Dealers Will Not Pay Off Your Trade No Matter How Much You Owe

Car Dealership Picture

Lots of car dealers claim that they will pay off your trade no matter how much you owe. If your current car is worth more than you own on the loan, you shrug your shoulders and respond to such a ploy with indifference. If, however, you owe more on the loan than your current car is worth, a situation commonly referred to as being “upside down,” such a claim grabs your attention because it implies a painless exit from a negative equity position.


If you understand exactly what I just wrote, then you’re also smart enough to understand that the car dealer will never pay for the outstanding balance on your existing upside-down car loan out of his or her own pocket. Use some common sense, people.

What the dealer will do is handle all the paperwork to get that upside-down loan paid off, and the outstanding balance will either be subtracted from any cash down payment you make on the new car or it will be added to the balance on the new loan. Nice going. Now you’re even more upside down than you were before, because the minute that new car or truck or SUV you just got talked into rolls off the dealer’s lot, it’s going to drop in value by thousands of dollars.


We understand how appealing potential solutions to mounting problems can be, especially if you’re stuck driving a big fuel-swilling SUV that’s worth much less than you owe on the loan, and you’re struggling to afford the gas it guzzles. But unless you’re swapping a vehicle like that for something like a base Toyota Prius with no options, no car dealership is going to be your knight in shining armor.

If you are upside down on your car loan, your best course of action is to keep your current car. At the very least, drive it until it’s worth more than you owe. The best-case scenario is to drive it until it’s paid off and starts costing more to own each month than a brand-new car would. And in the future, save enough cash for a down payment on a new car so that you’re never upside down on a car loan again.

– Christian Wardlaw

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