19k car loan, salvage/buyback title car

Bought a 2016 ford explorer in april for 14k, 4k warranty that already expired at 120k miles. Loan was around 20k after taxes

Just found out the car has a buyback title, it got a new AC, Transmission, and catalytic converter from warranty in the few months i had it. The problem now is im trying to trade it. 123k miles now, they valued it at 8.5k and told me i should get 3k+ back from the warranty, so that should be 11.5k-12k. I was looking at a chevy malibu, I found a few around 14k with 60k miles.

For some reason the dealership is telling me it would be easier for the banks to accept a trade it in for a $20k malibu instead of finding one close to the value of it.

Could anyone explain why? Because i thought it would make more sense for me to trade it for a car with lower value or the same.

It could’ve possibly went through but my warranty refund was $650 because of all the claims. So now I’m confused on why they don’t just let me trade it for malibu thats around 8.5k or 10k and roll the rest over onto the new loan