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2011 Forester 5 Speed Manual
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1,574 Posts
Discussion Starter #1
So every now & then I toy with the thought of getting out of my loan & trading my car for another with the intent of getting out from under my loan. Meaning, trade my car for another car of a lesser value so that the dealership can take my current car & pay off the loan. Anyone ever do that? What’s they key to success?
 

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2018 Forester XT Touring
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145 Posts
Not a car dealer here, but know a bit about it.
A few general keys to success
1) you need equity in your car to have any ability to pay off your current car and purchase a different car without a loan.
2) You need to know the value of both what you're buying and what you're trading in. Dealers are great at mixing the transactions confusing the issues and having you come out behind.

The actual way it works is similar to any other trade in. lets say you trade in a BMW for $45K, you have a loan of $25K on it for a used Forester priced at $15K. The transaction gets written up like any other car sale with a trade in amount. $20K(45k- $25K loan) gets applied to the Forester purchase, wiping out the balance owed, and they cut you a check for $5K

3) I'll be honest, if you're talking about the car in your profile, I think you're going to have a hard time making this happen. The value is likely too low for you to both owe enough that you need to come out from under it and have enough equity to purchase another car outright from a mainline dealer. You'd likely be at a random unaffiliated used car dealer, which can be Ok, but a lot of them are sketchy.

I feel like the best $ move would be to sell the car privately paying off the loan and buying something cheap on craigslist.
 

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2010 Forester 2.5 XPremium 4EAT
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863 Posts
The key to success, IMHO, is to always avoid trading your car to a dealer - only they ever benefit from that kind of deal. It's more convenient for the seller but they can get more $$ for their car privately.

If you have a bank loan, or if your loan otherwise allows it, sell your car privately, you'll end up with more $$ than trading and then decide what you want to do with the money.

Or, you might be able to get a better rate of interest from a bank loan and do some refinancing. Again, generally speaking, try and avoid if possible trading a car to a dealer.
 

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2017 Forester Touring 2.5i - ES/NAV/RB - 225/65 17 Yokohama GO15, Primitive Skid Plate Method racing
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266 Posts
BUT - with some states you get a tax credit on your trade that helps to offset the purchase price (trade vs private sale) overall.
 
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2015 Forester 2.5i Limited CVT
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Good advice here. I agree. Sell your car privately and then look for a good deal on another car. We never will get a good deal with trade ins.
 
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