Can an unpaid car be traded in?
07-20-2012, 09:47 PM
#11
Join Date: Apr 2009
Location: Florida
Posts: 35
Yes, an unpaid car can certainly be traded in. The trick is, the payoff amount on the vehicle may be greater than what's already paid off, so you're underwater for owning equity in your car. This is what happens when you get a 3+ year loan, and the car rapidly depreciated within the first two years.
07-20-2012, 10:00 PM
#12
Yeah I talked to my bank about trading in for a GT and since I bought my V6 two weeks before the 13's released, it RAPIDLY lost value. She advised me not to go with the trade in because my huge down payment for the V6 wouldv'e pretty much been worthless. It's a lot to decide about xD Wait to talk to your bank and value your car in the 6 month waiting time you have regarding the LAPD thing.
07-21-2012, 12:49 AM
#15
4th Gear Member
Thread Starter
Join Date: Sep 2010
Location: California
Posts: 1,125
Yeah I talked to my bank about trading in for a GT and since I bought my V6 two weeks before the 13's released, it RAPIDLY lost value. She advised me not to go with the trade in because my huge down payment for the V6 wouldv'e pretty much been worthless. It's a lot to decide about xD Wait to talk to your bank and value your car in the 6 month waiting time you have regarding the LAPD thing.
I guess what I may do is pay off this one, save up some money for a while, and then buy a GT. I don't wanna get too ahead of myself, it's just something I think about so often. Nothing wrong with having both a V6 and GT, so only time will tell what happens.
07-21-2012, 12:57 AM
#16
4th Gear Member
Thread Starter
Join Date: Sep 2010
Location: California
Posts: 1,125
Wow. I certainly wouldn't want that. I actually went through something similar to that when I bought a salvage title 2005 V6. I didn't know and wasn't told it was salvaged until I received the registration. It gave me so many problems and it once completely shut off on me on the freeway that the only solution that ran on my mind at that moment was to ram the car onto a wall. Luckily, the car started slowing down bit by bit and I didn't have to resort to that. Anyway, I bought that salvage title 2005 V6 for $6,200 and after that incident, I decided that my only option was to get rid of it and buy a brand new car. Ford only gave me $1,500 for it due to its salvage title so I had to pay that off for a while along with the 2010 car note. (Both cars were financed with different banks).
Last edited by Antonio323; 07-21-2012 at 01:01 AM.
07-21-2012, 09:40 AM
#17
5th Gear Member
Join Date: Mar 2006
Location: Colorado
Posts: 2,652
You owe 12k on your car to the bank.
You go to trade your car in on a new one for let's say 20k (just for numbers sake)
First dealer offers you 10k for your car and agrees to "pay off the balance."
He pays the bank 12k.
There's a 2k difference between what he paid the bank (12) and what he offered you for the car (10), so now you owe him 2k.
He tacks that 2k onto the loan for the 20k car, so you've just paid 22k for that car.
That's called negative equity.
You go to a different dealer and he offers you 15k for your car.
He pays the bank 12k.
He owes you 3k.
He applies that 3k towards the 20k car, so the balance owed is now 17k.
You take out auto loan for 17k.
Because you only owe 17k on a car that sells on the open market for 20k, you have positive equity of 3k dollars.
lol - here's what sucks. You put the keys in it and drive down the street to put gas in. Car's value has declined about 2000 dollars, so now you're down to 1k in equity
Hope this helps as this is about as over simplified as it gets, but it should clear the air. Taxes, dealer fees (which in most places is taxable too!) can complicate things as well.
For example...in Colorado you only pay taxes on the difference between the trade in amount and the purchase price. So in the first scenario...
New car price = 20k
Trade in amount = 10k.
You pay taxes on 10k of the new car.
Scenario 2.
New car price = 20k
Trade in amount = 15k
You pay taxes on 5k of the new car.
On trading my '10GT in on the Shelby. If I had bought it outright I would have been paying about 3500 in taxes. Because of the trade, Im only paying 600 in taxes.
You go to trade your car in on a new one for let's say 20k (just for numbers sake)
First dealer offers you 10k for your car and agrees to "pay off the balance."
He pays the bank 12k.
There's a 2k difference between what he paid the bank (12) and what he offered you for the car (10), so now you owe him 2k.
He tacks that 2k onto the loan for the 20k car, so you've just paid 22k for that car.
That's called negative equity.
You go to a different dealer and he offers you 15k for your car.
He pays the bank 12k.
He owes you 3k.
He applies that 3k towards the 20k car, so the balance owed is now 17k.
You take out auto loan for 17k.
Because you only owe 17k on a car that sells on the open market for 20k, you have positive equity of 3k dollars.
lol - here's what sucks. You put the keys in it and drive down the street to put gas in. Car's value has declined about 2000 dollars, so now you're down to 1k in equity
Hope this helps as this is about as over simplified as it gets, but it should clear the air. Taxes, dealer fees (which in most places is taxable too!) can complicate things as well.
For example...in Colorado you only pay taxes on the difference between the trade in amount and the purchase price. So in the first scenario...
New car price = 20k
Trade in amount = 10k.
You pay taxes on 10k of the new car.
Scenario 2.
New car price = 20k
Trade in amount = 15k
You pay taxes on 5k of the new car.
On trading my '10GT in on the Shelby. If I had bought it outright I would have been paying about 3500 in taxes. Because of the trade, Im only paying 600 in taxes.
Last edited by wcgman; 07-21-2012 at 09:42 AM.
07-21-2012, 11:14 AM
#18
I bought a new car once and learned not to do it again. The loss is too big. I buy pre-owned now, the previous owner ate the big loss for me.
Purchased a PT cruiser back when they were popular for around $27k out the door, 4 years later after the loan was paid off, it was worth about $12-13k. Never again.
Purchased a PT cruiser back when they were popular for around $27k out the door, 4 years later after the loan was paid off, it was worth about $12-13k. Never again.
07-21-2012, 11:24 AM
#19
5th Gear Member
Join Date: Feb 2010
Location: Connecticut
Posts: 2,549
Yes, you could trade the car in. The dealer will probably give you less then kelly blue book value, dealers don't give much money for trade-ins. Go down to the dealer and ask to trade your car in for a GT, they will be happy to help you out. I attached the Kelly Blue Book Link, you could look up the value of your car.
http://www.kbb.com/whats-my-car-worth/
I also attached a link to True Car, this site gives a good estimate on what a new car should cost.
http://www.truecar.com/prices-new/fo...2013/2B6B06C1/
http://www.kbb.com/whats-my-car-worth/
I also attached a link to True Car, this site gives a good estimate on what a new car should cost.
http://www.truecar.com/prices-new/fo...2013/2B6B06C1/
As for trading in your V6 on a GT. It all comes down to how much are they going to give you on a trade in. If what they are going to give you for trade in on your current car does not pay off the loan, then they will try to roll it into the new loan. The bank that is going to finance the new car is not going to want to finance a vehicle for more than it is worth. Unless you have money to put down towards the new GT, or get a great deal, this may not work in your benefit. wcgman explained it best.
Last edited by DRAGUL; 07-21-2012 at 11:40 AM.
07-21-2012, 12:45 PM
#20
Join Date: Jul 2011
Location: Alabama
Posts: 37
You owe 12k on your car to the bank.
You go to trade your car in on a new one for let's say 20k (just for numbers sake)
First dealer offers you 10k for your car and agrees to "pay off the balance."
He pays the bank 12k.
There's a 2k difference between what he paid the bank (12) and what he offered you for the car (10), so now you owe him 2k.
He tacks that 2k onto the loan for the 20k car, so you've just paid 22k for that car.
That's called negative equity.
You go to a different dealer and he offers you 15k for your car.
He pays the bank 12k.
He owes you 3k.
He applies that 3k towards the 20k car, so the balance owed is now 17k.
You take out auto loan for 17k.
Because you only owe 17k on a car that sells on the open market for 20k, you have positive equity of 3k dollars.
lol - here's what sucks. You put the keys in it and drive down the street to put gas in. Car's value has declined about 2000 dollars, so now you're down to 1k in equity
Hope this helps as this is about as over simplified as it gets, but it should clear the air. Taxes, dealer fees (which in most places is taxable too!) can complicate things as well.
For example...in Colorado you only pay taxes on the difference between the trade in amount and the purchase price. So in the first scenario...
New car price = 20k
Trade in amount = 10k.
You pay taxes on 10k of the new car.
Scenario 2.
New car price = 20k
Trade in amount = 15k
You pay taxes on 5k of the new car.
On trading my '10GT in on the Shelby. If I had bought it outright I would have been paying about 3500 in taxes. Because of the trade, Im only paying 600 in taxes.
You go to trade your car in on a new one for let's say 20k (just for numbers sake)
First dealer offers you 10k for your car and agrees to "pay off the balance."
He pays the bank 12k.
There's a 2k difference between what he paid the bank (12) and what he offered you for the car (10), so now you owe him 2k.
He tacks that 2k onto the loan for the 20k car, so you've just paid 22k for that car.
That's called negative equity.
You go to a different dealer and he offers you 15k for your car.
He pays the bank 12k.
He owes you 3k.
He applies that 3k towards the 20k car, so the balance owed is now 17k.
You take out auto loan for 17k.
Because you only owe 17k on a car that sells on the open market for 20k, you have positive equity of 3k dollars.
lol - here's what sucks. You put the keys in it and drive down the street to put gas in. Car's value has declined about 2000 dollars, so now you're down to 1k in equity
Hope this helps as this is about as over simplified as it gets, but it should clear the air. Taxes, dealer fees (which in most places is taxable too!) can complicate things as well.
For example...in Colorado you only pay taxes on the difference between the trade in amount and the purchase price. So in the first scenario...
New car price = 20k
Trade in amount = 10k.
You pay taxes on 10k of the new car.
Scenario 2.
New car price = 20k
Trade in amount = 15k
You pay taxes on 5k of the new car.
On trading my '10GT in on the Shelby. If I had bought it outright I would have been paying about 3500 in taxes. Because of the trade, Im only paying 600 in taxes.
This is the correct logic to consider when trading in a vehicle. Dealers are much more willing to negotiate when you have positive equity in your vehicle. Perfect example....I traded in my G37 on my 2011 GT, and they gave me $1500 more than the KBB value, and they came off the GT's price $2000. I wound up financing for a lesser payment on a car that is 3 years newer. Also, you have to be "firm" with salesmen. I'm not saying to be an ***....just tell them where you need to be whether it be payments/price. If they don't want to deal, walk away.