"Can I trade in my car to get right-side up on my car loan? "

"I bought a Nissan Maxima last year. After financing, I will end up paying $13,000 for the car. According to Kelley Blue Book, the car is worth about $5,000.

I heard that dealerships will take trade-ins, even if you are upside-down on your loan. Will trading the car in for a newer vehicle help me with my loan?

"

Answer
“Despite what dealerships try to tell you, taking on another loan is not a good way of handling this situation. What the dealerships are offering is to take what you owe on your current car, minus whatever small amount of trade-in value they will give you, and roll it into what you owe on the new car. This is how that would look:
Let’s say you currently owe $9,750 on your Maxima that is worth $5,000. The dealer gives you a trade-in value of about $3,000. That leaves you holding a bill for $6,750, plus whatever the new car cost is, plus financing charges. No matter how you look at it, this is an awful deal.
The best thing you can do is pay the car off as fast as you can. From there, you can sell the car to recoup some of your money or hang on to the car for as long as possible and enjoy not having a car payment. “
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Johnny Puckett
Answered on May 25, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
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