QuestionI have a question about trading in a car. We want to trade down to a smaller car. We have a van that we still owe on, which we want to use to trade in. What would the dealership offer us as a trade in if they determine that there is not much margin on the van after they pay off the contract? In other words, would we be better off selling the van on our own with the objective of just getting enough from the sale to break even, and then buying from the dealership without a trade in? If you would need specifics about our vehicle in order to give us advice, I will find out the blue book, how much we owe, and what kind of vehicle we are looking to buy. Thanks for any direction you can provide!
-john white.
AnswerHi John and thanks for the interesting question. This is probably, no definitely, the least understood part of buying a vehicle. A little terminology to start:
1. Actual Cash Value of the vehicle you own. You can get an idea by going to Edmunds.com and going to used car value. You can also get an exact value by going to Carmax. They will appraise it, pay you for it, or let you trade it in. They are not the highest bidder but at least they put their money where their mouths are.
2. Payoff amount, you can call your bank or financial source and ask them for the payoff amount. They will quote you a number that is normally good for three days.
Obviously if you owe more than the ACV you are what is known in the industry as:"Upside Down" If this is the case your only, in reality, solution is to pay on it until it has a positive vales. Dealers will tell you they can do creative financing (they can) but it is very expensive. If you have any further questions please let me know. Best of luck, Bud
