what to take when trading in a vehicle with a loan?

if it does not sell before then, i'm going to look at a truck this week i'm pre-qualified by chrysler capital for almost 2x the cost of the truck.

i'm considering trading in the avalanche. if they can get me to the positive side or at least breaking even of what i owe, i'm ready to pull the trigger, because i really hate selling vehicles privately. it's almost always a pain in the rear, and it would be easier to swap one payment for another than to pay for both while trying to sell one. In a few months i'll be in a position to pay off the avalanche, and there is always that option, however with as much time as it's been broken since i bought it(trans rebuild, trans rebuild lost reverse and needed re-rebuilt under warranty, rear diff explode, junkyard rear diff got rebuilt last month, rebuilt loose steering, and now i have a phantom clunk that comes and goes and a howl in OD but not in drive) i almost feel like trading it in and wiping my hands of the entire situation with that truck is the right thing to do.

so i've never done this before. what do you take with you to trade in a vehicle with a loan? i only ever traded in one vehicle that i owned outright, only ever bought 3 at dealers and 2 were cash.

i have all my purchase paperwork, my papers with my account number for the loan, my memorandum title, and i have called and have my payoff number.

Go and talk to the bank you have it financed with and talk about removing the lien. They'll tell you what you need to do. Not much to it really, especially if the value of the truck is close to the balance.

I think it depends on where you are planning to trade in the truck as some of the, shall we say, less ethical dealers have been known to "forget" to pay off your loan. That'll result in the lender coming after you, not them. With a big, reputable dealer I doubt that this would be an issue.

If you're a few months from paying it off, would be putting the current loan balance on a 0% credit card or otherwise scrounge up the money an option? I'm always a little concerned when selling or trading in a vehicle that has a loan on it, although the one time I didn't pay off the lien first, a local bank handled the transaction for the private buyer and that was smoother than I ever experienced at a dealer.

What you have is more than enough of what you need in a dealership situation.
Bear minimum:
Some proof you own some of it like title or registration.
Some lead to who owns the rest like bank account number or even just bank name and a 800 number.

From there, the dealership's Finance and Insurance (F&I Guy) will handle the rest.

Here is a scenario...
Lets say, they give you $8k as a trade-in but you owe $10k on the Avalanche.
An additional $2k will be added to the loan of your new truck. This is called rolling over negative equity (you were negative by $2k.)
After all is signed and you leave the old truck, the dealership will send all $10k to pay off the loan on the old truck. This $10k will be a combination of $8k of real dealership money plus $2k additional that came from borrowing $2k more than needed on the new truck.

I am not advising that rolling negative equity is a really good thing but sometimes it is a real reality of life.

If you owe $8k and they give you $8k as trade in then there is no negative equity.
If you owe $8k and they give you $9k then there is $1k positive equity and you can put that extra $1k towards the purchase of the new truck.

The dealership may try to blend all of this into one number.
Try to keep three distinct transactions.
1. New Purchase price.
2. Trade -in (this is the price they are buying your truck from you for.)
3. Financing. Remember, a dealership is not required to give you the lowest interest rate that you qualify for, just the lowest rate that you will agree to. The dealership makes a sales commission from the bank for getting you to sign for the debt. The commission increases as the interest rate increases.

You mention that Chrysler Credit has approved you. Do you know what % rate they have approved you at? Would be wise to know to cut out shenanigans.

Another thing about trade-ins.
In some states (and Ohio is one) there is a sales tax benefit to trade-in.

Building off the example above...
$40k, Negotiated purchase price of new truck
$8k, Trade in price for old truck

$32k net purchase.
You will be charged sales tax for only $32k.

Said another way, if you private party sold the old truck for $8k and brought that $8k to the dealership, you would be taxed on the whole $40k purchase. At your local rate of 6.75% this means that in this example you would have to sell the truck for $8,540 via private party to break even.

This tax has to do with where you live, not where you buy so even if you buy out-of-state or out-of-county, you will still get this benefit.

Also should be noted... Document Fee (Doc Fee)
This is a pure profit fee that dealerships add to the bottom of the page. I find it deceptive but it is "legal."
In Ohio, this fee is capped at $250. Some states have no cap. Buyer beware.
See this article and chart:
http://www.edmunds.com/car-buying/what-fees-should-you-pay.html

In Ohio, dealers MAY charge this Doc Fee but if they do there is a legal limit of $250.
Dealerships will tell you that they HAVE TO charge this fee. The only one telling them they HAVE TO is the management. Don't let them try to tell you that it is a legal requirement!
It is negotiable.

JohnRW1621 wrote: Another thing about trade-ins. In some states (and Ohio is one) there is a sales tax benefit to trade-in. Building off the example above... $40k, Negotiated purchase price of new truck $8k, Trade in price for old truck $32k net purchase. You will be charged sales tax for only $32k. Said another way, if you private party sold the old truck for $8k and brought that $8k to the dealership, you would be taxed on the whole $40k purchase. At your local rate of 6.75% this means that in this example you would have to sell the truck for $8,540 via private party to break even. This tax has to do with where you live, not where you buy so even if you buy out-of-state or out-of-county, you will still get this benefit. Also should be noted... Document Fee (Doc Fee) This is a pure profit fee that dealerships add to the bottom of the page. I find it deceptive but it is "legal." In Ohio, this fee is capped at $250. Some states have no cap. Buyer beware. See this article and chart: http://www.edmunds.com/car-buying/what-fees-should-you-pay.html In Ohio, dealers MAY charge this Doc Fee but if they do there is a legal limit of $250. Dealerships will tell you that they HAVE TO charge this fee. The only one telling them they HAVE TO is the management. Don't let them try to tell you that it is a legal requirement! It is negotiable.

You are partially correct on the document fee in Ohio. Each dealer sets his own price for doc fee (capped @ $250 in Ohio) BUT he must charge everyone the same amount. You can negotiate deducting the dollar amount from the sale price but the dealer still must show the doc fee on the contract.

In reply to Mark57:

Intersting.

Here are the two combine Ohio Laws that allow for Doc Fee but I have never seen it stated that if you charge one customer you must charge all.

http://codes.ohio.gov/orc/1317.07

http://codes.ohio.gov/orc/4517.261

JohnRW1621 wrote: I am not advising that rolling negative equity is a really good thing but sometimes it is a real reality of life.

It can be, if your trade-in's loan is at high interest and the new car's is not.

I had a friend trade a Neon in on a Mustang, and despite negative equity, his monthly payment was lower than the Neon's because it was at 0% APR and not 10%. To be clear, he effectively got to pay the previous car off at the new interest rate.

Something to consider and look into in the fine print, if there are early-termination fees. I've also heard of more than one person wrangling a lower price by agreeing to a high interest rate (up to 29% in Ohio!), then paying off the loan early/rolling it in as negative equity into a much lower-interest loan.

JohnRW1621 wrote: In reply to Mark57: Intersting. Here are the two combine Ohio Laws that allow for Doc Fee but I have never seen it stated that if you charge one customer you must charge all. http://codes.ohio.gov/orc/1317.07 http://codes.ohio.gov/orc/4517.261

I would have to look it up but I believe it is a FTC law. I can check with OADA tomorrow

here is the situation.

new truck is listed at 43,030(10,500 off sticker, cheapest one in the area by far, and the only one that i've found that has all my required options in the entire country). i am pre-approved for 79k through chrysler capital, and that is just a silly number. i said "i want stripped down crew cab with cummins and all the towing options" and they said "here's a totally loaded big horn with every imaginable option including a heated endangered bengal tigerskin codpiece, and throw a new jeep patriot in with the deal too!"

I owe $51xx on the avalanche. We're mortgaging the rental house finally in a few months(getting the process started now), so at that time i'm in a position to pay it off, however I do not trust it to last that long without another major breakdown. I'm already putting new front axle shafts in it tomorrow night as i lost one in FL so i removed them to get home. I got a trade in offer of 3k at another dealer claiming that because the 4x4 was inop it cut the offer in half. Those guys were sleazebags anyway and not worth dealing with, I just wanted to test drive a ram and figure out if it worked for me.

Dealer with truck i'm considering is big, close to home, and has a bazillion reviews all over the internet and about 99% of them are 5 stars. on dealer rater they're almost perfect.

I've had other dealers pull the "we're required to charge this $250 fee by law" and some don't mention it. The place we got the 9-7x from said "I charge $99. That's what it costs me to do the paperwork, title transfer, and the out of state inspection" since everything he sells is from states without salt.

What dealership did you get the 9-7 from, he asked with visions of rustfree cars in his eyes

Good luck.
Sounds like you're on the right path.

The day they look at your truck as a trade in should be treated like any other day a potential buyer is looking at it.
Have it as clean and as good looking/running as reasonably possible. The dealership will look at it with one goal, "how little will we have to do to this vehicle to make it presentable and sellable to someone else."
If it looks neglected or abused (like 4wd inop) then they will assume the worst and pay the least.

Knurled wrote: What dealership did you get the 9-7 from, he asked with visions of rustfree cars in his eyes

streetmotorsports.net

awesome guy, one man show, alumni of my high school and me showing up in my old walsh jesuit hoodie made things simple. easy to deal with, i told him my out the door # and had the truck that night. he literally went to the office at 9pm after his kid's basketball game to meet us and sign papers/run card/take delivery because he knew my wife wrecked her buick and needed it yesterday.

i have recommended him to several people and they all had positive things to say afterward.

the avalanche, it'll have a CEL, for an evap system leak that i can't find. i can't get around that. the 4wd though, i pop new shafts in(waiting at advance auto for me) and it's fully functional. i keep the inside clean so just need to pull the console clutter out and it's good. of course the outside will be covered in road salt i'm sure, unless it warms up and i wash it.

Take a code reader, clear code when you arrive, hope that it does not relight immediately.

patgizz wrote:

Knurled wrote: What dealership did you get the 9-7 from, he asked with visions of rustfree cars in his eyes

streetmotorsports.net awesome guy, one man show, alumni of my high school and me showing up in my old walsh jesuit hoodie made things simple. easy to deal with, i told him my out the door # and had the truck that night.

That is incredible. I love the way he takes pictures of the underside, too.

Your evap problem is probably the vent solenoid, they always get crud in them and don't seal properly or they only seal 2 out of 10 times. Of course it's in a real fun place.

All I recommend is try to get top dollar for your truck in trade and make sure the numbers make sense to you.