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Can you trade in your new car that you still owe a lot on for a significantly cheaper car?

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Wiki User
2013-10-03 14:25:09
2013-10-03 14:25:09

It is not a good idea to make such a trade.

The dealer will offer you significantly less then you owe, and move the difference unto your cheaper car. The bank may not even want to finance your cheaper car because the collateral would not cover the entire loan balance. You may be able to get approved if you purchase GAP insurance when making the trade; however, there is no guarantee.

Even if you can get approved, it would not be the best choice to do so. Imagine making a $500 payment on a car that over 5 years would have had a $300 payment. You could probably keep the more expensive car for the same $500 a month.

Weigh the options. It is usually more expensive to trade the more expensive car for a cheaper one.

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Yes, but your trade in value may or may not cover for the cheaper car so whatever you owe on your current loan will be tacked onto your future loan for the cheaper car you are speaking about.

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If you will trade an expensive car for a cheaper one, make sure that the cheaper car is in good condition and the trader of the expensive car should pay exact amount of money for the expensive car.

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You never get what a car is worth on a trade in. Get the blue book value of your car. Then, sell it outright and take the money to get a cheaper car.

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sell it or trade it in on something cheaper


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