car loan question.

[greenemami]

So, I am confused about this and wasn't sure where else to ask! Let me know if this makes sense...

We are in the market for a used minivan/crossover vehicle. The car I currently drive was estimated for a trade-in value of 8000. I currently owe about 5000 on the car, with a loan through the dealer. If I were to trade in that car for another car (let's just say it is an even trade), would that trade in go towards paying off the loan and then I have to take out a new loan for the difference or would I just still be responsible for the old loan even though I no longer have that car?

I.e. I trade for an 8000 car, would my trade in go towards paying off the 5000 loan and then putting 3000 towards the new car, meaning I need to take out a NEW 5000 loan, or would they call it an even trade and I am still responsible for my old loan? Oh, and this would be a different make/dealership than the old car.

Thank you for your help, sorry if this is a silly quesion

[russsk]

Yes, you would need to take out a new loan. The dealer will pay off your old loan and give you 3k, which you would (presumably) apply toward the purchase of a new car.

A better option would be to determine the amount of the car you want to buy, then apply for a loan for that amount (minus the 3k you would get for your trade) from a credit union, if you are a member of one, or from your bank if they offer good terms. We've saved quite a lot of money doing it this way, rather than getting the loan through the dealer.

[Drummer's Wife]

They would roll it all together, except that since you aren't upside down, you would just need a loan for the remaining amount of the new vehicle... if that makes sense. Assuming the dealer would really give you 8k for trade-in, then your old car would be paid off, and you would have 3k down for a new vehicle.

[greenemami]

thank you Can you tell I have no idea what I am doing with this?!