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Old 09-15-2013, 01:53 AM   #1
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What's all involved when trading a car up for a brand new car?

So my wife and I have been thinking about buying a brand new car. We have never owned a new car but we have bought a couple used from dealerships.

We was thinking about trading in our 2004 mazda6 S for a 2014 Mazda3 sedan.

We still owe money on the 2004 we only have it 1/4 paid off. Is there any rules or regulations involved. Like idealy how many years should you own you trade in, should it be mostly paid off like 75%, ect.

What kind of penalties may I be looking at with a trade in, ect.






















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Old 09-15-2013, 02:04 AM   #2
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You must have purchsed the 2004 used.. fairly recently it you still owe 75% of what you paid.
The first main problem is your old car as a trade in is only worth half or less of what you paid. As an unwanted trade in the new car dealer will wholesale off you used car trade in is worth even less..
And a ten year old car in not one a new car dealer wants..
(New car dealers want same brand cars with low mileage, ony a few years old to offer on their own used lots. Or a few 'cherry' other models the used lot guy wants around.. All the rest get sold off at auctions..)
And no dealer is going to pay more than he knows he will get for an old car at auction.

Anyway going upside down on a new car is possible.

Your Second main Problem IMO is you may not get financing. If you have ONLY paid off 1/4 of the cost of a ten year old used car.. Geez dude, you seem to HAVE NO MONEY, and seem to have no income worth a damn. Why would ANYONE offer you a loan for way more per month plus upside down (owe more than the car is worth)

Maybe I am wrong and you just bought the 2004 a month ago..Sorry if so.
And no rule about how long you need to own a car...

A new car usually takes about two full years of payments from zero down with a 48 mo. contract to be at the break even if traded in spot.
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Old 09-15-2013, 02:51 AM   #3
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I bought the car last october with a 48 month loan. This october will be 1 year, on a 4 year loan. 1/4th paid off right?

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Old 09-15-2013, 04:52 AM   #4
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I just bought a house and I have 3 cars. I've always bought used cause they are easier to pay off. Now with a better job, and with this house ill be spending 400 less than what I was paying for rent in the apartment.

With a extra 400 plus the 217 I pay already for car payment I would technically be able to make a 600 a month payment. I don't want too but I could if I needed to.

Besides the trade in I can put about 5K down.

The reason I want to look at buying new, I'm getting tired of the maintenance that comes with owning a used care.

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Old 09-15-2013, 07:37 AM   #5
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Many one years worth of payments on a four year loan will not have 1/4 paid off. Depending on the interest of the loan, the best you would have is 1/5 paid off.
As every month you are paying the full interest each month for what is left of the loan.
Say $10,000 loan at 5% interest (a reasonable rate for a used car with dealer aquired financing)
Is $230.29 per month payment with about $41 dollars of that amount as interest the first month So only $190 or so is going to the principle
Over the first year appoximately $450 of your payment went exclusively to interest Or two entire months of payments were interest only.
This is just an approximation, and if you paid more than the minimum payment that would change the situation a lot.

(A house mortgage is even worse.. A 30 year mortgage with average interest and only required payments 90% of your payment during the first few years is going only to pay interest. Paying a few hundred a month extra on a mortgage in the first years can save you a hundred thousand dollars over the 30 years.. easy )
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Old 09-15-2013, 07:53 AM   #6
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Luckily its a 6 year land contract. Im buying my grandmothers house. It still has intrest rate which is the lowest we could legally go to make the IRS happy. Which for give me without looking was 3%.

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Old 09-15-2013, 10:37 AM   #7
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An example would be if you owe $10,000 and they offer you $4,000 for the car, they will pay off the remaining balance and just charge you for it. So your new car would have an extra $6000 on it.
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Old 09-15-2013, 10:53 AM   #8
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Just to add what NissanAJ said.
You're essentially going to be adding what you owe left (after trade) on your 2004, to the sticker of the new car.
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Old 09-15-2013, 10:58 AM   #9
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I was a little further down the road when I traded the 2008 Focus SES I bought used for a 2013 Focus ST but still ended up adding about $1500 to the loan; difference between what I owed on the SES and what they gave me for trade. Unfortunately, the STs are like crack; no way was I going home without it. And I don't regret it for a minute!
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Old 09-15-2013, 01:03 PM   #10
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If ST's are like crack, then I'm a crackhead!!! LOL
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