Existing loan and car trade in - very confused

pieceofcandy · 16 January 2019 at 8:21AM

Hi all,

So we have a loan on our car (£7000) we are now in a position to pay the total amount off. My question is before we pay it off can we trade in our car at a ford dealership and use that loan to another car but then pay that off straight away??

Sorry if that doesn’t make much sense! Never though to do anything like this before

Thanks

tonyh66 · 16 January 2019 at 8:34AM

you owe £7000 on the car, trade in value may only be £5000 (for example, cars are almost always worth less than what you owe on them) meaning you will still owe the car loan £2000, pay that from your £7000 savings and you will have £5000 to buy a new car outright without a loan.

Cheapest option is to pay off the £7000 and then you own the car you have at the minute (no further loan payments so no interest to pay).

foxy-stoat · 16 January 2019 at 9:44AM

If the loan is secured on the car then you will have to settle the finance when you trade it in, if its not secured on the car then you can do what you like.

pieceofcandy · 16 January 2019 at 1:09PM

Thanks for advice

Sorry foxy, when you say do what you like what do you mean??

foxy-stoat · 16 January 2019 at 1:24PM

pieceofcandy wrote: »

Sorry foxy, when you say do what you like what do you mean??

Have you never heard of the term "do what you like" ?

Do what ever you feel like doing - if you want to do something you can do it.

Herzlos · 16 January 2019 at 2:18PM

If the loan is secured on the car (usually an HP or PCP), then you can trade the car in and the loan is settled/carried over.

If the loan isn't secured on the car (like a regular bank loan) then there's nothing linking it to the car so you can sell the car and keep the loan as it is.

Existing loan and car trade in - very confused

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