Tips on Buying Cars: Trading in a car with a loan still on it., hyundai santa fe, pontiac sunfire

Question
Hello there-
I currently have a 2000 Pontiac Sunfire Convertible and I have a remaining $5,350.00 on the loan. I am looking at a used Hyundai Santa Fe and the one I am looking at is I do believe $8,999.99. So the question is if I go to the dealership and they say my car is worth lets just say $6,350.00. Now would that mean because they are giving me 1 thousand more dollars than what i owe on it yet, I would subtract 1,000 from their asking price and that is what I would pay?

Answer
It can work differently in different states, but here in New York the transaction would work this way:

$8999.99 Price of Santa Fe
-6350.00 Less trade-in for Pontiac

$2649.99 Taxable difference
 212.00 Sales tax (assuming an 8% rate)
5350.00 Remaining loan balance on Pontiac

$8211.99 Due the dealer, plus any government fees

you still are responsible for the loan on the Pontiac.  If you're paying cash, then you pay it to the dealer, or pay it off in advance.  If you're financing the new amount, then it gets added into your financing.