Trading In A Car Purchased Last Year with 4-Year-Loan

October 25, 2013 12:33 PM

So my girlfriend and I broke up. And the car I purchased last year was for us- larger than I would need myself, more expensive than I would purchase on my own. Can I get rid of this or trade it even though I still owe on it for three more years?

So my girlfriend and I broke up. And the car I purchased last year was for us- larger than I would need myself, more expensive than I would purchase on my own.

It's a nice car. It's a Chevy Malibu 2012.

Now that we're breaking up I am really unhappy to be stuck with this car. I have paid on it for about a year and would like to get something smaller/cheaper.

Is there any chance I could do this? If I took it back to the same dealer (Carmax- they financed it), is there any chance I could get some sort of a deal in trading it back in? Or am I just stuck with this car for the next three years?

Thanks for any insights.

posted by tunewell to Work & Money (10 answers total)

What's the blue book value vs. your remaining balance on the loan?
posted by Oktober at 12:34 PM on October 25, 2013

Yes, you may be able to do this. The proceeds from the sale would be used to satisfy the loan, just like selling a house that still has an existing mortgage on it. The main difference is that cars tend to depreciate in value quickly, and there's a chance the car may be worth less than the loan. In that case, you may need to pony up some cash to get out from under it.
posted by craven_morhead at 12:35 PM on October 25, 2013

You can certainly trade it in, sell it, whatever. The only catch is because there's a lender in play, you're probably going to have to pay off the entire loan balance immediately. Cars being what they are, the loan balance is almost certainly larger than whatever you'd get from a sell/trade.

So you can certainly downsize if you want, but I highly doubt that you'd come out ahead. You'd wind up paying money--probably a few grand--to retire your existing loan, then head into buying a new car with zero left over capital.

If you really, really want a smaller car, that may be something you decide you're just willing to do. But if you're trying to downsize to save money, I'm afraid that ship has already sailed.
posted by valkyryn at 12:37 PM on October 25, 2013

Depends on the value of it. If they financed it and if you're not upside down on it (you owe more than it's worth), you may be able to work a trade, particularly if that car's in some demand. For example, my Honda Fit is in such demand in the used car market that they regularly offer me several thousand in cash every time I take it in for maintenance.

If you are upside down on it, they *may* be willing to roll whatever would be left over into the new loan, I've seen it done, but I also can't tell you how much of a bad idea that is (extremely).
posted by Ghostride The Whip at 12:42 PM on October 25, 2013

I just traded in a car which still had 3 years on the note. It's totally do-able. The car dealership who sells you the new car and takes your trade-in sends a check to your lender to pay off the note as part of the car buying process. Note that if you owe more than they give you for it, you may have to roll some of the cost into your new car loan, or bring money to pay it off.
posted by rabbitrabbit at 12:45 PM on October 25, 2013

We sold a car to Carmax with time left on its loan a couple years ago, and it is definitely doable. We owed about $1000 more than what they offered us for the vehicle, so we paid that amount to Carmax, who then turned around and paid off the loan. The whole process from walking in to leaving with the car sold took maybe 45 minutes, much shorter than I was expecting. I can't speak to how this might work if you want to do this as a trade-in, but you should definitely be able to sell the car back with little to no hassle over the loan part. Since your original purchase was from Carmax itself, your situation seems like it should be even easier than ours was - our loan was through another dealer in a completely different city.
posted by augustimagination at 1:04 PM on October 25, 2013

Following the advice above, also remember to be realistic about your actual costs. For instance, lots of people trade in paid-off cars with bad gas mileage to get brand-new cars with good gas mileage, thinking they'll save money...because they failed to sit down, do the math, and discover that the new car will cost them significantly more to run overall.

So sit down, figure out what the new car you want would cost (including the cost of ridding yourself of the old one) and compare that to the cost of keeping the current car (payments and interest) for the life of the loan. Make sure you're ignoring sunk costs (what you've already spent) and are focused only on your going-forward costs.

You might be surprised how much "getting out" of the current car adds to your new car cost, especially considering you've already paid sales tax on it (and you'll have to pay it again on a new car.)
posted by davejay at 1:28 PM on October 25, 2013 [6 favorites]

I've done this a bunch of times!

First, know how much you still owe on the vehicle from your financer. Then look up the value on KBB. Chances are there's a delta. I'm betting dollars to donuts that it's not in your favor. (Unless you put a hefty down payment down.)

So let's say that you owe $15,000 on the car, let's say the Blue Book value is $12,500. So you're $2,500 "Upside-down". That means you owe $2,500 more than it's worth. So you can write a check for that, and start dealing from scratch, or you can hondle. You know what my suggestion is.

The static number is what you owe. You can't negotiate that.

You can play, give a little, get a little on the trade in value, especially if you're buying from the same dealer.

Husbunny and I traded in our cars at the same time, and got two new cars. I think that we were able to negotiate a good deal (not a great deal, no one beats the dealer) because the dollar signs were dancing in front of their eyes.

If you liked working with Carmax, go back to them. If you'd rather not, no problem, go where you like and trade what you've got. All dealers will take your trade, no matter what you owe on it.

Do this, decide first, before you start talking about buying anything, what car you want. Yaris? Fit? Smart? Drive them all, and do your homework. Have an idea in your head about what they're worth.

THEN go to the dealer knowing that you'll need to know:

1. What they'll give you in trade.

2. How much what you're buying is.

3. What the financing costs.

Now is a great time to buy a brand new 2013 or even 2012, once January rolls around, that shit is leaden on the books.

Memail me if you want specific help!
posted by Ruthless Bunny at 2:11 PM on October 25, 2013

I've seen this done to get someone off a car lease. It was taken back to the dealer it was leased from a year after the initial lease and the person bought another car from them. The dealership made it work so it was a wash cash wise. Take a drive down to CarMax and ask.
posted by cnc at 2:11 PM on October 25, 2013

You could also look into sites like http://www.leasetrader.com. A friend of mine is trading his Lexus for a Cadillac... Not sure if this exists for purchased cars.
posted by reddot at 6:00 AM on October 26, 2013