Car financing and trade in confusion
Asked by Ivan Aug 10, 2018 at 12:35 PM about the 2014 Ford Focus SE
Question type: Car Selling & Trading In
If my car is worth $8000 in trade in value, but I owe
$10,000 on it, would trading my car in for a $6000
car cancel out what I owe?
(Ex: 10,000-8000=2000 and 8000-6000=2000
credit? )
I've tried asking different dealerships but they've
told me it doesnt work like that, especially because
im upside down in my loan.
4 Answers
No. You would owe $8000 on the 6k car. The 2 grand debt would roll over if they let you.
Math does not work that way. You can't cancel debt with more debt.
The value of the car minus the amount you owe is called negative equity 8k-10k= 2k. So if you trade in your 8k car for a lesser valued car, you still have that negative equity of 2k that gets rolled into trade. So if you go for a 6k car it will still be 8k technically. This is ok if you just absolutely hate your car.
