Tips on Buying Cars: Buying and trading, 10000 dollar loan, subaru outback

Question
I have a 2004 GMC Envoy with 78,000 on it.  It is killing me on gas and the payment is out of my budget (new job and pay cut) I recently hit a deer with it and there is considerable damage (4000) would like to trade it in as is instead of reporting to the insurance company.  I am looking at a 2001 Subaru outback with 39,000 for 9,000.  If the dealer is willing to give me 7,000 for the envoy but i owe 10,000 how does that all work.  How much will my new loan be for?  Does this even make sense?

Answer
You need to go around to local banks, credit unions, lenders, dealerships - talk to the credit/loan adviser.. it may take some time to shop around for the best deal - but it's usually worth it. What you need to do is have a new creditor (or your old one, if they will) - consolidate your old loan, with a new one.. (meaning... combine them into one new loan that includes your total debt) - Basically, you take that 7000, pay off most of your 10000...... then you find a place that will lend you the 9000 for the subie, and work with your current lender to cover the 3000 you still owe.. the result should be a 10000 dollar loan with a new interest rate and different monthly payments. You may have to shop around to find a lender that will do this at the best price... but it is your easiest way to fix your payment/gas problems - keep in mind a credit lendor may say something different (they would know more than I do) - but as far as I know that is the easiest way to eliminate old debt for a new car.