Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

1 Bump

Is this a good or bad Idea?

Dh and I just started building our credit. It was never bad, we just never had anything like a credit card or anything before. Well DH and I bought a car a few years back. The car payment is a little steeper than we'd like to keep paying. DH has great credit now, and mine is slowly climbing the ladder as well. There is a huge car sale for the next few days, and we were thinking about trading in our car for another newer car, with better monthly payment. Is this a good or bad Idea? Also how does a trade-in work if the trade-in car isn't paid off yet?

Answer Question
 
Anonymous

Asked by Anonymous at 6:24 PM on Oct. 22, 2010 in Just for Fun

Answers (7)
  • You have to watch getting "upside down" in a loan. That could hurt you more. Cars depreciate faster than you can pay off the loan. That could mean that you owe more than the car is worth.
    m-avi

    Answer by m-avi at 6:27 PM on Oct. 22, 2010

  • It depends on how much the car you trade in is worth... First off, for a trade in you will always get less than for a straight out sale. So if you owe more on it than they offer as a resale value, they would pay off your loan and add the difference to the new loan. If the value is more than what you owe, they deduct the difference from your new loan.

    Other than that, if you open a new car loan for a higher amount than your current one, your credit rating might go down by a llittle bit (higher debt to income ratio), but if your monthly payments would be less, I'd say go for it!
    Anouck

    Answer by Anouck at 6:30 PM on Oct. 22, 2010

  • Just depends really. Trading up is said to be better than trading down, but when you want a lower payment, you don't really have much of a choice.

    If you owe $3,000 on the car and they give you $5,000 for it as a trade, $2,000 will be used in your down payment.

    However, if you owe $5,000 on the care and they give you $3,000 for it as a trade, $2,000 will be added onto your car loan.
    AllAboutKeeley

    Answer by AllAboutKeeley at 6:32 PM on Oct. 22, 2010

  • It depends on how much you owe vs. the car's value. If you owe more than the trade-in value, the remainder is worked into your new loan. If you owe less, you will only receive the trade-in value LESS what you owe. If it's just a matter of lowering your payments, I'd search around about refinancing your current loan vs. getting a new car and increasing your total debt.
    geminilove

    Answer by geminilove at 6:41 PM on Oct. 22, 2010

  • How much you owe on the old car. Will be aplied to the new car.
    louise2

    Answer by louise2 at 6:47 PM on Oct. 22, 2010

  • More important is do you need a new car? If not why not complete the pay off your car and not have a car payment at all.
    tootoobusy

    Answer by tootoobusy at 7:09 PM on Oct. 22, 2010

  • Look up on line to see the blue book value of the car. Hopefully, it's worth more thanyou owe.
    mompam

    Answer by mompam at 7:26 PM on Oct. 22, 2010

Join CafeMom now to contribute your answer and become part of our community. It's free and takes just a minute.
close Join now to connect to
other members!
Connect with Facebook or Sign Up Using Email

Already Joined? LOG IN