Question on a trade?

[torrence]

Ok folks, I have a question on a trade, but not to sure how it works.

Currently I have a 08 Ford Focus which I am upside down on my payments (I owe more than what the car is worth).

I owe like 17K on it and a dealership (or stealership) said that they could give me 10.5K for it. So I am looking to get rid of some of this debt. I see that this particular dealership has an 05 Focus for $5400 with 98K on the clock. How would that trade work? Since my trade is worth more than his, as in a 5K difference would the dealer owe me 5K as in cut me a check?

Excuse my ignorance, but that is why I am asking the question?

 

[Dusten]

since you owe 17000 you are going to owe that difference when trading in your car
so, if you bought a car for 5K, and the dealer is willing to give you 10k for yours, you will end up paying 12k for that 5k car. congrats, you are still in debt.
and that trade wont happen, not without a huge down payment, as no bank is going to loan you more than your car is worth at the time of purchase
trade in - amount owed = equity
new vehicle price - equity = amount owned on new car

10000-17000= -7000
5000 -(-7000) = 12000

 

[torrence]

Damn..... I thought my reasoning was too good to be true. Back to plan A!