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When purchasing a vehicle, whether new or used, when should the issue of a trade in be used and what is the difference between "trade in value" and "trade in payoffs"? (I asked this due to the NUMEROUS issues my husband has been having with his truck that was purchased last year (03/2009) and has been having major issues since DAY ONE and now I am FED UP w/it even though I do not drive it as much (he uses for work) and have decided to "let go" but do not want to go on credit...vehicle year is a 2001)

Answers from the Automotive Experts

Jenny Trostel, Partner at Anderson of Hunt Valley The Trade In Value is the actual fair market value of the vehicle the the dealer will pay for the car. This value is based on what the vehicle will sell for in the are where you live. The Trade In Payoff Amount is the amount the you owe on the loan to the bank. If you do not owe any money, then this amount does not affect you when you are trading in your car. If you owe money on the trade in, then that amount is deducted from the from the trade in value and that amount is the amount of the deposit on the new vehicle. For example, if the vehicle's trade in value is $10,000 and you owe $5000 to the bank for the trade in vehicle, then your deposit would be $5000 on the new vehicle that you are purchasing. If the trade in payoff is higher then the trade in value, you might need to put an additional amount of money towards the new vehicle. Owing more then the car is worth is called negative equity. Banks do not like to finance negative equity.

Jessie L Thatcher, F&I and Sales Specialist at Reynolds and Reynolds Company  (Retired) Since you apparently have an outstanding loan on the vehicle you need to know what that amount is. You can call your financial institution and ask them for a payoff amount. Then go on line and check several sites to get a feel for the value of your vehicle. One is This will just give you an estimated value. When you are selecting a new vehicle you will have to either pay off the current vehicle or "roll" the payoff amount into a new loan. If you owe more on the vehicle than it is worth than you have a "negative equity" and this could make financing more difficult. If you have some equity in the current vehicle than you should be OK. The best advice is to know exactly where you stand before you even walk into a dealership or talk to anyone about a new vehicle. You don*t want a lot of inquiries into your credit report while trying to move out of the vehicle.

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