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  #1  
Old 01-19-2014, 09:51 AM
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Default Trading in discussion...

So, personally I plan on keeping my truck for a long long time... BUT, if I were to decide to trade in I'm curious how this works...

I've read about a few people who have traded in their truck with money still owing on it. How does this work? Does the dealership give you the remaining you owe as the trade in value of the truck in order to pay off what you owe? If so, doesn't this make what you pay on your next one more because you don't have the trade in value knocked off the price?

I know when I go to get my next vehicle, I am going to be ordering it rather than taking it off the lot. There are a few "convenience" items I want to make sure I get next time.
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Old 01-19-2014, 12:04 PM
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You are always better to sell a vehicle out right than a trade in. It might suck if you don't have something else to drive until you buy a new truck, however. If you trade in a vehicle, typically, you will get much less. If you trade before the vehicle is paid off, you get screwed twice. Hopefully you'll love your Ram for a long time. I have almost 200,000 miles on mine and I still love it, see no reason to trade or sell it. Plus with this many miles, book value is nothing, but it's still an awesome truck. My experience has been an add in a newspaper will get results as long as it's a paper with high readership. If you do plan to sell your truck, make sure it's under 100,000 miles.
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Old 01-19-2014, 12:26 PM
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The difference between what you owe and what you get for your trade is called "negative equity". It, often, can be added to the net amount you are paying for the new vehicle. Dealer finance people know how to move the numbers around, on the sales contract, to satisfy the lender.
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Old 01-22-2014, 02:28 PM
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I do not know how the system works with our friends south of the border but you will have to do a little math, seeing you are going to order your vehicle you have the time.

1 - If you have a spreadsheet program on your computer or even Excel let me know I can send you a program to determine how much you still owe on your vehicle and how much you will owe at any given time.

2 - With GST or HST, not sure if N.S. has HST or Provincial tax; however the value of your trade is subtracted from the value of your new vehicle resulting in less sales tax being paid on the new vehicle. Example: $20K for a new vehicle the HST on that price is $2.6K (HST @13%). Value of Trade is $10K, HST is $1.3K. Final HST on new vehicle is $1.3K. Now if you can get more than $11.3K on a private sale then you will be ahead.

As for having a trade where you will be in negative value (trade is less than what is owing) most dealers, banks, etc will add in the difference to the price of the new vehicle for financing purposes.

On a personal note from my own vehicle, I would have to sell my trade privately for $3K more than the trade value to realize any gains. A check of Auto Trader shows that would be close to the average retail for that vehicle within my geographic region. I still have it for sale, no takers, so I will probably trade it in for the new.
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Old 01-22-2014, 02:54 PM
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Quote:
Originally Posted by hydrex View Post
You are always better to sell a vehicle out right than a trade in. It might suck if you don't have something else to drive until you buy a new truck, however. If you trade in a vehicle, typically, you will get much less. If you trade before the vehicle is paid off, you get screwed twice. Hopefully you'll love your Ram for a long time. I have almost 200,000 miles on mine and I still love it, see no reason to trade or sell it. Plus with this many miles, book value is nothing, but it's still an awesome truck. My experience has been an add in a newspaper will get results as long as it's a paper with high readership. If you do plan to sell your truck, make sure it's under 100,000 miles.
I have to disagree with this. Although most of the time you will get more by selling yourself. I just went through this when I ordered my truck. My current Silverado had KBB private party value of about $25k, trade in value of $22.5. The dealer agreed to give me the $22.5 trade value for it. I would have put it up for sale for $25k and probably taken $24 to $24.5. By trading it in I am saving $1,700 on taxes so it ends up being the same as selling it myself. Plus they agreed to that trade in value in writing and I got to keep driving my truck until my new one comes in.

As far as the OP's question, they will pay off your current loan, if you owe more than they gave you than they will roll the negative equity into the new car purchase. If you owe less than they gave you they will take that off the new car purchase or write you a check for the difference I suppose if thats what you want.

Last edited by finn5033; 01-22-2014 at 03:06 PM.
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Old 01-22-2014, 04:18 PM
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Thanks guys... Perfectly answered my question. I
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Old 01-22-2014, 05:10 PM
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Quote:
Originally Posted by walc View Post
The difference between what you owe and what you get for your trade is called "negative equity". It, often, can be added to the net amount you are paying for the new vehicle. Dealer finance people know how to move the numbers around, on the sales contract, to satisfy the lender.
Not necessarily. It's only called negative equity if you owe more than your trade is worth. I think that's what you meant you just didn't clarify it.

Quote:
Originally Posted by finn5033 View Post
I have to disagree with this. Although most of the time you will get more by selling yourself. I just went through this when I ordered my truck. My current Silverado had KBB private party value of about $25k, trade in value of $22.5. The dealer agreed to give me the $22.5 trade value for it. I would have put it up for sale for $25k and probably taken $24 to $24.5. By trading it in I am saving $1,700 on taxes so it ends up being the same as selling it myself. Plus they agreed to that trade in value in writing and I got to keep driving my truck until my new one comes in.

As far as the OP's question, they will pay off your current loan, if you owe more than they gave you than they will roll the negative equity into the new car purchase. If you owe less than they gave you they will take that off the new car purchase or write you a check for the difference I suppose if thats what you want.
Here's your answer ^^ Very well said.

I just went through this about 5 months ago trading in my 1500 for my 3500. Here's what the numbers looked like.

2012 Ram 1500 SXT Trade in value: $27,500
Money owing on 2012 1500: $19,500
Negotiated price for 2012 3500: $60,000

So when they calculate everything they first take your trade in value off the price of the new truck. So I saved tax on $27,500... so $3300. I would have needed at least $30,800 for my truck selling it privately just to make it worth it. But in reality I would have wanted more because of that hassle of selling it myself.

The dealership then payed off the $19,500 owing on my 2012 1500 so that loan was completely closed. That value is then added onto my new loan. So the breakdown looks like this.

$60,000
-$27,500
=$32,500
x 1.12 (TAX)
=$36,400
+$19,500
=$55900 (TOTAL REVISED FINANCED AMOUNT)

Obviously there's some destination fees and charges etc on top of that... but to keep it as simple as possible I left that out.
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Old 01-25-2014, 05:32 PM
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The best thing anyone can do for their trade in values is to put down a healthy amount of money and make sure to keep good credit for low interest rates. I never thought I was going to have to trade my truck in, but this past week, I had to. With a decent rate, 7500 down and 4500 in rebates kept my amount financed down. My truck wash a complete wash when I traded it in. Owed 30,500 and received 30,500. I took the money from my canceled GAP and service contract and used that as a ''down payment'' on my 14 Charger. I didn't have any negative equity rolled into my new loan and I negotiated a pretty bitchin price on my Charger, benefits of being a former car salesman. I ended up financing just as much as I owed on the Ram with a lower rate. We will end up saving about 100/month on the Charger as opposed to the ram. 530/month vs 433/month and only added 6 months in payments from where would have been on the Ram. We will end up saving a little over 4k all said and done. Sorry I went off on a tangent there. Bottom line, good credit, good down payment and wait for good rebates. Also negotiate your extended warranty and GAP prices down or pay them out of pocket so they don't put you further behind the 8 ball if you have to trade in.
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Old 01-25-2014, 08:52 PM
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Quote:
Originally Posted by walc View Post
The difference between what you owe and what you get for your trade is called "negative equity". It, often, can be added to the net amount you are paying for the new vehicle. Dealer finance people know how to move the numbers around, on the sales contract, to satisfy the lender.
Quote:
Originally Posted by brandonjansen View Post
Not necessarily. It's only called negative equity if you owe more than your trade is worth. I think that's what you meant you just didn't clarify it.
By inference, the OP's question was directed to how "negative equity" is handled when trading.
The question had nothing to do with "positive equity" ( owing less than the trade allowance ), which would result in a deduction from the net sale price of the new vehicle.
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Old 01-26-2014, 03:46 AM
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Quote:
Originally Posted by walc View Post
By inference, the OP's question was directed to how "negative equity" is handled when trading.
The question had nothing to do with "positive equity" ( owing less than the trade allowance ), which would result in a deduction from the net sale price of the new vehicle.
Ahhh yes I see what part of his post you were replying to now.
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