade our car for a cheaper one if we still owe on it?

We have had our car for a year now and need a car that's better on gas and cheaper. The thing is, is that we got a bank loan and so we're paying monthly on it. I'm wondering can we trade our car, transfer the other car onto the loan, and just keep paying the loan off, or are we stuck with this gas hog of a car until we pay it off? And yes, we knew the car wasn't good on gas when we got, but we don't really drive too far. Now my DH got a transfer notice to relocate for his job which will be 70 miles a day!! We are stressing so bad right now!!!

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RubyBlue82

Asked by RubyBlue82 at 3:19 PM on May. 6, 2013 in Money & Work

Level 13 (1,119 Credits)
Answers (11)
  • Yes, but now you will be upside down in your loan. Which simply means, you owe more than your car will be worth. It's a no win situation. You will be paying on the car long after it dies, probably.... or think of it this way, you've added additional money onto what you already owe, for something that is not worth the value.
    m-avi

    Answer by m-avi at 3:21 PM on May. 6, 2013

  • So will we be paying on 2 loans ? Or the same loan with a different car that just takes longer to pay it it off?
    RubyBlue82

    Comment by RubyBlue82 (original poster) at 3:29 PM on May. 6, 2013

  • Yes, but you might do better to sell it yourself and pay off the loan then get a new loan in a cheaper car. But you will likely be able to sell it yourself for a higher price than the car lot will give you for it.
    missanc

    Answer by missanc at 3:31 PM on May. 6, 2013

  • I think it works like this-

    My SIL owed $8,000 on a Jeep. She got a $22,0000 Monte Carlo and owed $30,000 on her loan because the Jeep was just added to it. Or that's at least how she made it sound every time she bitched about it
    ThatBoysMom

    Answer by ThatBoysMom at 3:38 PM on May. 6, 2013

  • How much do you owe on the car you currently own? Do you owe more or less than it is worth? If you take your car to a lot (instead of selling it yourself) the car lot will give you X amount for it. This amount will go toward the loan you have now. So it will either pay it off, or only part of it, depending on how much you owe. Then your new car amount will be added, if you have good credit. Otherwise they might just turn you down for the new loan part.

    Nimue930

    Answer by Nimue930 at 3:46 PM on May. 6, 2013

  • We've only payed off like 4 grand of it and we still owe about 15....I know I won't be able to get that much for it...we're going to be out a lot of money...Oh man this sucks! I hope we can add on to the loan and just keep paying on even if takes us 10 years to pay it off, because we are going to be spending so much on gas with the car we have....thank you for all the options ladies! :-)
    RubyBlue82

    Comment by RubyBlue82 (original poster) at 4:28 PM on May. 6, 2013

  • You can trade in the other car but the loan to cover the new car will also have to pay off the balance of the old one minus the trade in. Talk to you bank.
    Dardenella

    Answer by Dardenella at 7:35 PM on May. 6, 2013

  • My hubs and I have bought many vehicles - some that were not paid off before trading in - and what happened was the dealers would add the balance of the remaining cost onto the new car payment loan. When I traded in my 2 yr old jeep (payments were over $525/mo) I researched cars and found a Chevy Cavalier that I liked, and we drove off the Chevy lot with a brand new cavalier and the payments were $230/mo!! (and that was after adding in the remaining cost of the jeep onto the cavalier paperwork).
    MizLee

    Answer by MizLee at 9:52 AM on May. 7, 2013

  • Awesome Mizlee!! I would love to have a new car with less payments! Let's hope it works out for us. We seem to have a lot of back luck lately.....
    RubyBlue82

    Comment by RubyBlue82 (original poster) at 12:18 PM on May. 7, 2013

  • You say you owe 15,000 so say your new car costs 10,000 and you get 12,000 for a trade in. You would still owe 3,000 (15000-12000) for the old one and need to finance 13,000 (10000+3000) on the NEW loan. The banks can't just add onto the existing loan, but they can issue a new one.
    aeneva

    Answer by aeneva at 1:31 PM on May. 7, 2013

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