I know how a vehicle with negative equity is factored for trade-in. How is it factored for a vehicle that costs less than what my current vehicle is worth and what I owe? I owe approximately 21000 on a vehicle that is worth about 18000 and want to trade it in for something that costs not more than 10000. How would that negative equity be factored?
The car dealership would simply pay off your current vehicle, 21000. Then they would take the new vehicle you are purchasing and finance you for the cost they paid off 21000 plus the cost of the new vehicle 10000. Then take the trade in value 18000 and subtract it from the 31000 and you should arrive at a new loan financed at approximately13000. You could sit on it a while and also sell the vehicle yourself. In this situation you are almost guaranteed to get more for the vehicle than a dealership would offer you for trade in by probably a few thousand dollars. This could help you bring the cost down of the new vehicle you wish to purchase