Trading a car that has a loan for a smaller loan?

[diane.jsmith]

Right now we have a 2009 Journey. It has a loan amount of 17500$. We are looking to trade it in for an older car with a smaller loan, however we have heard mixed things about doing so. The dealership has told us that they would pay off the total loan of 17500$ and put us with the smaller loan... I don't know how much I can trust that.

Do any of you mamas know how that works out? We want to rid as much debt as we can, right now we are about 20000 in total debt, and all but our car will be paid off within the next 2 months. What would be ideal for us to do?

[maat55]

You are far better off selling the car yourself, if your upside down, you should attempt to secure a private note for the difference and to cover a cheaper car if possible.

The dealer will give you less than wholesale value for your current car.

[cjscully]

Right now we have a 2009 Journey. It has a loan amount of 17500$. We are looking to trade it in for an older car with a smaller loan, however we have heard mixed things about doing so. The dealership has told us that they would pay off the total loan of 17500$ and put us with the smaller loan... I don't know how much I can trust that.

Do any of you mamas know how that works out? We want to rid as much debt as we can, right now we are about 20000 in total debt, and all but our car will be paid off within the next 2 months. What would be ideal for us to do?

Here's how this works:

Old Loan - Trade-in Value of current Car + Cost of New Car = New Loan Amount. The only way that works out to smaller loan is if the trade-in value of your current car is greater than the purchase price of the one you're buying.

As Maat55 said, you'll get more for your current vehicle by selling it yourself, which means you'll reduce your debt by a greater amount.

[littleroc02us]

Just remember that the dealer is looking our for their best interest and not yours. Go to KKB and find out the private sale amount you could get for the Journey. Then sell it hopefully close to what you owe. If not get a small loan to cover the differnece. Then buy a used vehicle for that has around 40k milaege on it with some warranty left on it from a ma and pa shop that you can negotiate a good deal with. I just don't trust dealers. I've had great success with local businesses.

[disneysteve]

You have $20,000 in debt and expect to be down to $17,500 in 2 months which means you are able to put $1,250/month toward debt reduction. At that rate, everything will be paid off in 16 months. If you add the payment currently going to the other $2,500 in debt to your car payment, you'll be debt-free even quicker. If you can tighten your belt and free up a little more money to put toward debt, you can get this paid off in a year or less. Personally, I'd probably keep the car if I knew it would be paid for within a year or so.