Tips on Buying Cars: first time trade in, kelly blue book, horrible mistake

Question
We have a 2002 Ford Explorer with 109k that we want to trade in on a used car for better gas mileage. We still owe 9500. on the Explorer. We have never traded in a vehicle before and don't know what to expect or if we are making a horrible mistake. Please help us.

Answer
One thing you don't want to do is continue to add debt to your current debt. So you need to find out what your current car value is - what you can get for it on a trade.. and what you can sell it for (kbb.com) - You will probably be better off selling it (you usually get a lot more for it that way) - just be careful not to buy a car that will put you owing substantially more than the car is worth - for instance... if you sell the explorer for 7000 - pay off all but 2500 of your current loan.. don't buy a car that depreciates fast... or else you will owe 12000 on a car worth 7000... You may want to make larger payments and bring your loan debt to equal the value of the vehicle before selling/trading in.. this way you never add more debt to your new purchase.

You can use kelly blue book (kbb.com) or NADA (nada.com or google search NADA) to get value estimations - or go to a dealership and see what they will give you on a trade.. I would figure the trade will usually be around 2000 less than you can sell the truck for yourself - it's up to you if you want to fool with selling it. If you have any other questions feel free to ask.