Sorry didn't know where to put this but I'm curious cause my heart and my head have been wanting another Cooper s
So I have a question for you guys that have taken out loans on cars ..
I still owe just under 9k on my gti ( im technically under water since the new gen came out my mkv severely dropped in value).
Anyway I'm just curious whats the process of trading in a vehicle thats still has equity owed, what happens if I go to trade it in ?
I assume the dealer won't pay for the entire loan since at my mileage my car is worth 5k-7k , anyone traded in a car that's owed on can you tell me how it works ?

 

The dealer will pay off the entire loan. However, he will turn around and roll the negative equity into your new loan. Different banks have different criteria on how much negative equity they will finance. For example, bank X will finance 120%, meaning 20% of the new cars value. Depending on your exact situation, you might want to wait for a promotion, so any rebates can go towards the negative equity. Also putting money down can help as well. Let me know if you have questions.

 

As the poster above me mentioned, the dealer will pay off the total amount of your loan and roll over the negative equity. So if you owe 9k and they offer 7k, the difference of 2k is "rolled" into your new loan on the new car. If you do choose to roll negative equity it is a good idea to have a down payment.

 

2k in negative equity is not too bad. On a 60 month loan your looking at $35-$40 extra per month. There always seems to be a promo, or a nice dealer, that will knock down $500-$1000 on the car. So in reality your looking an extra $20 per month. And if you want to put $1000 down you've got all your negative equity taken care of.

 

So it's safe to assume it would work like this ; for example
My loan is at 10k
My cars value is at 5k
The mini being purchased is at 5k
So loan - value + purchased car = new loan

So in that case it's still going to be at 10k ?

As a heads up I wouldn't be getting a new mini , I want either an r56 JCW or a countryman s , mileage and year are irrelevant to me , I'm just a little confused when you said "20% of the new cars value"

Thank for the info though guys.

 

Let's say your new Mini is $10,000. You would likely be able roll over $2000 negative equity. Making your new loan $12,000

 

So it would be ok to assume that the maximum negative equity would be the 20% and the rest would need to be paid for through a down payment?

 

Pre owned cars have a lot of wiggle room in the deal to put money (such as a negative equity trade), or to discount, so I think you could possibly do more than 20%. Cars, unlike houses, are not appraised by the bank, so a dealer does have some wiggle room. The dealer also is in the business of getting you in the new car, so I'd say you definitely have a good chance of getting into a new Mini.

Also I don't know the interest rate on your current car, but interest rates are low now, so your payment might not even change much.

 

Here's a negative car loan calculator to play with...

http://www.bankrate.com/calculators/...alculator.aspx

 

Thank you guys for the replies
I actually joined the army and I leave in a few months, so as much as I want to buy a new car I think it's in my best interest to wait till I get back from basic training. But now that I know the dealer will work with me my plans have changed.
Currently I pay 7% interest, which compared to how much I paid on my mini was quite low . Compared to the national average its high

Thanks for the calculator to btw

 

Thank you for your upcoming service! My son is a Navy Corpsman attached to the Marines at Camp Pendleton. I recall how agonizing it was for us, and of course more so for him, while waiting for graduation from boot camp. Where is your boot camp? Please keep us up-to-date!

Drive Hard. Drive Safe. Keep Grinning.

Holiday MINI Gifts 10% Off. Just type OctDISCOUNT at checkout.

 

Dealers love to suck money from guys who get the itch to switch cars. Payoff what you owe and don't buy more debt. Last I heard the US Army was not paying big dollars.

Best of luck.

 

Don't thank me yet..Im technically apart of the army but until I graduate I'm not a soldier
My basic training is in Georgia , my recruiters say I'm not allowed to speak of where and when I'm going, so I can't give exact info


No the money is not great until you've been in a few years , actually I'll be taking a slight pay cut for the first year I'm in if I compare it to what I'm making now..but serving this country is far more important to me than money