Trade-In Guide for Buying New Car

Video Transcript

"Hi, this is John Michaels with Expert Village. Today we're going to be talking about buying a new car. In this segment we're going to talk about trade-ins. If you have an old car that you're trading in, whether or not there is an existing loan, most dealerships will tell you we'll pay off any trade, which is very true, because in order for you to get a loan on your new car, they have to pay off the old loan on your old car. So, if you're buried or upside down, which is the terminology for having negative equity, which means you owe more on your car then it's currently worth. Regardless of whether they tell you, meaning the dealership, that we'll pay off any trade at any time, if you're trading in that car, it will be shown as a paid off trade-in. Remember, there are lots of tricks that dealerships use and word they use in order to make you feel a little more comfortable in what's happening. Terminology for trade-ins will vary. Based on what you know your knowledge to be, your car is worth, get out there and find out before you trade-in your car, how much its worth. Just because the dealerships say they're giving you x amount of dollars for your trade-in, doesn't necessarily mean that they are. What they are giving you is what is referred to as a trade allowance. Which means the new car that you're purchasing, they're adding the discount that they're taking from that car to the value of the trade that you have to tell you a number that's called a trade allowance. Which is a combination of both a discount on your new car and the actual cash value for the amount of money they're giving you on your trade-in. So remember, do your homework. Find out what your trade-in is worth."