Explain Auto Financing!!!! - Impala Tech
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post #1 of 9 (permalink) Old 07-03-2013, 04:45 PM Thread Starter
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Explain Auto Financing!!!!

I'm looking into a '14 Impala 2LT 6 cyl. The dealerships are wanting to finance the trade-in value that they offer me financed back into the MSRP.
I must not be understanding something but I cant see financing my
trade-in along with the new vehicle. Then making a profit again on my trade in when they sell it to a new owner.
Just an example:
MSRP = 30,000
upsidedown = 3,000
--------
33,000
trade in - 10,000
--------
23,000
cash down = 3,000
-------
total financed = 20,000

Dealerships are wanting to add back the trade in value for a total
of 30K financed. The GM build your own website figures whats above but dealers says otherwise.
Can this be explained in crayons and coloring books? Thanks all.
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post #2 of 9 (permalink) Old 07-03-2013, 05:45 PM
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We need more info. 3k upside down? As in, you owe 3k more on your current car than it's worth? If yes, of course that is going to carry over to your new payment.

Two doors, four doors, wagons, and ragtops.
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post #3 of 9 (permalink) Old 07-03-2013, 05:55 PM Thread Starter
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Yes, I owe 3K more than the trade in. I understand that this is financed back in but where does their trade in offer for my car go? They are offering to buy my car at 10,000 per my example, I'm still responsible for the trade in price instead of applying it to MSRP + differance in payoff + any down payment ?
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post #4 of 9 (permalink) Old 07-03-2013, 06:29 PM
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I pay cash for all of my cars. If you let the dealership think you are going to finance the car they will give you a good deal on the car because they get a kick back in terms of their floor plan (the car you are buying doesn't belong to the dealership, but to GM, the dealer is just on the hook financially to sell it in six months). If the buyer finances the car through GMAC then GM lowers his interest rate on what he has to pay back and extends the amount of time he has to pay off the car that they ordered. This is money in the dealers pocket which is why they push financing. Of course they are very unhappy when after shaking hands on the deal I turn out my pockets full of cash.

If you are upside down then it is all funny money anyway. The dealer has to finance the cost of the new car, your old car and their profit margin regardless of the numbers on the paper. The bottom line remains the same. If your car sells at all it will probably be sold at auction for a wholesale price rather than have an off brand on their lot. If it is a cream puff low mileage car they may keep it for resale, but you can bet that they will give you one third of their anticipated sale price at best on your trade in.

If they quote you a better number they just raise the price of the car (the number they claim they have discounted below MSRP). The old gag of here is our price from GM is an old one, but a good one, as believe it or not the dealership has a computer and a printer and can print out any dealer invoice that they want with any value on the paper to back up their claim.

Big Dave
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post #5 of 9 (permalink) Old 07-03-2013, 07:49 PM
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You may have a trade worth 10k, but you owe 13k. You have no equity and the dealer has to pay your car off with 13k.

Think of it this way.

$30,000 new car
13,000 payoff on your trade to get a clear title
--------
43,000 total
-10,000 the value of your trade
--------
33,000 amount you will owe to get out of your old car, into new Impala.
You deduct your 3k cash down payment from there. The 3k cash is the only equity you will have in this new car.

You can't just deduct the 3k you are upside down because to get a clear title for your trade, the dealer has to pay the 10k also. You owe 13k on a 10k car.

It's simple math, the dealer is not hurting you.
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post #6 of 9 (permalink) Old 07-03-2013, 08:50 PM
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What can you sell your car for privately?

Two doors, four doors, wagons, and ragtops.
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post #7 of 9 (permalink) Old 07-03-2013, 10:16 PM
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post #8 of 9 (permalink) Old 07-04-2013, 03:40 PM
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You are money ahead to sell your old car yourself.
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post #9 of 9 (permalink) Old 07-05-2013, 09:49 PM Thread Starter
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All good points and understood. I know I'd come out better if I leave my trade out of it and made a straight down payment, other than buying outright as Dave said.
Yes actually I could pay off mine privately (2010 2LT, leather etc...) but here in the Charlotte area there are'nt many '14's in dealerships yet and I don't want to pay for shipping a car from 1 dealership to another.
The old patience is a virtue here, a few months and they will be all over the place and in 12 months I can get a deal on a '14 leftover . Thanks to all.

Last edited by 68imp; 07-05-2013 at 10:07 PM.
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