How does trading in a vehicle with a lien work?

[BowDown]

Assuming they give you = or more than is owed in trade do they pay off your bank loan before you purchase the new vehicle? Or do they take a new loan that covers both and somehow pay on that loan the amount of your trade?

[Me007gold]

It depends, If it is worth more then you own, they pay off the old note, and then either give you the money or use it as a down payment. Now if you owe more then its worth, they can(depending on how much you are upside down) pay off the old note, and just roll what you own in to the new payment.

[Maxximtl]

I guess it all depends...is it leaning to the left or to the right?

[Nliiitend1]

Originally Posted by Maxximtl

I guess it all depends...is it leaning to the left or to the right?

[Peloton25]

Originally Posted by Maxximtl

I guess it all depends...is it leaning to the left or to the right?

MichaelXi will be sorry you beat him to that. I fixed the title.

To answer the OP's question - if they offer you an equal amount on your trade-in to what you owe your current lender, then it is a wash and they just pay off your trade. They expect to be made whole, plus a little profit, when they re-sell your trade-in to a broker or another customer.

If your trade-in is worth more than what you currently owe on the car, they apply the difference to your new vehicle purchase as part of the down payment. So you owe $8,000 on your car, they offer you $10,000 for it, the $2,000 difference becomes part of your downpayment. They are responsible for cutting the check to your lender for that $8,000, thus releasing you of the liability. Again, they expect to get all of that $10,000, plust a little profit, back when they sell your car.

Some shady car dealers have been known to delay the payoff process causing customers some grief. Fraudulent dealers have even waived it off altogether, usually right before their doors close for good, so it pays to keep tabs on that through their finance department or your salesperson.

>8^)
ER

[BowDown]

Good to know. The vehicle should by all rights be worth more on trade than I owe.. but the least I'm going to take is what I owe.