What happens to your current car loan when you get a new car?
Written By: admin on May 6, 2009
3 Comments
My wife want to get a new car. She currently has a 2005 Ford Escape, owes about 6500 on her current car. She likes the new Ford Edge’s, if we get a new one would the dealer pay off the remainder of the ancient car loan?
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It would depend on what you agree to do with the Escape. If you’re trading it in to the dealership on the Edge, then paying off the ancient loan would be part of the agreement you have with them if that’s what you need done. The loan on the Escape needs to be paid if you do trade it in, either by you or by the dealership though. So, for example, using round numbers, if you buy the new vehicle for $20000 and the dealership gives you $10,000 for the trade-in, you would have a $10,000 difference between the two. After paying off the loan on the ancient vehicle you would need to get a loan on the new vehicle for $16,500 plus taxes and fees, less any downpayment you would place toward the buy.
Hope this helps.
Ken
The loan will be paid off as part of the overall contract. Simply place if you owe 6500.00 and its worth 7500.00 your loan will get paid off and will show on contract you had 1k in equity …On the other side if payoff is 6500.0 and its worth 5500.00 then you will carry over the negative equity on your new loan , either way your current loan will be paid off by dealer.
Whether your wife has to pay off the balance she owed much likely depend on the market value of the present car.
Eg.
1. If market value for the 2005 Ford Escape is $4500, your wife has to pay off the difference she owed; meaning that she has to pay 6500 -4500 = 2000
2. If the market value is $7500 then the profit is 7500 – 6500 = 1000
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http://car-info-guide.blogspot.com