Source
r/PersonalFinanceCanada•
imydal

Trading in partially paid Financed car?

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Hello guys,

I’m needing some input about my situation. I am very tempted to get an EV because of the rising gas costs and it makes sense for me since I’m getting solar panels installed this year. I never really understood the trade in especially for a car that I’m still making payments for.

Scenario: I currently pay and financed for a $60,000 car and I’ve paid off maybe 40-50% of it so far.

Brand new EV is also worth around $60,000 and dealership offered to buy my existing car for ~$35,000 for an otherwise brand new, low km car I have.

I’m confused about the other debt I’m still suppose to pay for my existing car. What happens here and could someone crunch numbers to see how much money I’m actually losing and or how stupid I am to do this?

Cheers my lovely Canadians

Edit: thanks everyone, I really do appreciate it. I think it’s definitely best to keep my gas car and it does not make any further economical sense to do this in attempts to “save” on gas bills while paying far more in other ways. I’ll admit I am not the wisest in using my money at times and I wish I was.

Posted Mar 27, 2022, 12:33 PM UTC · edited

06
BigDreamCityscape•

It would become negative equity on the new financed vehicle. Call your loan holder and find out how much principle you owe and subtract what you've been offered.

If you still owe 45k and had an offer for 35k you'd carry over 10k and finance a now 70k car.

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1
00TZ00•

https://www.thecarconnection.com/car-loans/finance-guides/can-i-trade-in-my-car-if-i-still-owe/

So lets say you owe 30k dealership pays you 35k for a net gain of 5k. 5k is taken off the principle amount for the new EV for a price of 55k.

Or

If you owe 40k and dealership pays you 35k thats 5k you need to essentially add to the EV making the price 65k.

IMO your not doing yourself any favors getting an EV at this time.

Even with the fuel savings your still going into more debt for a new car. You also will need a charging station, electrical work done to your home for said charger & taxes / interest. It will generally take years 5+ to recoup the costs of everything in fuel savings alone.

I would drive what you have and enjoy your monthly electrical savings from the solar panel upgrade and if anything use said monthly gains from the solar to pay off your current car loan faster to save any potential interest.

5
BigDreamCityscape•

Also with talks of solid state batteries becoming widely used your EV will be obsolete before its paid off.

2
1985_mk•

Dealer would put $35k toward your current loan on your vehicle. Is there is still an amount owing it would be tacked on to your new vehicle loan as negative equity.

2
Zerot7•

You need to see what owe by contacting the financing company or there is no real numbers to crunch. When you trade in a car whatever you get for the trade minus the financed amount on your existing car is applied to the pre tax price of the new vehicle.

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1
nanodime•

As others have all said, sounds like you come out behind in this scenario. You're spending a lot of money to try saving money. Probably would take way too long for it to ever break even to be worth doing

1