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RandomMrdan's avatar

What steps do I need to take in order to trade my car for another?

Asked by RandomMrdan (7436points) February 20th, 2012

I have a 2011 Ford Fusion. It’s not that I don’t like the car, but I’ve always wanted something more sporty and fast.

I’ve taken an interest in a Pontiac GTO. I will have had my Fusion for a year this May. It’s up to date in all it’s payments.

I haven’t spoken to any dealerships or anything yet, because I don’t think I’ll want to do a potential trade like this until maybe spring time.

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13 Answers

RandomMrdan's avatar

oh, the GTO is probably going to be a 2004–2006 model.

zenvelo's avatar

Dealers don’t buy cars unless they are doing a trade in.

It sounds like you have a specific used car in mind. Depending on your cash flow, buy the GTO while you can. Then put the Fusion up for sale. Depending on how much you put down, once your loan is paid off you may not have much left from the Fusion.

robmandu's avatar

Trading in a car is easy, usually.

BTW, “trading in” implies that you want to sell your car to a dealership as part of a deal to purchase another vehicle. You can, of course, always sell the car “private party” to another individual if you choose.

0. Wait until you’re ready to deal. Markets and offers change frequently. Finding the exact car you want but being unable to take action until days, weeks, months just wastes your time.

1. Get an offer on your current car. Most dealerships will provide an offer after some cursory inspection of your vehicle. This is usually the least amount of money you can get for the vehicle as it offers great convenience to be able to get all of the deal done – that is, sell old car and buy new car – all at one time.

2. Compare that offer to your payoff amount (which you get from the bank or lending institution that is financing your car). Right now in early 2012, you should expect that on a 2011 domestic model, assuming you paid little or nothing down, chances are the dealer’s offer on your car is less than the payoff amount you owe the bank The technical term for this is negative equity. If the offer is more than the payoff amount you owe, congratulations! You have downpayment in hand.

3. If you do have negative equity, you’re not necessarily out of a deal. You can roll that negative equity into the financing of the new car you want to get, assuming your credit and other conditions support it. However, this is usually a bad idea for most folks… you’ll be working to pay down negative equity for months, even years. But if you do choose to finance negative equity, make sure you purchase GAP Insurance, usually offered by most financial institutions.

Most dealerships try to negotiate/haggle on all of the various aspects of the deal, including the price of the car your’re buying, the offer on your trade-in, financing rates, downpayment, etc. The only way to shop around is to get all of that in writing up front, before signing any papers. Most dealerships make that difficult.

robmandu's avatar

@zenvelo, I know some of the larger used car dealership chains, like CarMax, will buy your old car whether or not you buy one from them.

robmandu's avatar

BTW @RandomMrdan, unless your credit score is stellar, expect to find that interest rates will be higher and loan limits lower for financing on cars older than 2006. Of course, it also depends on who you use for financing as each company makes their own decisions.

RandomMrdan's avatar

@robmandu Hey thanks! That helps out quite a bit!

john65pennington's avatar

You are trading down, instead of up with the GTO. They do not make it anymore and parts could be a problem.

Why not consider a Genesis by Hyaudi?

And, do not overlook CarMax for a great used car. I love mine.

jerv's avatar

Well, you already lost a good chunk of cash as soon as you drive the Fusion of the lot. Fortunately, cars hold their resale value better than they used to, but trying to finance is a nightmare for “pre-owned” cars even under the best of circumstances.
One concern I have is that you are already looking to trade and you haven’t had the Fusion very long. Now, I’ve also gotten rid of a few cars after a year or less, but those were beater cars under $500 with serious issues (cracked blocks, snapped timing bells, body rot…). Trading such a new car might raise some red flags in the eyes of others. It’s tricky enough to negotiate a good deal when you don’t look impulsive, so trying to trade now might make prospective financers think they can pull a fast one on you with bad terms.

RandomMrdan's avatar

@jerv thanks for the heads up. I’ll be sure not to jump to any quick decisions. And as you pointed out, I’ve only had this car for a short while. I may just decide to give it a few years before I trade it for anything.

jerv's avatar

There are those that lease for only 24 or 36 months, and that is considered fairly normal, so you don’t have to keep it for too long.

mowens's avatar

Still have the Fusion?

RandomMrdan's avatar

Yep, the Fusion is treating me quite well =)

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