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Gigi878

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I want to trade in and refinance my car is that possible? How would it work?

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How would it work?

Helpful to 4 out of 4 people

Be very careful here.  It depends on how long you financed your current car, and how old that particular loan is.

Most people finance cars for 72-months.  If you're current loan is less than 5-years old, you might have a small problem.  If your current loan is less than 3 years old, then you're going to have a bigger problem.  This is a very dangerous trap (financially) to fall into.

Everybody knows that a car depreciates the moment you drive it off the lot.  Unfortunately, it depreciates faster than you can pay it down.  A lot of this is attributed to the fact you're paying interest on that loan, and interest does not add to the value of your car.  Therefore, odds are you're going to owe more on your car than what is is worth.

This is called being "Flipped" or "Upside Down".  Here is an example.  Let's assume you're payoff is $10,000, but your car appraises for $6000.  The difference between the two ($4000) is the amount you are "Upside Down".  That $4,000 gets rolled into you new loan.  So, in addition to paying for the new car, you'll also still be making payments on your old car, even though you don't own it anymore!  That $4,000 would represent about $80 per month of whatever your new payment is.

Formulate a plan before visiting your dealer.  Call your bank and get an exact 15 or 20 day payoff before going car shopping.  Compare this amount to Kelly Blue Book trade-in values at WWW.KBB.com   Know exactly where you stand.

Visit http://themoparman.com/Car_Buying_Mistakes_.php to learn more mistakes people make when buying a car.

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